Result Update

Institutional Research
India I Pharmaceuticals
02 September, 2020

Abbott India BUY

Price: Rs16,460
Growing amid lockdown Target Price: Rs19,200
Forecast return: 16%
Abbott India (AIL) Q1FY21 earnings came ahead of our estimates as the marketing Market Data
platform and early digital focus would have enabled smooth operations. Revenue for Bloomberg: BOOT IN
the quarter grew 7% YoY/ 11% QoQ to Rs 10.46bn largely due to chronic/ sub-chronic 52 week H/L: 18,522/9,073
basket. It is the only MNC posting mid-single digit growth. Gross profit margin Market cap: Rs348.5bn
expanded by 50bps YoY to 42.7% vs. 42.2% in Q1FY20 vs. 43.9% in Q4FY20 as product
Shares Outstanding: 21.2mn
mix was tilted due to lockdown scenario. There was some inflation at raw material
Free float: 24.6%
level as it was higher by 9% YoY/ 8% QoQ. The lower promotional and travel expenses
Avg. daily vol. 3mth: 17,699
reduced the other expenses by 36% YoY/ 39% QoQ to Rs 923mn. All this led to higher Source: Bloomberg
EBITDA margins for the quarter at 22% vs. 17% YoY vs. 14% QoQ. We value AIL with
43x FY22E EPS of Rs 442 with buy rating and TP of Rs 19,200. Changes in the report
Rating: Unchanged
Major brands have aided revenue growth
Target Price: Rs19200 from Rs18500
AIL reported 7% YoY growth in revenue in Q1 at Rs 10.46bn from Rs 9.98bn as major
EPS: FY21E 1.9% and FY22E 4.4%
brands: Mixtard, Thyronorm, Udiliv, Vertin, and Duphalac continue to maintain robust Source: Centrum Broking
market share and demonstrate strong growth potential. Also, Digene has been growing
much faster (15.3% MAT Jun20) while Novo’s insulin Ryzodeg continues to reflect strong Shareholding pattern
Jun-20 Mar-20 Dec-19 Sep-19
growth traction (24.5% MAT Jun20). Duphaston saw slower growth at 5.1% MAT Jun20.
Promoter 75.0 75.0 75.0 75.0
AIL has 21 brands that appear in the list of top 300 brands. Approximately, 24% of core
FIIs 1.3 1.6 1.8 1.7
revenue comes under price controlled products. Company launched 21 new products in
DIIs 5.1 5.1 5.3 5.9
FY20 including line extensions.
Public/other 18.6 18.2 17.9 17.5
EBITDA margin increased 500bps YoY in the quarter
Source: BSE
Revenue for the quarter were higher 7% YOY to Rs 10.5bn and is the only MNC to register
high-mid-single digit growth. The gross profit expanded to 50bps to 42.7% for the quarter Centrum estimates vs Actual results
while the core gross margins were around 69% for the quarter. Employee cost increased in YE Mar Centrum Actual Variance
(Rs mn) Q1FY21 Q1FY21 (%)
tandem with revenue growth. Other expenses reduced by 36% YoY and was down 39%
Revenue 10,189 10,643 4.5%
sequentially to Rs 923mn due to lower promotional and travel expenses. All this pushed
EBITDA 2,262 2,611 15.4%
EBITDA to Rs 2.33bn, growing by 34% YoY/ 69% QoQ and EBITDA margins stood at 22% vs.
EBITDA margin 21.6 24.5 290bps
17% Q1FY20 vs. 14% Q4FY20. (%) Income
Other 285 276 -3.1%
AIL derives 32% core margin excluding the Insulin portfolio
Interest 19 45 134.2%
Assuming similar contribution from the Insulin segment the core EBITDA margins for
Depreciation 150 141 -6.0%
Q1FY20 stood at 32% and core gross margins around 69%. We look forward to the core
PBT 2,093 2,701 29.1%
brands growth as new introduction in Women’s healthcare and GI segment followed by
Tax 557 622 11.7%
vaccines continues to look impressive.
Rep. PAT 1,536 2,080 35.4%
Valuations and Risk
Adj. PAT 1,536 2,080 35.4%
The core leading brands/segments for AIL have been posting growth upwards of 20%, and Source: Bloomberg, Centrum Broking
our understanding is this growth rate would sustain in near future post the pandemic
environment as well. We expect company to post revenue growth ahead of IPM 2-3%,
including the new launches support as well. A focused drive to improve the operational
efficiencies, cost reduction and positive product mix would result in margin improvement.
Considering margins outperformance, we have upgraded our earnings for FY21E and FY22E
by 2% and 4%, respectively. At CMP of Rs 16,460, the stock trades at 47.6x FY21E EPS of Rs
349.3 and 37.6x FY22E EPS of Rs 442. We value AIL with 43x FY22E EPS of Rs 442 with buy
rating and TP of Rs 19,200. Key risks to our call include slowdown of the domestic pharma
market and the company’s additional brand coming under price control.
Financial and valuation summary
YE Mar (Rs mn) 1QFY21A 1QFY20A YoY (%) 4QFY20A QoQ (%) FY20A FY21E FY22E
Revenues 10,643 9,989 6.5 9,612 10.7 40,931 45,394 51,917
EBITDA 2,611 2,038 28.1 1,666 56.7 7,564 9,524 12,003
EBITDA margin (%) 23.9 19.8 20.7 16.8 42.0 18.5 21.0 23.1
Adj. Net profit 1,804 1,169 54.2 1,110 62.5 5,915 7,422 9,396
Adj. EPS (Rs) 8.5 5.5 54.2 5.2 62.5 278.3 349.3 442.1
Pharmaceuticals

