X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Aventis: Bogged by falling exports - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Aventis: Bogged by falling exports
Nov 2, 2010

Aventis has announced its 3QCY10 results. The company has reported 5.8% YoY and 8% YoY growth in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Net sales grow by 6% YoY during 3QCY10 led by the growth in its core pharmaceutical business.
  • Operating margins shrink by 0.5% to 20.6% during the quarter due to higher other expenditure (as percentage of sales).
  • Bottomline grows by 8% YoY during the quarter led by higher other income.


Financial performance: A snapshot
(Rs m) 3QCY09 3QCY10 Change 9mCY09 9mCY10 Change
Net sales 2,775 2,936 5.8% 7,958 8,524 7.1%
Expenditure 2,189 2,331 6.5% 6,058 6,761 11.6%
Operating profit (EBIDTA) 586 605 3.2% 1,900 1,763 -7.2%
EBDITA margin (%) 21.1% 20.6%   23.9% 20.7%  
Other income 99 133 34.3% 273 253 -7.3%
Depreciation 44 53 20.5% 129 143 10.9%
Profit before tax 641 685 6.9% 2,044 1,873 -8.4%
Tax 203 212 4.4% 730 615 -15.8%
Profit after tax/(loss) 438 473 8.0% 1,314 1,258 -4.3%
Net profit margin (%) 15.8% 16.1%   16.5% 14.8%  
No. of shares (m)       23.0 23.0  
Diluted earnings per share (Rs)         66.0  
Price to earnings ratio (x)*         27.6  
* based on trailing 12 months earnings

What has driven performance in 3QCY10?
  • Aventis clocked a 6% YoY growth in sales during 3QCY10. This was led by the strong 15% YoY growth in sales from its core pharmaceutical business. However, further growth was arrested due to the 22% YoY decline in exports, which continues to face volatility. For the nine month period, while sales from the domestic business (excluding ‘Rabipur’) grew by a decent 17% YoY, export sales dipped by 13% YoY. The performance so far on the topline front is in line with our estimates for the full year.

    Revenue break-up
    (Rs m) 3QCY09 3QCY10 Change 9mCY09 9mCY10 Change
    Domestic sales - Others 2,025 2,320 14.6% 5,534 6,469 16.9%
    Domestic sales - 'Rabipur' - -   92 -  
    Total domestic sales 2,025 2,320 14.6% 5,626 6,469 15.0%
    Export sales 560 436 -22.1% 1,747 1,516 -13.2%
    Total 2,585 2,756 6.6% 7,373 7,985 8.3%

  • Operating margins fell by 0.5% to 20.6% during the quarter. This was largely due to a rise in other expenditure from 19.6% in 3QCY09 to 20.9% in 3QCY10 (as percentage of sales). Raw material and staff costs remained under control. As a result, operating profits rose by a mere 3% YoY during the quarter. For the nine month period, operating profits declined by 7% YoY. Operating margins, for the year so far, are also in line with our estimates for the full year.

  • Bottomline growth at 8% YoY was faster than the growth in operating profits on account of higher other income. However, for the nine month period, net profits fell by 4% YoY.

What to expect?
At the current price of Rs 1,820, the stock is trading at a multiple of 20.7 times our estimated CY12 earnings. In the domestic market, Aventis’ strong presence in the fast-growing lifestyle segment along with its focus on strategic brands are expected to be the key growth drivers going forward. Further, the company is incurring expenditure on two projects – the first is to deliver high quality low cost healthcare to the rural population and the second is to enter the OTC (over-the-counter) market. These initiatives will further bolster growth. However, we expect the pressure on margins to continue. Overall, we maintain our view on the stock.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

SANOFI INDIA SHARE PRICE


Sep 25, 2018 (Close)

TRACK SANOFI INDIA

  • Track your investment in SANOFI INDIA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

SANOFI INDIA - MYLAN COMPARISON

COMPARE SANOFI INDIA WITH

MARKET STATS