Novartis India has announced a 6.8% growth in sales and 38% growth in PBT for 1HFY02. Subsequent to completion of the demerger of its agribusiness and amalgamation of Ciba CKD Biochem, the company has recast prior period results. The results are thus comparable on a year to year basis.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Diluted Earnings per share*
P/E (at current price)
Though the topline figures were more or less in line with the growth in domestic pharma market, a spurt of more than 1000 basis points spurt in operating margins in 2QFY02, comes as a pleasant surprise. The improvement in operating margins was on the back of new product introductions, a sharp drop in purchase price of pharma products, and closure of its loss making ciba vision business. Though the company's top brand Voveran (an anti-inflammatory) witnessed a degrowth, sales were up due to four new products recently launched by the company.
% of sales
Purchase of finished goods
The company has also disclosed it segmental information for 1HFY02 as shown in the table below. Though on a smaller base, both consumer healthcare and animal healthcare business have grown at healthy rates. However, high marketing & sales expenses and stiff competition has impacted margins in consumer healthcare division.
Table Showing Segmentwise operating margins
Animal Healthcare Business
* Profit before interest and tax
At the current market price of Rs 202, the stock trades at 12 x its annualised earnings for 1HFY02. The results of the restructuring excerise undertaken by the company is evident in current results. It seems that though would be able to maintain its margins going forward, due to its presence in niche speciality segments the topline is clearly dependent on new product introductions. However, the parent company seems uncomfortable launching new products until patent protection becomes a reality in India.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407