EPS growth (%) 31.3 25.5 26.6

PE (x) 59.8 47.6 37.6
EV/EBITDA (x) 43.8 34.9 27.5
Cyndrella Carvalho
PBV (x) 14.5 14.0 12.5
Analyst, Pharmaceuticals
RoE (%) 26.6 29.9 35.0 +91-22-4215 9643
RoCE (%) 26.9 30.2 35.3 cyndrella.carvalho@centrum.co.in
Source: Company, Centrum Broking
Please see Disclaimer for analyst certifications and all other important disclosures.
Abbott India 02 September, 2020

Thesis Snapshot
Estimate revision Valuations
FY20E FY20E FY21E FY21E We value AIL (Higher to GSK multiple) at 43x FY22E EPS of Rs 442 with Buy
YE Mar (Rs mn) % chg % chg
New Old New Old rating and target price of Rs 19,200. At CMP of Rs 16,460 , the stock trades
Sales 45,394 45,394 0.0% 51,917 51,240 1.3% at 47.6x FY21E EPS of Rs 349 and 37.6x FY22E EPS of Rs 442.
EBITDA 9,524 9,342 1.9% 12,003 11,480 4.6%
Valuations
EBITDA margin (%) 21.0% 20.6% (60)bps 23.1% 22.4% 70bps
EPS FY22E Rs442
Adj. PAT 7,422 7,287 1.9% 9,396 8,996 4.4%
PER FY22E 37.6x
Diluted EPS (Rs) 349 343 1.9% 442 424 4.4%
Source: Centrum Broking
P/E mean and standard deviation
Abbott India versus NIFTY 50
1m 6m 1 year
BOOT IN 6.5 7.5 80.8
NIFTY 50 3.6 3.0 4.1
Source: Bloomberg, NSE

Key assumptions
YE Mar (Rs mn) FY20 FY21E FY22E
Revenue growth % 11.3% 11.1% 14.1%
Material cost (%) 56.6% 55.2% 53.4%
Source: Centrum Broking

EV/EBITDA mean and standard deviation

Source: Bloomberg, Centrum Broking

Peer comparison
Mkt Cap CAGR FY20-FY22E (%) PE (x) EV/EBITDA (x) RoE (%)
Company
Rs mn Sales EBIDTA PAT FY20 FY21E FY22E FY20 FY21E FY22E FY20 FY21E FY22E
Abbott India 349,775 12.6 26.0 26.0 59.1 47.1 37.1 43.3 34.5 27.2 26.6 29.9 35.0
Glaxo SK Pharma 266,654 9.8 21.4 32.3 57.9 33.7 33.1 38.7 23.5 23.9 23.3 39.7 34.1
Sanofi* 186,433 2.6 4.3 8.4 39.4 38.1 33.5 28.0 46.7 37.6 20.3 21.2 24.0
Pfizer 213,101 8.1 17.3 14.9 45.8 29.4 30.8 33.3 28.1 21.9 14.5 23.0 25.9
Source: Company, Centrum Broking, *December ending

