Buy Novartis India; target of Rs 756: Firstcall Research

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Buy Novartis India; target of Rs 756: Firstcall Research

Firstcall Research is bullish on Novartis India and has recommended buy rating on the stock with a target of Rs 756 in its January 4, 2012 research report.

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Firstcall Research is bullish on Novartis India and has recommended buy rating on the stock with a target of Rs 756 in its January 4, 2012 research report.

"Novartis India (NIL), incorporated in 1947, is a subsidiary of Swiss giant Novartis -- the world's second largest pharmaceutical company. The company finds its origin from three separate entities namely Geigy, Ciba, and Sandoz. Geigy was founded in 1758; Ciba was founded around 1860 and Sandoz was founded in 1886. In the year 1970 Ciba and Geigy merged and formed Ciba-Geigy. Much later in 1996 Sandoz was merged with Ciba-Geigy. Together these three entities became one to form Novartis. Today, Novartis has 115,000 associates working across 140 countries. The company is engaged in manufacturing and marketing of drugs, pharmaceutical products and formulations for consumer healthcare and animal healthcare."

"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.  

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To read the full report click on the attachment