2025-11-14 23:32:47
Latest Post
BEL receives orders worth Rs. 871Crore
Rossell Techsys Recognized as Outstanding Supplier by Lockheed Martin
660 MW Unit-1 of SJVN's Buxar Thermal Power Project Successfully achieves Commercial Operation
Adani Cement is the First Indian Cement Company to become a TNFD Adopter
Liberty General Insurance Launches Surety Insurance Business in India
Research
Elder Pharma - Q3FY12 Result update - Centrum
Posted On : 2012-02-21 20:10:44( TIMEZONE : IST )
Buy
Target Price: Rs462
CMP: Rs347
Upside: 33.2%
Good growth in domestic business
Elder Pharma's (EPL) Q3FY12 results were in line with our expectations. The company's revenue grew by 36%YoY, EBIDTA margin declined by 190bps and net profit grew 16%YoY. The company is expected to report good growth from new product introduction in the domestic market, entry into new geographies and breakeven of NeutraHealth, UK during the year. As per IMS MAT data, the company's domestic business grew by 17.8% against market growth of 14.9%. We reiterate Buy rating on the scrip and maintain the target price of Rs462 (based on 9x FY13 EPS).
- Good sales growth in domestic business: EPL's domestic business grew by 23%YoY from Rs2.10bn to Rs2.57bn due to good growth across segments. The Women's Healthcare segment grew by 14%YoY, Neutraceuticals by 20%, Wound and Pain management by 13%, Anti-infective by 20% and Lifestyle segment by 16% during the quarter. EPL's consolidated sales grew by 36%YoY from Rs2.52bn to Rs3.44bn.
- Margin declines by 190bps: EPL's EBIDTA margin declined by 190bps from 17.9% to 16.0% due to the increase in material cost and personnel expenses. The decline in margin is attributed to the integration of low margin NeutraHealth, UK and Biomeda, Bulgaria. The company's material cost increased by 290bps from 51.8% to 54.7% of total revenues due to the change in product mix and increase in cost of imported raw materials due to rupee depreciation. Personnel expenses increased by 320bps from 11.2% to 14.4% of total revenues due to the additional manpower at its new manufacturing facility. Other expenses declined by 420bps from 19.2% to 15.0% of total revenues due to the rationalization of selling expenses. The company's net profit before EO items grew by 16%YoY from Rs171mn to Rs198mn.
- New product to drive growth: EPL has introduced the following new products in Q3FY12: Meny (meropenem), Meny Plus (meropenum+sulbactam), Formic-OF(cefixime+ofloxacin), BFX (balofloxacin), Vagisil (in-licensed from Combe, US) and Chymoral - AP (trypsin+chymotrypsin+aceclofenac+paracetamol). EPL generated sales of Rs20mn from these products during the quarter. EPL has launched 14 new products in FY13. These are expected to be the future growth drivers for the company as they are new generation products.
- NeutraHealth likely to break even: EPL's 100% subsidiary NeutraHealth, UK reported sales of Rs740mn and loss of Rs3mn for the quarter. It is expected to break even in Q4FY12. EPL's 92.2% subsidiary Biomeda, Bulgaria reported sales of Rs140mn and loss of Rs12mn in the quarter. Biomeda is expected to break even by the end of FY13.
- Flagship brand Shelcal doing well: As per IMS MAT-Dec'11 data, Shelcal has reported sales of Rs1.2bn and growth rate of 23.5%. Its line extension, Shelcal-CT reported sales of Rs340mn and grew at 16.6% during the same period. We expect Shelcal brands to reach revenues of Rs2.0bn during FY13.
- Reiterate Buy: We have maintained our EPS estimates for FY12 and for FY13 at Rs41.1 and Rs51.3 respectively. We expect the company to benefit from good growth from new product introductions in the domestic market, strong performance of Shelcal brand and expected break even of NeutraHealth, UK. At the CMP of Rs347, the stock trades at 8.4x FY12E EPS of Rs41.1 and 6.8x FY13E EPS of Rs51.3. We reiterate Buy rating with a target price of Rs462 (based on 9x FY13E EPS).