Centrum Institutional Research 2

Abbott India 02 September, 2020

Exhibit 1: Major Products & their Brands

Apr'20 May'20 Jun'20 Jun-20 MAT
SSA IQVIA Therapy
Rs mn Category Growth Growth Growth Growth
Value M.S. (%) Value M.S. (%) Value M.S. (%) Value M.S. (%)
(%) (%) (%) (%)
Abbott 6,773 2.0 3.2 1,883 1.9 6.0 6,773 6.5 7.0 80,281 6.4 5.4
IPM 95,578 -8.8 96,924 -4.3 1,05,079 8.6 12,62,746 7.5
MIXTARD Anti-diabetic 671 70.0 21.0 563 58.0 -1.5 611 58.0 12.3 6,919 55.0 9.9
NOVOMIX Anti-diabetic 343 36.0 2.6 271 28.0 -20.6 310 29.0 0.5 3,777 30.0 3.3
THYRONORM Thyroid hormone 333 35.0 9.0 318 33.0 3.4 333 32.0 13.6 3,754 30.0 11.8
DUPHASTON Gynaecological 245 26.0 -12.7 229 24.0 -15.4 215 20.0 -11.1 2,942 23.0 5.1
UDILIV Cirrhosis of liver 190 20.0 -0.5 196 20.0 2.6 217 21.0 24.3 2,364 19.0 11.4
RYZODEG Anti-diabetic 175 18.0 4.2 213 22.0 21.1 176 17.0 9.6 2,238 18.0 24.5
NOVO RAPID Anti-diabetic 174 18.0 16.0 146 15.0 -2.2 143 14.0 2.1 1,814 14.0 8.8
VERTIN Antiemetic 154 16.0 8.1 155 16.0 15.0 172 16.0 34.6 1,759 14.0 17.6
ACTRAPID Anti-diabetic 152 16.0 20.8 128 13.0 -2.4 138 13.0 11.3 1,614 13.0 12.9
DUPHALAC Laxative 138 14.0 13.5 146 15.0 24.8 161 15.0 42.4 1,574 12.0 11.8
DIGENE Antacid 137 14.0 11.9 136 14.0 18.2 137 13.0 25.6 1,415 11.0 15.3
CREMAFFIN PLUS Laxative 106 11.0 14.6 112 12.0 18.0 118 11.0 34.6 1,233 10.0 17.8
EPTOIN Anti-epileptic 102 11.0 7.6 92 9.0 0.8 87 8.0 2.3 1,095 9.0 8.1
CREMAFFIN Laxative 85 9.0 -4.3 96 10.0 9.1 98 9.0 24.7 1,072 8.0 10.7
TRESIBA Anti-diabetic 95 10.0 10.9 77 8.0 -11.2 79 8.0 0.1 1,043 8.0 11.5
NOVOFINE Anti-diabetic 51 5.0 -63.9 48 5.0 -63.5 55 5.0 -55.4 779 6.0 -49.5
ZOLFRESH Sedative 60 6.0 6.1 64 7.0 17.5 66 6.0 24.5 695 6.0 10.5
PROTHIADEN Anti-depressant 61 6.0 -1.0 61 6.0 6.1 63 6.0 25.7 685 5.0 3.0
Source: IQVIA (IMS) Monthly Data- Jun’20

Exhibit 2: Quarterly Financials

YE March (Rs bn) Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
Revenues 8,449 9,797 9,477 9,063 9,989 10,548 10,783 9,612 10,643
Materials cost 4,759 5,599 5,486 5,042 5,600 6,018 5,982 5,556 6,100
% of revenues 56.3% 57.2% 57.9% 55.6% 56.1% 57.1% 55.5% 57.8% 57.3%
Employee cost 1,147 1,052 1,063 1,093 1,202 1,206 1,190 1,163 1,285
% of revenues 13.6% 10.7% 11.2% 12.1% 12.0% 11.4% 11.0% 12.1% 12.1%
Others 1,429 1,207 1,462 1,399 1,445 1,282 1,213 1,509 923
% of revenues 16.9% 12.3% 15.4% 15.4% 14.5% 12.2% 11.3% 15.7% 8.7%
EBITDA 1,114 1,939 1,466 1,529 1,742 2,041 2,397 1,384 2,611
EBITDA margin (%) 13.2% 19.8% 15.5% 16.9% 17.4% 19.4% 22.2% 14.4% 24.5%
Depreciation & amortisation 40 40 40 49 148 150 151 148 141
Interest expenses 6 5 4 8 20 18 19 28 45
Other income 218 245 376 294 296 289 278 281 276
Exceptional items - - - - - - - - -
PBT 1,286 2,139 1,798 1,766 1,870 2,163 2,506 1,489 2,701
Taxes 462 763 628 634 700 379 639 380 622
Effective tax rate (%) 35.9% 35.7% 34.9% 35.9% 37.4% 17.5% 25.5% 25.5% 23.0%
PAT 824 1,376 1,170 1,132 1,169 1,783 1,867 1,110 2,080
Minority/Associates - - - - - - - - -
Reported PAT 824 1,376 1,170 1,132 1,169 1,783 1,867 1,110 2,080
Source: Company, Centrum Research

Centrum Institutional Research 3

Abbott India 02 September, 2020

Highlights from the Annual Report 2019-20

Speech Highlights of Anil Joseph, MD Abbott India
 Anil Joseph became the MD effective from 1st July 2020, taking over from Ambati Venu
who is now elevated to Non-Executive Director.
 Continue to leverage the existing strengths and in being able to strike a balance
between accessibility and high-quality medicines to create holistic solutions.
 Nurture newer strengths to help scale even more heights in the new normal that is
shaping up.
 Driven to expand the portfolios across its offerings and strengthening the brand equity
through contemporary means of engaging with the customers and end-users.
 It is imperative to depend not only on the leading brands but also on the differentiated
business capability to remain one of the leading healthcare companies in India.
 Strengthening digital ecosystem and upgrading technological capacities will remain key
to the processes.
 Anticipate another year of good growth and stable operations. However need to
commit to finding creative solutions to challenges known and unknown.

