Sale of brands boosts Glaxo net - Views on News from Equitymaster

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Sale of brands boosts Glaxo net

Jul 26, 2000

Glaxo’s net profit has more than doubled to Rs 295.2 m in the second quarter of the current year as compared to Rs 145.1 m in the corresponding quarter of last year. While other income amounted to Rs 110 m (vis-à-vis Rs 112.3 m in the last year), the company earned Rs 105 m on the sale of brands.

(Rs m) 2QFY99 2QFY01 Change
Sales 2,242 2,868 27.9%
Other Income 112 110 -2.0%
Expenditure 2,070 2,585 24.9%
Operating Profit (EBDIT) 172 283 64.2%
Operating Profit Margin (%) 7.7% 9.9%  
Interest 23 26  
Depreciation 34 38 11.8%
Profit before Tax 228 330 44.6%
Other Adjustments   105  
Tax   2  
Profit after Tax/(Loss) 228 433 89.9%
Net profit margin (%) 10.2% 11.4%  
No. of Shares (m) (eoy) 59.8 59.8  
Diluted no. of shares (m) 59.8 59.8  
Diluted Earnings per share* 15.2 28.9  
*(annualised)      

The company’s turnover has also grown by an impressive 27.92% at Rs 2867.8 m in the second quarter as against Rs 2241.8 m in the corresponding quarter of the last year. This looks impressive when justaposed against a 20% topline growth for Cipla and an 18% growth for Nicholas Piramal. The company's operating margins have also registered an impressive increase.

The stock quotes at a price of Rs 436, which implies an earnings multiple of 15 times its annualised earnings of calendar year 2000. If one were to exclude the entire Rs 105 m earned from the sale of its brands, still, Glaxo's second quarter bottomline has grown by an impressive 43% (as compared to the second quarter last year). If one were to take this into account the stock quotes at an earning multiple of 20 times.

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