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Hoechst Marion: PBT up 28% - Views on News from Equitymaster
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  • Oct 20, 2001

    Hoechst Marion: PBT up 28%

    Aventis Pharma (formerly Hoechst Marion Roussel) has posted a PBT of Rs 255 m, a rise of 28% for 3QFY02. Sales grew by around 8% fuelled by a strong growth in export business.

    (Rs m) 3QFY01 3QFY02 Change 9mFY01 9mFY02 % Change
    Sales 1,311 1,412 7.7% 3,797 3,802 0.1%
    Other Income 21 26 23.8% 57 81 42.1%
    Expenditure 1,096 1,141 4.1% 3,234 3,097 -4.2%
    Operating Profit (EBDIT) 215 271 26.0% 563 705 25.2%
    Operating Profit Margin (%) 16.4% 19.2% 14.8% 18.5%
    Interest 8 4 -50.0% 28 15 -46.4%
    Depreciation 29 38 31.0% 90 113 25.6%
    Profit before Tax 199 255 28.1% 502 658 31.1%
    Extraordinary Expenses (27) (39) 44.4% (149) 31 -120.8%
    Tax 49 64 30.6% 114 213 86.8%
    Profit after Tax/(Loss) 123 152 23.6% 239 476 99.2%
    Net profit margin (%) 9.4% 10.8%   6.3% 12.5%  
    No. of Shares (eoy) (m) 23 23   23 23  
    Diluted Earnings per share* 21.4 26.4   13.9 27.6  
    P/E (at current price) 15.5   14.9  
    (*- annualised)            

    Domestic pharma sales was driven by strong performance of the company's key brands viz Cardace (61 %), Allegra (51%) and Amaryl (48%). Overall for the nine months, though sales remained flat, profit before tax grew more than 31% on the back of 370 basis points rise in operating margins. The rise in operating margins could be attributed to the restructuring excerise undertaken by the company.

    Though the company currently has been able to command premium prices for its strategic products till date, it would face stiff competition from domestic players for its strategic products as this products mature.The company needs to maintain a flow of new product launches to sustain growth momentum. Considering the past track record it is expected that the parent company would continue to give fast access to its rich product pipeline.

    At the current market price of Rs 410, the stock is trading at 14 times our expected earnings for FY02. The growth in the near future is expected to be fuelled by strategic products identified by the company and benefits from the restructuring excerise. The triggers for the stock in the near term are expected outsourcing by the parent company 6-8 months down the line, growth in strategic new products, further introduction of new products and expected dilution of DPCO.



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