Speech Highlights of Ambati Venu, Non-Executive Director

Abbott India
 Ambati Venu was the MD until 29th Feb 2020, post which he was elevated to Non-
Executive Director.
 Able to clock impressive results once again with total revenue at Rs 42bn, growing at
11% YoY and net profit growing by 31.7% YoY.
 In hindsight not only the company has been able to restructure and redesign business
as per the need of the hour but also continue to pioneer healthcare innovations.
 Aim is to improve health outcomes across the continuum of care comprising
awareness, diagnosis, treatment and compliance.
 Added 21 new products to the portfolio during the year.
 16 brands out of the company’s top 20 brands continue to dominate market share.
 One of the company’s oldest brands, Cremaffin, became the newest entrant into OTC
category.
 Introduced India’s only sub-unit quadrivalent flu vaccine during the year.
 Pioneered the launch of a division focusing on menopausal health – the Miliana
division.
 Femoston, provides the opportunity to reach out to patients in the pre-and post-
menopause phase.
 Added global products – Duphalac Bears and Duphalac Chews to the portfolio, catering
to a niche audience for their gastrointestinal needs.

Management Discussion and Analysis

Industry Review
 As per IQVIA, IPM is estimated at Rs 1.49tn, grew by 2% YoY.
 Acute therapies dominate IPM with 64% of the total sales.
 Chronic segment shows faster growth of 10.9% as compared to 7.9% for acute
therapies (3 year CAGR).
 The domestic pharmaceutical market is highly fragmented with the top 10 companies
making up 43% of the share, and the top 150 companies accounting for 96% of share.

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Abbott India 02 September, 2020

 As per National Indian Promotion Agency, India is the largest producer of generic
medicines and vaccines, occupying 20% volume share in generics and 62% in vaccines.
Opportunities and Challenges
 Technology and Digitalization: Technology led revolutionization of the healthcare
industry is likely to be expedited in the year 2020 due to the global pandemic. Remote
healthcare, patient empowerment and multichannel engagement are likely to be some
of the important emerging trends.
 National Health and Protection Scheme: NHPS has expected to cover 50 Crore
beneficiaries in 10 Crore families. The National Health Agency projects a four-fold
increase in the number of patients treated annually in India, rising to 10 Million over
the next few years.
 Specialty medicines: Will witness increased demand across both developed and
pharmerging markets, and are projected to account for more spending than previously.
 Pricing controls and regulations: Downward pressure on drug prices is likely to intensify
due to the inclusion of more medicines in the 2020 update of the National List of
Essential Medicines (NLEM) and government’s plans to implement trade margin caps
more widely in 2020. The 2019 amendment to the Drug Price Control Order (DPCO)
broadens provisions for exemptions from price controls to cover all patented medicines
as well as products granted orphan drug status. This is likely to encourage investment
from originators and result in early launches of more innovative, patented drugs.
 OTC drug regulations: Creation of a regulated OTC market coupled with stricter
enforcement of prescribing and dispensing regulations will drive growth in the OTC
space. The Company is well placed to benefit from such a policy with its dedicated OTC
vertical.
 Uniform Code of Pharmaceuticals Marketing Practices (UCPMP): Given that the
Company has a strong compliance process in place, it would be well positioned under
a strict enforcement of UCPMP.
Financial Performance
 Total revenue grew by 11% YoY to Rs 42bn from Rs 37.9bn.
 PBT for the year was Rs 8bn growing by 14.9% YoY.
 Other income stood at Rs 1.14bn. Income from bank deposits grew by 27.5%. It has an
investment portfolio of Rs 21.6bn as on 31st Mar’20.
 Material cost increased on account of inflation, but was offset by improved sales price
realisation, resulting in a marginal decrease in material cost as a percentage to sales
from 57.4% to 57.1%.
 Increased its employee strength to 3551. The employee cost as a percentage to sales
shows a marginal decrease at 11.7% in FY20 from 12.0% in FY19. The increase in
employee cost by 9.3% over last year is mainly due to merit increase.
 Other expenses including depreciation and finance cost increased by 7.8% YoY.
However as a percentage to sales, it has decreased to 15.1% in FY20 from 15.6% in
FY19.
Business Performance
Women’s Health
 This portfolio grew by 21.9% led by Duphaston in FY20.
 Growth drivers are: strong brand equity, coverage of gynaecologists, high level of trust
and credibility owing to sensitive indications with a high premium on safety.
 During the year, 5 new products viz. Femoston (Hormone replacement therapy or HRT),
Femilon (Contraception), Novelon (Contraception), Cetropro (Prevention of premature
ovulation) and Parihep (Thromboembolic conditions) were launched.

