Buy Abbott India; target of Rs 1808: Firstcall Research

Firstcall Research is bullish on Abbott India and has recommended buy rating on the stock with a target of Rs 1808 in its September 18, 2012 research report.

“Abbott India Limited (AIL) is a subsidiary of Abbott Capital India Limited in which the latter holds about 69% stake. It is involved in the discovery, development, manufacture and marketing of pharmaceutical, diagnostic, nutritional and hospital products in India. Abbott India Limited offers products in the areas of pain management and gastroenterology primarily under the 'Brufen', 'Digene', and 'Cremaffin' brand names. In addition, it offers various solutions in the areas of thyroid, obesity, diabetes, and benign prostratic hyperplasia. The company also provides various products in the neurology and psychiatric segments as well as in the field of anesthesiology and neonatology. Abbott India Limited has a network of 18 distribution points, which cater to approximately 11,000 stockists and 70,000 retailers. It was founded in 1944 and is based in Mumbai.”

“Abbott India Ltd is a development, manufacture and marketing of pharmaceutical, diagnostic, nutritional & hospital products in India, reported its financial results for the quarter ended 30th June, 2012. The first quarter witness a healthy increase in overall sales as well as profitability on account of improved efficiencies across a number of operating divisions, favorable product mix and the effect of foreign exchange. The company’s net profit jumps to Rs.295.20 million against Rs.171.00 million in the corresponding quarter ending of previous year, an increase of 72.63%. Revenue for the quarter rose 14.90% to Rs.4118.20 million from Rs.3584.20 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.13.89 a share during the quarter, registering 11.13% increase over previous year period. Profit before interest, depreciation and tax is Rs.501.80 millions as against Rs.313.90 millions in the corresponding period of the previous year.”

“During the quarter the total expenditure rose by 11 per cent mainly on account of increase in Cost of Material Consumed along with consideration of depreciation. Total expenditure in Q1 FY13 was at Rs.3673.20 million as against Rs.3323.40 million in Q1 FY12. Purchase of Stock in Trade is Rs.1805.80 millions against Rs.1804.30 millions in the corresponding period of the previous year. Other Expenditure were at Rs.774.10 million and Cost of Material Consumed are Rs.337.50 million in Q1 FY13 are the primarily attributable to growth of expenditure.”

“Abbott India has signed an agreement to collaborate with Astellas Pharma Global Development in a Phase 3 clinical trial for ASP0113 (TransVax™), an investigational vaccine licensed from Vical Incorporated for preventing cytomegalovirus (CMV) reactivation in transplant patients. The first quarter witness a healthy increase in overall sales as well as profitability on account of powerful combination of exciting products, improved efficiencies across a number of operating divisions and the effect of foreign exchange. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend buy in this particular scrip with a target price of Rs 1808 for medium to long term investment,” says Firstcall Research report.

Shares held by Mutual Funds/UTI

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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

Read More