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.
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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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