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Centrum Broking
Abbott India (Add)
CMP: ₹7,695.95
Target: ₹8,410
Abbott India Q4FY19 revenues and EBIDTA were in line with our expectation due to strong growth of its major brands. However, net profit was lower than our expectation due to lower other income. Abbott India posted 15 per cent y-o-y growth in revenues to ₹906 crore as major brands namely Duphastone, Udiliv, Vertin, Duphalac and Influvac continue to demonstrate strong growth potential, despite being among matured brands portfolio.
The company’s EBIDTA margin grew by 340 bps y-o-y to 16.9 per cent from 13.5 per cent y-o-y due to lower personnel cost and decline in other expenses. Abbott’s tax rate declined to 35.9 per cent from 37.1 per cent y-o-y of PBT. Net profit grew by 13 per cent y-o-y to ₹113.2 crore from ₹100.1 crore. The management has indicated about 20 new product addition per annum which will help to improve revenues and profitability. Also, the marketing of Bharat Biotech vaccines is expected to improve margins.
We value Abbott at 26x FY21E EPS, with ‘Add’ rating and target price of ₹8,410.
Risks: Key risks to our call include slowdown of the domestic pharma market and the company’s additional brand coming under price control.
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