Burroughs Wellcome: Following Glaxo's footsteps - Views on News from Equitymaster

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Burroughs Wellcome: Following Glaxo's footsteps

Jul 26, 2000

Burroughs Wellcome has followed Glaxo's footsteps in declaring impressive second quarter results. While turnover has increased 22.9%, the bottomline has jumped more than 35%.

(Rs m) 2QFY99 2QFY00 Change
Sales 489 601 22.9%
Other Income 43 40 -7.2%
Expenditure 398 479 20.3%
Operating Profit (EBDIT) 91 122 34.6%
Operating Profit Margin (%) 18.5% 20.3%  
Interest 7 4  
Depreciation 6 6 -11.3%
Profit before Tax 121 153 26.5%
Other Adjustments      
Tax 48 55  
Profit after Tax/(Loss) 72 98 35.3%
Net profit margin (%) 14.8% 16.3%  
No. of Shares (m) (eoy) 9.2 9.2  
Diluted no. of shares (m) 9.2 9.2  
Diluted Earnings per share* 31.5 42.6  

Though Burroughs Wellcome has an older portfolio of products as compared to Glaxo, the company has an advantage in that lesser number of its brands fall under the Drug Price Control Order. However, what products have led the company's topline growth will only be confirmed at the analysts meet tomorrow.

The company is not being amalgamated with Glaxo primarily due to the fact that payscales at Burroughs are higher than those at Glaxo. While the workers are unwilling to shift to lower payscales, the management is unwilling to increase the payscales overall, to prevalent levels in Burroughs.

The stock quotes at Rs 340 which implies an earning multiple of 8 times of calender year 2000 earnings.

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