Motilal Oswal neutral on Aventis Pharmaceutical

2870 Investors following Aventis Pharma. Share this News with them.

0

Like this story, share it with millions of investors on M3

Motilal Oswal neutral on Aventis Pharmaceutical

Motilal Oswal has maintained neutral rating on Aventis Pharmaceutical (AVEN) with a target price of Rs 1838, in its July 28, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Hold Oracle Financial: PPFAS Buy Unichem Labs; target of Rs 176: KRChoksey Reduce Patni Computer; target of Rs 329: KRChoksey ALSO READ See previous views by Motilal Oswal See what other Experts & Brokerages are saying about Aventis Pharma See messages about Aventis Pharma Aventis Pharma BSE | NSE 01/06/12 Are Mutual Funds betting on Aventis Pharma?

Motilal Oswal has maintained neutral rating on Aventis Pharmaceutical (AVEN) with a target price of Rs 1838, in its July 28, 2011 research report.

"Aventis Pharmaceutical's (AVEN) 2QCY11 performance was below our estimates. Net sales grew 11.5% to INR3.03b (against our estimate of INR3.06b), EBITDA de-grew 1.6% YoY to INR428m(against our estimate of INR495m) and adjusted PAT grew 17.2% YoY to INR497m (against our estimate of INR467m). Top-line growth was led by better performance in domestic formulations business (81% of revenue) which grew 12.1% YoY to INR2.44b (in line with our estimate). Exports grew 9% to INR588m against our estimate of INR549m. EBITDA margins declined 190bp to 14.1% (against our estimate of 16.2%) due to higher-than-expected overhead costs. Adjusted PAT was INR497m, higher than our estimate of INR467m, despite EBITDA de-growth due to higher other income (INR361m against our estimate of INR256m). In the past, the company indicated that for the domestic business, the rural and OTC segment would be key growth drivers, and that AVEN was likely to incur some extra expenditure to establish itself in these segments. This is likely to put pressure short-term profitability."

"AVEN will be a key beneficiary of the patent regime in the long term. The parent has a strong R&D pipeline with 55 products undergoing clinical trials, of which 13 are in Phase-III or pending approval and some are likely to be launched in India. However, AVEN's profits declined significantly over the past four years with EBITDA margins declining from 25% in CY06 to 13.2% in CY10, mainly impacted by discontinuation of Rabipur sales in the domestic market, lower export growth and higher staff and promotional expenses. RoE declined from 28.6% to 15.5% over CY06-10. After the lowerthan-expected 2QCY11 performance, we have cut our CY11 EPS estimates by 5.8% and CY12 estimates by 2.6%. Based on our revised estimates, the stock is valued at 28.3x CY11E and 22.8x CY12E EPS. We believe the stock price performance is likely to be muted in the short-term until clarity emerges on future growth drivers. Maintain Neutral for target of Rs 1838," says Motilal Oswal research report.

Bodies Corporate holding more than 50% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment