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SBCH: Malt powered performance

Jul 27, 2001

Malted beverage major, SmithKline Beecham Consumer Healthcare (SBCH), has posted impressive growth in the second quarter. In 2QFY02, the company has declared a 45% growth in bottomline. What is even more interesting is that its topline has shown a growth of 17.5%.

(Rs m) 2QFY01 2QFY02 Change 1HFY01 1HFY02 Change
Net sales 1,805 2,121 17.5% 3,531 4,273 21.0%
Other Income 55 70 27.1% 165 153 -7.3%
Expenditure 1,465 1,627 11.1% 2,932 3,374 15.1%
Operating Profit (EBDIT) 341 494 45.1% 600 900 50.1%
Operating Profit Margin (%) 18.9% 23.3%   17.0% 21.1%  
Interest (net) 14 (8)   36 16 -56.3%
Depreciation 36 34 -5.3% 73 67 -8.2%
Profit before Tax 346 538 55.6% 656 970 47.9%
Tax 68 135 99.4% 152 257 69.6%
Extraordinary expenses         24  
Profit after Tax/(Loss) 278 403 44.9% 504 688 36.6%
Net profit margin (%) 15.4% 19.0%   14.3% 16.1%  
No. of Shares (eoy) (m) 45.4 45.4   45.4 45.4  
Diluted Earnings per share* 24.5 35.5   22.2 30.3  
*(annualised)            
Current P/e ratio   12.2     14.3  

However, the relatively high growth percentage in sales clocked in 2QFY02 should be reviewed against last year's reported results for the corresponding period, which were influenced by subdued trading.

SBCH improved its operating margins by a significant 440 basis points. Its advertising expenses declined by 12% during the quarter to Rs 152 m. This and a 27% jump in other income helped the company post an impressive 45% growth in bottomline, despite the tax provisioning nearly doubling.

On a consolidated half yearly basis, SBCH's topline has grown by 21% and its bottomline by 37%. The performance indicates the stability of SBCH's growth.

On the current price of Rs 435 the stock trades at a P/e multiple of 15 times our projected earnings for FY02. The company's market cap to sales comes to about 2.3 times. The stock has already risen 10% since its 1QFY02 results. Going forward, the stock is likely to see a further upside based on the company's attractive valuations.


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