Target: ₹24,450

CMP: ₹20,243.85

Abbott India Q3FY23 numbers largely in‐line with our estimates, sales grew by 8 per cent YoY (down 6 per cent QoQ) to ₹1,330 crore, mainly driven by strong traction in its key therapies of GI and VMN segment. Major brands i.e Udiliv, Thyronorm, Duphalac, have shown improvement. Better product mix offset by RM cost pressures.

Gross margin contracted 317bps YoY and 163bps QoQ to 43.8 per cent. However, decline in promotional and other overhead cost led to EBITDA margin expansion of 188bps YoY (‐103bps QoQ) at 24 per cent. Absolute EBITDA grew 17.6 per cent YoY (down 7.8 per cent QoQ) to ₹320 crore.

PAT for the quarter grew by 24 per cent YoY (down 7 per cent QoQ) to ₹250 crore. As of now new products account for about 3 per cent growth, which indicates its ability to introduce promising products ahead.

Abbott has expanded its key portfolios and introduced 10 new products in FY22, in therapeutic areas. Having strong set of brands, with highest MR productivity among its domestic peers, and its ability to grow ahead of the market, backed by price increases & new launches. Cash on books also may be utilised for M&A in consumer health and vaccine brands.

Maintain Buy with a revised target price of ₹24,450 ( ₹23,100 earlier).