Abbott India: Good show

The company's operating costs were also under tight check in the last quarter on a y-o-y basis.

Abbott India reported an improved performance in the quarter ended August 2007 thanks to improved demand for its product repertoire in segments such as gastroenterology, anaesthesia and diabetes. Of equal importance, is that its operating costs were also under tight check in the last quarter on a -o-y basis.

As a result, the company's operating profit (excluding other income) grew 38.6 per cent y-o-y to Rs 26.2 crore in the last quarter, while its net sales expanded 15.3 per cent to Rs 157.7 crore.

Its operating profit margin also improved 280 basis points y-o-y to 16.6 per cent in the quarter end August 2007. The quarterly results were declared on Sunday and on Monday, the stock rose 1.4 per cent to Rs 579.

Although, not strictly comparable, but in the quarter ended May 2007, Abbott's operating profit margin had declined marginally on a y-o-y basis to 13.5 per cent.

The company's board, in an earlier meeting, has approved the fresh buy-back of shares at a price not exceeding Rs 650, for a total consideration of Rs 51.8 crore, subject to regulatory approvals.

This works out to a buyback of 5.5 per cent of the outstanding shares. Meanwhile, at the end of June 2007, the foreign promoter's stake in the company was 65.14 per cent.

This buyback is at 14.8 times trailing 12 month earnings, while other multinational stocks like Pfizer trade at 20 times. However, Pfizer does enjoy higher operating profit margins as compared to Abbott.

Shareholders of Abbott could consider tendering their stock in the latest buyback offer of the company if the price is attractive.

Maruti Suzuki: Slow pace

Maruti Suzuki's total sales in September 2007 went up by 13.5 per cent y-o-y to 67,448 units, which was much lower than the sales growth recorded in July and August. For instance, in August 2007, Maruti's total sales grew 27.2 per cent y-o-y, while in July they had expanded 24.8 per cent y-o-y.

The comparatively slower sales growth in September 2007 vis-a-vis the first two months of Q2 FY08, is attributed to a steep 32 per cent y-o-y decline in the sales of Maruti 800 to 5,221 units, which partially offset the impressive 21.8 per cent growth in the key A2 segment (comprising Alto and Swift).

Sales in its A3 segment continued to remain strong with a growth of 43.3 per cent to 4,885 units in the previous month, thanks to the recently launched SX4 model, and volumes in this segment, also includes Esteem and Baleno.

Analysts point out that discounts at dealer level are prevalent in only some of the older models, which have lower margins.  Meanwhile, in August 2007, sales in the A2 segment had improved by 28.6 per cent y-o-y to 41,736 units, but sales of Maruti 800 declined only 14.7 per cent y-o-y.  Also, sales in the A3 segment grew a whopping 70.6 per cent y-o-y in August. Similarly, in July 2007, the company's A2 segment sales went up by 18.6 per cent y-o-y, but Maruti 800 sales declined merely 1.2 per cent y-o-y.  Nevertheless, the company's total sales rose an impressive 21.3 per cent y-o-y to 191,325 units in the September 2007 quarter.  In the June 2007 quarter, Maruti's total sales rose 17 per cent y-o-y to 169, 669 units.  The Maruti stock declined 0.8 per cent to Rs 992 on Monday after the company announced its sales figures.