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New products lead Nicholas' growth

Oct 19, 2000

Nicholas Piramal has reported an above average topline growth of 17% (vis–a–vis the overall domestic pharmaceutical growth of 10.8%) primarily due to introduction of new products such as Rejoint as well as Omnatax and Haemaccel which were acquired from Hoechst Marrion last year. Of the 19% growth in formulation sales in the second quarter almost 9% was from the acquired brands. Vitamin A which contributed around 13% to the company's turnover showed a growth of 10%. Besides, the company has been a beneficiary of the price hike that would yield Rs 40 m in the current year.

(Rs m) 2QFY00 2QFY01 Change
Sales 1229.10 1441.60 17.3%
Other Income 41.90 19.50 -53.5%
Expenditure 1057.70 1209.50 14.4%
Operating Profit (EBDIT) 171.40 232.10 35.4%
Operating Profit Margin (%) 13.95% 16.10%  
Interest 28.70 3.80 -86.8%
Depreciation 24.90 33.40 34.1%
Profit before Tax 159.70 214.40 34.3%
Other Adjustments      
Tax 18.50 29.80 61.1%
Profit after Tax/(Loss) 141.20 184.60 30.7%
Net profit margin (%) 11.49% 12.81%  
Earnings Per Share 16.21 21.19  
(annualised)      

The company's R & D is focussing on five New Chemical Entities of which two are in the cardiovascular segment, one addresses the anti–cancer segment, one addresses the anti–diabetic segment and one for the fungal segment. These are expected to take around one and a half years more before the company reaches the stage of clinical trials.

However, the company's plans to float a US $ 70m –100m ADR issue have been deferred. The resources were to be used for upgrading its research for Mulund and setting up a a clinical research facility. A part of the proceeds was to be used to fund acquisitions both domestic and overseas. The managment was of the view that the company would raise resources via borrowings and tighten working capital management.

The stock quotes a price of Rs 312, which implies an earnings multiple of 14.7 times FY01 earnings.


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