Brokerage house Firstcall Research is bullish on Pfizer and has recommended buy rating on the stock with a target price of Rs 1107 in its August 28, 2013 research report.
Firstcall's research report on Pfizer
"Pfizer India is one of the major players in the Indian Pharmaceutical industry. The net sales of the company increased by 8.04 percent and net profit slumped by 85 percent. The sale of Animal Health Business to the wholly owned subsidiary of Pfizer Inc for Rs. 4242.80 mn resulted in profit of Rs. 3825.20 mn which was reported as an exceptional item in June quarter results of 2012. Thus profit figures of corresponding quarters are incomparable. In case gain from animal health business is not taken into consideration, profit before tax and exceptional item would have reported an increase of 37 percent in the current quarter. Thus, profit margins have actually improved over the previous year. The company's profit will be impacted by rupee depreciation, high inflation, and low growth in the economy and DPCO price policy in the coming quarters."
"The EBIT of the company has risen by 50.94 percent and other operating income has also increased by 25.5 percent in Q1 FY14 compared to the corresponding quarter in the previous year. The total expenditure has also increased by meager 4.25 percent in the current quarter and the company has no long term and short term borrowings. Pfizer has a market share of 1.9 percent in the Rs. 72000 mn pharmaceutical industry. The current portfolio of the company has well known established brands such as COREX syrup, BECOSULES Capsules and Gelusil. Thus even in this difficult scenario, Pfizer is expected to deliver positive results in the coming quarters and thus we recommend 'BUY' for the scrip."
Outlook and Conclusion: "At the current market price of Rs.1035.00 the stock P/E ratio is at 13.40 x FY14E and 12.80 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.77.26 and Rs.80.87 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 3 percent and 9 percent over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 3.86 x for FY14E and 2.82 x for FY15E. Price to Book Value of the stock is expected to be at 1.60 x and 1.43 x respectively for FY14E and FY15E. We recommend 'BUY' in this particular scrip with a target price of Rs 1107 for Medium to Long term investment," says Firstcall Research report.
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