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Knoll Pharma: 3QFY02 PBT rise 26% - Views on News from Equitymaster
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  • Oct 23, 2001

    Knoll Pharma: 3QFY02 PBT rise 26%

    Knoll Pharmaceuticals, subsidiary of Abbot AG, has declared its 3QFY02 report card. While sales have grown by around 3%, operating margins have jumped 240 basis points. Higher operating margins, coupled with interest savings helped to achieve a 26% growth in PBT. However, net profit dropped by 48% due to inclusion of an extraordinary income to the tune of Rs 132 m in the last year from sale of property at Sion, Mumbai. Similarly the first half also had an extra-ordinary income of Rs 161 m on account of profit on sale of mutual fund units.

    (Rs m) 3QFY01 3QFY02 % Change 9mFY01 9mFY02 % Change
    Sales 901 932 3.4% 2,529 2,676 5.8%
    Other Income 25 27 8.1% 92 148 61.1%
    Expenditure 768 771 0.4% 2,139 2,240 4.7%
    Operating Profit (EBDIT) 133 161 20.6% 390 437 11.9%
    Operating Profit Margin (%) 14.8% 17.2% 15.4% 16.3%
    Interest 6 0 -98.2% 14 2 -88.3%
    Depreciation 13 12 -6.3% 39 35 -10.9%
    Profit before Tax 139 175 25.7% 429 548 27.6%
    Extraordinary Income 132   - 293 - -100.0%
    Tax 38 54 41.9% 96 139 44.7%
    Profit after Tax/(Loss) 233 122 -47.8% 626 410 -34.6%
    Net profit margin (%) 11.3% 13.1%   13.2% 15.3%  
    No. of Shares (eoy) (m) 16 16   16 16  
    Diluted Earnings per share* 57.6 30.0   52.2 34.1  
    P/E (at current price) 8.6   7.5  
    (*- annualised)            

    Overall the performance for first nine months is remarkable considering that there was a drop in operating profit in the first quarter on the back of cut in Ibuprofen prices by NPPA in January this year. Ibuprofen is a bulk drug which is used in pain management segment. As Knoll Pharma is a market leader in the Ibuprofen market, the price cut had a severe impact on the company's financials in the first quarter. The jump in operating margins in the current quarter seems to be on the back of upward revision of four formulations of Insulin injection in March. Insulin Vial prices have increased by 22% - 25% since then. Insulin is the biggest revenue churner for Knoll where the company has a market share of close to 60%.

    Abbot Labs had recently made an open offer at Rs 328 per share to the shareholders of Knoll Pharma covering 20% of the company's equity. This follows Abbot's acquisition of Lupharma UK Holding One Ltd. which in turn holds a 51% stake in Knoll Pharmaceuticals.The free float of the company post acquisition is very limited. At the current market price of Rs 257, the stock is trading at a P/e of 7x its FY02 expected earnings.



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