Buy Abbott India; target of Rs 32700: ICICI Securities

ICICI Securities's research report on Abbott India

Abbott India’s (Abbott) impressive revenue growth of 12.3% YoY in Q3FY25 was ahead of our expectation. As per IQVIA, this may be driven by key brands of Novo Nordisk like Rybelsus and Ryzodeg and owned brands like Duphalac, Udiliv and Thyronorm. Abbott’s superior product portfolio (8 out of top 10 brands are category leaders) and minimal share of products (24% of owned portfolio) under price control help the company in taking timely price increases (6-7% p.a.) which boost its EBITDA margin (90bps YoY rise in 9MFY25). We remain positive on Abbott given its exclusive focus on domestic formulations, strong return profile (RoCE and RoE of 35% each in FY24) and cash rich balance sheet (INR 11.1bn at end-H1FY25). Maintain BUY with TP of INR 32,700, based on 42x FY26E EPS.

Outlook

We maintain our revenue estimates, but cut FY25-26E EBITDA and PAT marginally by 1-2% each to factor in lower gross margin in the quarter. The stock currently trades at valuations of 36.0x FY26E and 31.8x FY27E earnings and EV/EBITDA multiples of 28.6x FY25E and 24.6x FY26E. We maintain BUY rating and target price of INR 32,700, based on 42x FY26E EPS (unchanged). Key risks: Addition of key drugs in NLEM and government intervention.