Buy Novartis India; target Rs 756: Firstcall Research

“Novartis India Limited engages in the discovery, development & marketing of prescription medicine in India and internationally. It operates in four segments: Pharmaceuticals, Generics, OTC, and Animal Health. During the quarter ended, the robust growth of revenue is increased by 9.71% Rs 2150.70 million. Net Sales and PAT of the company are expected to grow at a CAGR of 12% and 17% over 2010 to 2013E respectively. Company earns nearly 68% of revenue from Pharmaceuticals segment only. The company is based in Mumbai, India. Novartis India Ltd. operates as a subsidiary of Novartis AG.”

“Novartis India has posted decent standalone earnings for the quarter ended Sept 30, 2011. During the quarter, net profit of Rs 431.80 million for the quarter ended Sept. 30, 2010 as compared to Rs 405.60 million for the quarter ended Sept. 30, 2010, rising 6.46%. Net sales for the quarter are surged by 9.71% to Rs.2150.70 million from Rs.1960.40 million for the same quarter previous year. Total income for the quarter is increased by 10.29% to Rs.2333.70 million same quarter corresponding year. Company’s EPS is increased by 22.04% to Rs.13.51 for the quarter ended Sept 30, 2011.”

“At the current market price of Rs.669.00, the stock is trading at 12.96 x FY12E and 11.45 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.51.63 and Rs.58.42 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 12% and 17% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 8.55 x for FY12E and 7.59 x for FY13E. Price to Book Value of the stock is expected to be at 2.46 x and 2.03 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 756 for Medium term investment,” says Firstcall Research report.

Public holding more than 90% in Indian cos

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