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Nicholas: Robust numbers

Jul 19, 2002

Nicholas Piramal has recorded an encouraging 20% topline growth for 1QFY03. Net profit, excluding extraordinary expenses grew by 69% YoY. The extraordinary charge of Rs 25 m was on account of amortisation of VRS and restructuring expenses. Operating margins registered a 100 basis points rise. The first quarter numbers of the current year include figures of ICI Pharma Ltd, acquired by the company recently. Hence, the results are not exactly comparable with corresponding previous quarter.

(Rs m) 1QFY02 1QFY03 % Change
Sales 1,860 2,232 20.0%
Other Income 69 189 172.8%
Expenditure 1,530 1,814 18.6%
Operating Profit (EBDIT) 330 418 26.8%
Operating Profit Margin (%) 17.7% 18.7%  
Interest 113 116 2.5%
Depreciation 43 65 51.8%
Profit before Tax 243 426 75.1%
Other Adjustments (27) (25)  
Tax 34 90 161.6%
Profit after Tax/(Loss) 182 312 71.2%
Net profit margin (%) 9.8% 14.0%  
No. of Shares (eoy) (m) 38.0 38.0  
Diluted Earnings per share 19.1 32.8  
P/E (at current price)   8  

The company's formulations business has recorded a 20% growth over previous corresponding quarter, outperforming industry growth rates. Nicholas Piramal, together with its joint ventures, continued to maintain its second rank in domestic formulations as per ORG. The company also enjoys first rank in the cardio-vascular segment (CVS), post-acquisition of the pharma business of ICI India Ltd. in March 2002. The rise in operating margins reflect restructuring plans, including reshuffling of product portfolio implemented by the company in the last financial year.

At the current market price of Rs 266, the stock is trading at 8x it annualised earnings for 1QFY03. The company’s investments and acquisition synergies are expected to start percolating into the financial numbers in the current year. Immediate cash flows from sale of property and effective utilisation of internal accruals is expected to ensure considerable savings in interest costs for Nicholas Piramal in the current year.

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