Broker’s call: Abbott India (Buy)

Target: ₹18,500

CMP: ₹16,515.60

Abbott India Ltd (AIL) strategy of Going Digital and Services beyond the pill is the key differentiator and game-changer for the company. AIL's continuous endeavour to move from awareness to compliance to lifestyle modification has resulted in its success in the industry.

The above strategy has led AIL's branded business to grow by 1.5x -1.8x of the industry growth, driven by the launch of new products and affordable medicines as well as by the company's direct touch programs.

Its therapy leading products (Brands) and Insulin products comprise 62 per cent and 38 per cent respectively of the overall revenues. '

Additionally, the company has signed an agreement with Novo-Nordisk to market insulin products in the domestic market. We expect Branded businesses' top line and EBITDA to post a CAGR of 12.6 per cent and 13 per cent respectively over FY20-23.

AIL generates steady free cash flow which is 65 per cent of the overall EBITDA based on strong profitability and minimal capex. The parent company incurs all R&D expenses; therefore, AIL has a high asset turnover based on the above factors.