Maintain Neutral on Aventis Pharma - Motilal Oswal

Aventis Pharma: Agreed to exit from JV, Chiron Behring Vaccines with Novartis Vaccines; will receive US$22.4m/~Rs1b; Maintain Neutral

Aventis Pharma has agreed to sell its 49% stake in Chiron Behring Vaccines Pvt Ltd (CBVPL) to its joint venture partner, Novartis Vaccines & Diagnostics Inc.

This was an anticipated development post Aventis stopped marketing Rabipur in India in Feb 2009 after losing the case to Novartis.

We believe that the company can declare a special dividend out of the total consideration of ~Rs1b to be received from the stake sale.

We believe that APL will be one of the key beneficiaries of the patent regime in the long term.

APL's profitability has declined significantly in the last three years, with EBITDA margin declining from 25% for CY06 to 15.2% for CY09. RoE has declined from 28.6% to 17.1% in the same period. The stock is currently valued at 21.1x CY11E and 17.7x CY12E EPS. We believe that stock price performance is likely to remain muted in the short-term until clarity emerges on future growth drivers. Maintain Neutral.

Source : Equity Bulls

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