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Abbott India 02 September, 2020

Gastroenterology
 This portfolio by 9.9% in FY20, mainly driven by Cremaffin, Udiliv and Duphalac.
Differentiated offerings beyond pills, a strong portfolio - from Gastro to GPs - and
strong equity amongst the consumers are behind the sustained growth.
 During the year, 12 new products viz. Evitol (Non-alcoholic fatty liver disease or NAFLD),
Fidonal (Anal Fissures), Udisyp (Liver Disorders), Tenfoplus (Hepatitis B), Viadek
(Pancreatic Exocrine Insufficiency or PEI), Udistrong Orange (Liver Diseases), Creon SD
(Pancreatic Exocrine Insufficiency or PEI), Cremadiet + 300 (Constipation), Udistrong
sachet – Cranberry (Liver Diseases), Antoxipan sachet, Duphalac Bears 1.6
(Constipation – Pediatrics) and Duphalac Chews 3.3 (Constipation - Pregnancy) were
launched.
Metabolics
 This portfolio grew by 27.9% in FY20, mainly driven by NeoMercazole and Thyronorm,
which retains flagship position in its respective segment.
 Integration of the thyroid portfolio to optimise spend and increase market share,
introduction and improvement of line extensions to facilitate differentiation, and
entering bacterial vaginosis with new sub-therapy (pre-probiotics) to leverage equity
with Gynecs are some of the major drivers of performance.
Central Nervous System
 This portfolio grew by 12.6% in FY20. Vertin and Prothiaden continue as the market
leaders in their segments.
 Introducing new sub-therapies and life-cycle management support for older molecules
remain key priorities.
 Launched Epishield (Micronutrients/ Epilepsy) during the year.
Multi-specialty
 This portfolio showed a growth of 4.4% in FY20 which was mainly driven by Zolfresh,
Arachitol Nano and Brufen.
 Under this segment, the Company offers products for Pain Management, Insomnia,
Nutritional supplements and Vitamins.
Vaccines
 The portfolio showed strong double-digit growth of 20.4% and contributed 3.9% of
sales in FY20. The growth was mainly driven by Influvac, market leader in its
participated market.
 The key brands in the vaccines portfolio are Influvac, Enteroshield and Rotasure.
 The company has a licensing arrangement with Bharat Biotech India Limited to market
vaccines in the immunology segment.
 Launched Influvac Tetra (Flu vaccine) during the year and was a big hit in the first three
months of its launch.
Consumer Health
 This portfolio showed strong growth of 19.5% in FY20.
 The company offers a few consumer-directed products, including all variants of Digene
- tablets, liquids and powders.
 Cremaffin was consumerised to revitalise the brand.
 Two new products - Brufen Rapid (Analgesics) and Digene Ultra Fizz (Antacid) were
launched during the year.
Dividend
 Director recommended a final dividend of Rs 107/ share and special dividend of Rs 143/
share, which will absorb a sum of Rs 5.31bn.

Centrum Institutional Research 6

Abbott India 02 September, 2020

Exhibit 3: Raw materials purchase from related parties

% of Raw % of Raw % of Raw % of Raw % of Raw
In Rs mn FY16 FY17 FY18 FY19 FY20
Materials Materials Materials Materials Materials
Abbott Healthcare Private
332 2% 1,012 6% 1,433 8% 1,257 6% 1,500 6%
Ltd., India
Abbott Products Operations
2,085 14% 2,469 14% 2,251 12% 3,317 16% 3,773 16%
AG., Switzerland
Total 2,417 16% 3,481 20% 3,685 19% 4,574 22% 5,273 23%

Cost of materials consumed 14,920 17,121 19,047 20,885 23,157

Source: Company, Centrum Research

There has been a steady increase in purchase of raw materials from related parties over the
years FY16-20. Purchases have increased from 16% of total materials consumed in FY16 to
23% of total materials consumed in FY20.

Exhibit 4: Contingent Liabilities and Commitments

Contingent Liabilities and Commitments (in Rs mn) FY16 FY17 FY18 FY19 FY20
Estimated amount of contracts remaining to be executed and not provided for 33 36 57 43 45
Income Tax Claims - - - - 734
Sales Tax Claims 92 78 350 351 330
Total 125 114 407 394 1,110
Source: Company, Centrum Research

There has been increase in contingent liabilities and commitments in FY20 due to income
tax claims.

