Sell Aventis Pharma; target Rs 1937: Angel Broking

"Aventis Pharma (Aventis) reported in-line results at the top-line and net profit fronts for 3QCY2011, led by growth across the domestic and exports market. Domestic sales grew by 11.2% yoy, contributing around 82% to the company’s total revenue; the remaining contribution came in from exports, which grew strongly by 26.6% in 3QCY2011. Given the valuations, we recommend a Sell rating on the stock. Aventis net sales grew by 13.5% yoy to Rs 313 cr for 3QCY2011, in-line with our estimate of Rs 307cr, backed by 11.2% yoy growth in the domestic segment. Export sales grew by 26.6% to Rs 58.8 cr. The company reported gross margin of 48.6%, below our estimate of 50.6%. OPM came in at 16.1%, higher than our estimate of 15.0%. Net profit came in at Rs 55 cr, up 15.9% yoy, lower than our estimate of Rs 51cr."

We expect net sales to post a 13.6% CAGR to Rs 1,401 cr and EPS to register a 15.6% CAGR to Rs 89.7 cr over CY2010–12E. At current levels, the stock is trading at 27.4x and 26.1x CY2011E and CY2012E earnings, respectively. We recommend Sell on the stock with a target price of Rs 1,937," says Angel Broking research report.

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