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Thursday, April 9, 2009

Pfizer India - Healthy Stock To Invest In From Pharmaceutical Sector

Pfizer India Ltd has a market share of 2.2%, and is currently ranked 14th (ORG-IMS MAT Dec. 2008) after the divestment of 4brands of the Consumer Health portfolio to M/s. Johnson & Johnson Ltd.

The company has reported earnings results for the full year ended November 2008. For the year, the net sales grew marginally from Rs.6726.6 million in the previous year to Rs.7006.1 million. The company has achieved growth despite the sale of four Consumer Healthcare Brands to M/s. Johnson & Johnson Limited. The Com-pany has achieved a net profit of Rs. 2991.2 million as compared to Rs.3389.3 million for the previous year showing a decline of 11.75%. This decline is due to the impact of other income and exceptional items in the pre-vious year and the year under review respectively.

The company posted excellent financial figures for the quarter ended Febru-ary 2009. The net sales for the company gone up by 26.51% to Rs 1902.40 million for the Q1FY09 as against the net sales of Rs 1503.70 million for the Q1FY08. The company posted the EBITDA of Rs 436.40 million for the Q1FY09 as against the EBITDA of Rs 315.70 million for the Q1FY08 with the growth rate of 38.23%. The operating profit margin for the company stood at 22.94% for the Q1FY09 as against the operating profit margin of 20.99% for the Q1FY08, clearly showing the strength of the company.

The net profit for the company rose to Rs 390.10 million for the Q1FY09 in comparison to net loss of Rs 192.90 million for the Q1FY08. The net profit margin stood at 20.51% for Q1FY09. The EPS for the company stood at Rs 13.07 for the quarter ended in February 09 versus the negative EPS of Rs 6.46 for the quar-ter ended February 08. The EPS on TTM (Trailing twelve months) stood at Rs 48.67 for the company.

Market Cap: 1,792.72
EPS (TTM): 48.67
P/E: 12.34
P/C: 11.46
Book Value: 301.45
Price/Book: 1.99
Div(%): 125.00
Div Yield(%): 2.08
Market Lot: 1.00
Face Value: 10.00
Industry P/E: 12.28


Valuation
The company has posted the compounded annual growth rate of 48.42% in bottom line in last four years and is expected to maintain its growth in coming years. The company was well placed to benefit from the growth of Indian Pharmaceutical market, that is expected to grow at 11- 12%. It is expected to be valued at $20 billion by 2015. Pfizer current portfolio includes some of India’s best known brands within the pharmaceutical industry. These brands have stood the test of time and even today are growing from strength to strength.

In addition, the Company has in-creased focus on launching new brands. Four new brands were launched in 2008 viz., Champix, Cyclokapron, Acupil and Trulimax. A new indica-tion of Lyrica in Fibromyalgia was also launched. Focus on Institutional and Retail sales has also considerably increased. This would significantly improve its financial performance over the next few years. The stock at the current market price of Rs 597 will trade 12.27 times to its earnings of Rs 48.67 (TTM) and 1.90 times to its book value of Rs 314.52 and is ex-pected to provide huge upside potential in long – term.

We initiate a ‘BUY’ signal on the stock at the current levels with a target of Rs 935 in the long -term investment horizon with an appreciation of 56.62%.

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