Exhibit 5: Currency Risk

Currency Risk (in Rs mn) FY16 FY17 FY18 FY19 FY20
USD Euro USD Euro USD Euro USD Euro USD Euro
Trade Receivables 52.6 - 59.3 - 74.3 - 40.6 - 18.2 -
Other financial assets 18.8 52.4 27.3 94.2 9.2 - 49.4 98.6 184.5 -
Trade Payables 788.7 0.4 1,090.1 60.3 825.7 0.7 1,301.4 98.6 1,203.6 1.2
Net statement of financial
717.3 52.0 1,003.5 33.9 742.2 0.7 1,211.4 - 1,000.8 1.2
position exposure
Source: Company, Centrum Research

Exposure to USD has increased over the years FY16-20 due to increase in exposure in trade
payables.
Exhibit 6: Loans and deposits given to related parties
Loans and deposits given to related parties (in Rs mn) FY18 FY19 FY20
Abbott Healthcare Private Ltd., India 147 147 148
Alere Medical Private Limited, India 2,000 - -
Source: Company, Centrum Research

Deposits given to Abbott Healthcare Private Ltd., India is related to lease assets. Alere
Medical Private Limited, India paid the working capital loan in FY19 along with outstanding
interest.

Centrum Institutional Research 7

Abbott India 02 September, 2020

P&L Balance sheet

YE Mar (Rs mn) FY18A FY19A FY20A FY21E FY22E YE Mar (Rs mn) FY18A FY19A FY20A FY21E FY22E
Revenues 33,071 36,786 40,931 45,394 51,917 Equity share capital 213 213 213 213 213
Operating Expense 22,605 25,137 27,695 29,001 32,437 Reserves & surplus 16,715 19,873 24,105 25,087 28,110
Employee cost 3,937 4,356 4,761 5,141 5,451 Shareholders fund 16,928 20,086 24,317 25,300 28,322
Others 1,283 1,245 911 1,729 2,025 Minority Interest 0 0 0 0 0
EBITDA 5,245 6,048 7,564 9,524 12,003 Total debt 0 0 0 0 0
Depreciation & Amortisation 162 169 596 610 620 Non Current Liabilities 553 754 2,240 2,240 2,240
EBIT 5,083 5,878 6,968 8,914 11,383 Def tax liab. (net) 0 0 0 0 0
Interest expenses 38 23 85 86 99 Total liabilities 17,481 20,840 26,557 27,540 30,563
Other income 1,170 1,133 1,144 1,237 1,412 Gross block 976 1,219 1,607 1,617 1,593
PBT 6,215 6,989 8,027 10,065 12,697 Less: acc. Depreciation (162) (169) (596) (610) (620)
Taxes 2,203 2,485 2,112 2,643 3,301 Net block 814 1,050 1,011 1,007 973
Effective tax rate (%) 35.4 35.6 26.3 26.3 26.0 Capital WIP 22 7 16 16 16
PAT 4,012 4,503 5,915 7,422 9,396 Net fixed assets 835 1,057 1,028 1,024 990
Minority/Associates 0 0 0 0 0 Non Current Assets 377 528 530 623 711
Recurring PAT 4,012 4,503 5,915 7,422 9,396 Investments 0 0 0 0 0
Extraordinary items 0 0 0 0 0 Inventories 5,853 6,068 5,272 8,864 9,895
Reported PAT 4,012 4,503 5,915 7,422 9,396 Sundry debtors 2,634 2,761 3,179 3,116 3,414
Cash & Cash Equivalents 10,314 16,843 21,974 21,510 23,534
Ratios Loans & advances 2,055 73 61 0 0
YE Mar FY18A FY19A FY20A FY21E FY22E
Other current assets 1,947 1,949 3,280 1,620 1,707
Growth (%) Trade payables 4,806 6,635 6,578 7,028 7,499
Revenue 13.9 11.2 11.3 10.9 14.4 Other current liab. 818 894 826 826 826
EBITDA 32.0 15.3 25.1 25.9 26.0
Provisions 1,057 1,040 1,508 1,508 1,508
Adj. EPS 45.0 12.2 31.3 25.5 26.6
Net current assets 16,122 19,125 24,855 25,749 28,718
Margins (%) Total assets 17,481 20,840 26,557 27,540 30,563
Gross 42.4 43.2 43.4 44.8 46.6
EBITDA 15.9 16.4 18.5 21.0 23.1 Cashflow
EBIT 15.4 16.0 17.0 19.6 21.9 YE Mar (Rs mn) FY18A FY19A FY20A FY21E FY22E
Adjusted PAT 12.1 12.2 14.5 16.3 18.1 Profit Before Tax 6,215 6,989 8,027 10,065 12,697
Returns (%) Depreciation & Amortisation 162 169 596 610 620
ROE 26.0 24.3 26.6 29.9 35.0 Net Interest 38 23 85 86 99
ROCE 26.2 24.4 26.9 30.2 35.3 Net Change – WC 4,944 3,577 884 (1,450) (1,032)
ROIC 34.5 67.9 119.7 123.9 119.9 Direct taxes (2,225) (2,470) (2,126) (2,643) (3,301)
Turnover (days) Net cash from operations 9,134 8,288 7,466 6,668 9,082
Gross block turnover ratio (x) 33.9 30.2 25.5 28.1 32.6 Capital expenditure 160 (391) (567) (606) (586)
Debtors 24 27 26 25 23 Acquisitions, net 0 0 0 0 0
Inventory 104 104 89 103 124 Investments 0 0 0 0 0
Creditors 92 100 104 99 96 Others 0 0 0 0 0
Net working capital 178 190 222 207 202 Net cash from investing 160 (391) (567) (606) (586)
Solvency (x) FCF 9,294 7,897 6,900 6,062 8,496
Net debt-equity (0.6) (0.8) (0.9) (0.9) (0.8) Issue of share capital 0 0 0 0 0
Interest coverage ratio 138.0 268.8 88.7 110.2 121.7 Increase/(decrease) in debt 0 0 0 0 0
Net debt/EBITDA (2.0) (2.8) (2.9) (2.3) (2.0) Dividend paid (1,403) (1,658) (1,658) (6,375) (6,375)
Per share (Rs) Interest paid (38) (23) (85) (86) (99)
Adjusted EPS 188.8 211.9 278.3 349.3 442.1 Others 438 312 (26) (64) 2
BVPS 796.6 945.2 1,144.3 1,190.6 1,332.8 Net cash from financing (1,003) (1,368) (1,769) (6,526) (6,472)
CEPS 196.4 219.9 306.4 378.0 471.3 Net change in Cash 8,292 6,529 5,131 (464) 2,025
DPS 55.0 65.0 65.0 250.0 250.0 Source: Company, Centrum Broking
Dividend payout (%) 29.1 30.7 23.4 71.6 56.5
Valuation (x)
P/E 88.1 78.5 59.8 47.6 37.6
P/BV 20.9 17.6 14.5 14.0 12.5
EV/EBITDA 65.4 55.7 43.8 34.9 27.5
Dividend yield (%) 0.3 0.4 0.4 1.5 1.5
Source: Company, Centrum Broking

