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Home Abbott India – Stock For the Month of September 2018

Abbott India – Stock For the Month of September 2018

Price: Rs. 8611

Abbott India (“Abbott India” or the “Company”) is one of India’s fastest-growing pharmaceutical companies. The Company provides products across various therapeutic categories such as Women’s Health, Gastroenterology, Central Nervous System (CNS), Metabolics, General Care, Vitamins, Vaccines, etc.

Abbott India owns a portfolio of 110 brands and a manufacturing site at Goa and over 40 third party manufacturers.

 The Company operates mainly in the Gastro-Intestinal (GI), Vitamins & Minerals, Neuro, Gynaecological and Hormones domain (~90% of domestic revenues as per AIOCD MAT Mar 2018). Abbott India also distributes Novo Nordisk’s insulin products in India. Insulin comprise 40-45% of Abbott India’s business

Business Divisions

Brands

Women’s Health & Gastrointestine (WH & GI)

Duphaston | Udiliv Cremaffin | Duphalac | Creon | Heptral

Specialty Care (Metabolics and Central Nervous System)

Thyronorm | Vertin Prothiaden

GenNext and Vaccines

Zolfresh | Influvac | Enteroshield | Brufen Arachitol Nano

Consumer Care

Digene | Citrosoda | Rashfree

Financial Position

Particulars

FY14

FY15

FY16

FY17

FY18

Revenue (In Rs. Cr.)

2,296.89

2,288.65

2,614.50

2,902.56

3,298.50

Growth

-0.36%

14.24%

11.02%

13.64%

EBITDA (In Rs. Cr.)

268.35

312.26

364.38

397.32

524.50

EBITDA Margin

11.68%

13.64%

13.94%

13.69%

15.90%

PAT (In Rs. Cr.)

198.45

228.96

255.25

276.65

401.22

PAT Margin

8.64%

10.00%

9.76%

9.53%

12.16%

EPS (In Rs.)

93.39

107.75

120.12

130.19

188.81

Historic P/E (Closing Price of 31stMar)

18.77

36.64

39.19

35.63

28.86

Current P/E Ratio

45.51

 

 

 

 

Shareholder funds (In Rs. Cr.)

787.85

937.53

1,195.60

1,386.94

1,692.76

Minority Interest (In Rs. Cr.)

0.00

0.00

0.00

0.00

0.00

Debt (In Rs. Cr.)

0.00

0.00

0.00

0.00

0.00

Cash (In Rs. Cr.)

462.84

643.89

839.42

1,090.92

1,031.35

Ratios

D/E

0.00

0.00

0.00

0.00

0.00

Interest Coverage

3354.38

624.52

144.60

194.76

137.30

ROCE

34.06%

33.31%

30.48%

28.65%

30.98%

ROE

25.19%

24.42%

21.35%

19.95%

23.70%

INVESTMENT RATIONALE

Market Leader in Most of the Categories

Abbott India’s top 10 brands together recorded revenue CAGR of 17%. The Company’s top 10 brands are leaders (at number 1 or 2 position) in their respective segments.

PERFORMANCE OF TOP 10 BRANDS

Brand

Market Share

Rank

Duphaston

24.3%

1

Thyronorm

51.7%

1

Udiliv

15.1%

2

Vertin

29.8%

1

Cremaffin

9.5%

2

Duphalac

13.7%

1

Digene

14.4%

1

Influvac

51.4%

1

Creon

34.8%

1

Prothiaden

7.3%

1

The Company is a leading player in the thyroid segment and has over 50% market share through its flagship brand Thyronorm which has grown by 60% despite under price control. Abbott India’s other major brand Duphaston for gynaecological usage is performing well and has grown by 31%.

The Company currently markets over 110 brands in India and is present in metros and Tier I and Tier II cities and has no plans to enter the rural market.

New Product Launches

The Company continues to launch new products in various categories to expand its portfolio. In FY 2018, the Company launched 21 new products / product extensions. Abbott India plans to launch 20 new products in FY 2019 and 100+ products over next five years which is expected to provide further growth opportunities.

Abbott India

Robust Earnings Growth Driven by Better Product Mix

In FY18, Abbott India revenues increased 13% to Rs. 3298 Cr. Main contributors to the revenue were women’s health (+19%), metabolics (+15%), gastroenterology (+11%), central nervous system (CNS +8.8%).

Strong Balance Sheet, Debt-Free Cash Rich Company

Abbott India is a debt-free company and has seen its core ROEs improving from 42.6% in FY 2014 to 49.2% in FY 2018. Continued new product launches, volume led growth in Abbott India’s top brands and intermittent price hikes in its portfolio provide comfort on return ratios that are healthy.

The Company has maintained dividend payout in the range of 30% in the past 5 years and has cash per share of Rs. 485 in FY 2018.

INVESTMENT CONCERNS

24% of Abbott India’s portfolio falls under National List of Essential Medicines (NLEM).

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About the Author

Rajat Sharma pictureRajat Sharma is a well known stock market analyst and commentator. He has covered Indian markets for over a decade and is regarded for consistently identifying early stage investment opportunities. Attorney by qualification, Rajat has done extensive work for improving corporate governance and disclosure standards.