Centrum Broking

Abbott India (Buy)

Target: ₹21,225

CMP: ₹14,522.20

Abbott India (AIL) Q3-FY21 earnings were below our estimates. Revenue growth was lower than estimates while margin expansion continued to drive earnings. Revenue for the quarter were flat at ₹1,050 crore while company continues to grow faster in covered market over 9M.

Gross profit margin expanded by 73 bps y-o-y to 45.3 per cent as better product mix and price growth continues to support the earnings. The other expenses indicate improved activity on ground which we believe should reflect in better growth trajectory going ahead. We have seen meaningful recovery in market share of Duphaston as the segment recovers. All the leading brands on secondary data continue to show strong double digit growth. We believe the strong product basket and recent launches on strong marketing platform would continue to deliver strong market beating growth for AIL over coming years. The core leading brands/segments for AIL have been posting growth upwards of 11 per cent, and we expect this growth rate would sustain and improve post the pandemic environment as well. We expect AIL to sustain delivering market beating growth 2-3 per cent ahead of IPM, including the new launches support as well. A focused drive to improve the operational efficiencies, cost reduction and positive product mix would result in margin improvement. We value AIL with 41x FY23E EPS of ₹517 with buy rating and TP of ₹21,225

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