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Abbott India 02 September, 2020

Disclaimer
Centrum Broking Limited (“Centrum”) is a full-service, Stock Broking Company and a member of The Stock Exchange, Mumbai (BSE) and National Stock
Exchange of India Ltd. (NSE). Our holding company, Centrum Capital Ltd, is an investment banker and an underwriter of securities. As a group Centrum has
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Recipients of this report should assume that our Group is seeking or may seek or will seek Investment Banking, advisory, project finance or other businesses
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The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant
uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on
which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase over
time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company. These
projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accepted accounting principles. No
independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. You should not regard the inclusion of
the projections and forecasts described herein as a representation or warranty by or on behalf of the Company, Centrum, the authors of this report or any
other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you should only consider the projections
and forecasts described in this report after carefully evaluating all of the information in this report, including the assumptions underlying such projections and
forecasts.
The price and value of the investments referred to in this document/material and the income from them may go down as well as up, and investors may realize
losses on any investments. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of original capital may occur.
Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without
notice. Centrum does not provide tax advice to its clients, and all investors are strongly advised to consult regarding any potential investment. Centrum and
its affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Foreign currencies denominated securities are subject
to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from the investment. In addition, investors in
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complete.

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Abbott India 02 September, 2020

The opinions and projections expressed herein are entirely those of the author and are given as part of the normal research activity of Centrum Broking and
are given as of this date and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this report
and there can be no assurance that future results or events will be consistent with any such opinions, estimate or projection.
This document has not been prepared by or in conjunction with or on behalf of or at the instigation of, or by arrangement with the company or any of its
directors or any other person. Information in this document must not be relied upon as having been authorized or approved by the company or its directors
or any other person. Any opinions and projections contained herein are entirely those of the authors. None of the company or its directors or any other person
accepts any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection therewith.
Centrum and its affiliates have not managed or co-managed a public offering for the subject company in the preceding twelve months. Centrum and affiliates
have not received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for
service in respect of public offerings, corporate finance, debt restructuring, investment banking or other advisory services in a merger/acquisition or some
other sort of specific transaction.
As per the declarations given by them, Mr. Cyndrella Carvalho, research analyst and and/or any of their family members do not serve as an officer, director or
any way connected to the company/companies mentioned in this report. Further, as declared by them, they are not received any compensation from the
above companies in the preceding twelve months. They do not hold any shares by them or through their relatives or in case if holds the shares then will not
to do any transactions in the said scrip for 30 days from the date of release such report. Our entire research professionals are our employees and are paid a
salary. They do not have any other material conflict of interest of the research analyst or member of which the research analyst knows of has reason to know
at the time of publication of the research report or at the time of the public appearance.
While we would endeavour to update the information herein on a reasonable basis, Centrum, its associated companies, their directors and employees are
under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent Centrum from
doing so.
Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable
regulations and/or Centrum policies, in circumstances where Centrum is acting in an advisory capacity to this company, or any certain other circumstances.
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state,
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unless otherwise stated, this message should not be construed as official confirmation of any transaction. No part of this document may be distributed in
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authorized. Please ensure that you have read “Risk Disclosure Document for Capital Market and Derivatives Segments” as prescribed by Securities and
Exchange Board of India before investing in Indian Securities Market.

Ratings definitions
Our ratings denote the following 12-month forecast returns:
Buy – The stock is expected to return above 15%.
Add – The stock is expected to return 5-15%.
Reduce – The stock is expected to deliver -5-+5% returns.
Sell – The stock is expected to deliver <-5% returns.
Abbott India

16870

12430

7990

3550
Sep-17 Mar-18 Sep-18 Mar-19 Aug-19 Feb-20 Aug-20
Abbott India

Source: Bloomberg

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Abbott India 02 September, 2020

Disclosure of Interest Statement

1 Business activities of Centrum Broking Centrum Broking Limited (hereinafter referred to as “CBL”) is a registered member of NSE (Cash, F&O and Currency Derivatives
Limited (CBL) Segments), MCX-SX (Currency Derivatives Segment) and BSE (Cash segment), Depository Participant of CDSL and a SEBI registered
Portfolio Manager.
2 Details of Disciplinary History of CBL CBL has not been debarred/ suspended by SEBI or any other regulatory authority from accessing /dealing in securities market.

3 Registration status of CBL: CBL is registered with SEBI as a Research Analyst (SEBI Registration No. INH000001469)

Abbott India

4 Whether Research analyst’s or relatives’ have any financial interest in the subject company and nature of such financial interest No

5 Whether Research analyst or relatives have actual / beneficial ownership of 1% or more in securities of the subject company at the end of the month
No
immediately preceding the date of publication of the document.
6 Whether the research analyst or his relatives has any other material conflict of interest No

7 Whether research analyst has received any compensation from the subject company in the past 12 months and nature of products / services for which
No
such compensation is received
8 Whether the Research Analyst has received any compensation or any other benefits from the subject company or third party in connection with the
No
research report
9 Whether Research Analysts has served as an officer, director or employee of the subject company No

10 Whether the Research Analyst has been engaged in market making activity of the subject company. No

11 Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past twelve months; No

Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company
12 No
in the past twelve months;
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage
13 No
services from the subject company in the past twelve months;

Member (NSE and BSE). Member MSEI (Inactive)

Single SEBI Regn No.: INZ000205331

Depository Participant (DP)

CDSL DP ID: 120 – 12200
SEBI REGD NO.: CDSL: IN-DP-CDSL-661-2012

PORTFOLIO MANAGER

SEBI REGN NO.: INP000004383

Research Analyst
SEBI Registration No. INH000001469

Mutual Fund Distributor

AMFI REGN No. ARN- 147569

Website: www.centrum.co.in
Investor Grievance Email ID: investor.grievances@centrum.co.in

Compliance Officer Details:

Ashok D Kadambi
(022) 4215 9937; Email ID: compliance@centrum.co.in

Centrum Broking Ltd. (CIN :U67120MH1994PLC078125)

Corporate Office & Correspondence Address
Registered Office Address
Centrum House
Bombay Mutual Building,
6th Floor, CST Road, Near Vidya Nagari Marg, Kalina, Santacruz (E), Mumbai
2nd Floor, Dr. D. N. Road,
400 098.
Fort, Mumbai - 400 001
Tel: (022) 4215 9000 Fax: +91 22 4215 9344

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Abbott India 02 September, 2020

Centrum Broking Institutional Equities Team Details

Nischal Maheshwari CEO nischal.maheshwari@centrum.co.in +91-22-4215 9841
Research Analyst Sector E-mail Phone number
Gaurav Jani BFSI gaurav.jani@centrum.co.in +91-22-4215 9110
Milind S Raginwar Cement & Metals milind.raginwar@centrum.co.in +91-22-4215 9201
Shirish Pardeshi FMCG shirish.pardeshi@centrum.co.in +91-22-4215 9634
Ashish Shah Infra & Aviation shah.ashish@centrum.co.in +91-22-4215 9021
Madhu Babu IT madhu.babu@centrum.co.in +91-22-4215 9855
Probal Sen Oil & Gas Probal.sen@centrum.co.in +91-22-4215 9001
Cyndrella Carvalho Pharma cyndrella.carvalho@centrum.co.in +91-22-4215 9643
Sparsh Chhabra Economist sparsh.chhabra@centrum.co.in +91-22-4215 9035
Joaquim Fernandes Quant Joaquim.Fernandes@centrum.co.in +91-22-4215 9363
Equity Sales Designation Email Phone number
Rajesh Makharia Director rajesh.makharia@centrum.co.in +91-22-4215 9854
Paresh Shah MD paresh.shah@centrum.co.in +91-22-4215 9617
Anil Chaurasia Sr. VP anil.chaurasia@centrum.co.in +91-22-4215 9631
Himani Sanghavi AVP himani.sanghavi@centrum.co.in +91-22-4215 9082
Saahil Harwani Associate saahil.harwani@centrum.co.in +91-22-4215 9623

Centrum Institutional Research 12