The perfect dose

Higher pharma sales add sheen to Pfizer numbers

Pfizer has reported an improved performance for its year ended November 30, 2006, and that was owing to the growth in its key pharmaceuticals division.

As a result, operating profit (including service income) grew 25 per cent y-o-y to Rs 165.22 crore in the year ended November 2006 compared with 10.1 per cent growth in operating income to Rs 688.47 crore. Operating profit margin also grew 290 basis points y-o-y to 24 per cent in the previous year.

Segment profit of its pharmaceutical division grew 19.6 per cent y-o-y to Rs 170.67 crore in the previous year, helped by improved demand for its medications such as Gelusil (antacid), coupled with ramp-up in sales volumes for recent product launches such as Viagra and Lyrica (medication for management of neuropathic pain), say analysts.

However, for the quarter ended November 2006, the company reported a lacklustre performance and that was attributed to trade-related issues in Maharashtra. Operating profit margin remained flat on a y-o-y basis at 18 per cent in the last quarter.

The US parent had earlier announced that it had sold its worldwide consumer healthcare business to Johnson & Johnson and Pfizer India is also expected to exit from this business shortly.

For the Indian arm, this business""which has products such as Benadryl, Listerine and Gelusil""was estimated to provide Rs 150 crore or about 21.8 per cent of the company's total revenues for the year ended November 2006, according to analysts.

Without considering the transfer of the consumer healthcare business, the Pfizer India stock trades at 20 times estimated November 2007 earnings, and leaves little room for further upsides.

UltraTech: Cementing gains

UltraTech Cement, like other cement players, has reported improved performance in the December 2006 quarter, thanks to surging price realisations on a y-o-y basis. The company's operating profit grew 245.4 per cent y-o-y to Rs 380.2 crore in Q3 FY07 compared with 59.9 per cent growth in net sales to Rs 1260.45 crore.

However, the results of Q3 FY07 are not strictly comparable with a year earlier, given the merger of Narmada Cement Company with itself from October 1, 2005.

Nevertheless, the merged entity's operating profit margin grew 1610 basis points y-o-y to 30.1 per cent in the last quarter. ACC, too, in the last quarter saw its operating profit margin expand by 1410 basis points y-o-y to 29.4 per cent.

UltraTech's sales grew 14.5 per cent y-o-y to 44.96 lakh tonne in the last quarter, and its net realisations also grew an estimated 39.4 per cent y-o-y to Rs 2801 per tonne. ACC too had seen its realisations improve by 44.9 per cent y-o-y in the last quarter.

Going forward, cement demand in the post-monsoon season is expected to remain strong, despite recent measures taken by the central bank to cool off the real estate sector.

Also, the company is expected to complete by 2008, the setting up of captive power plants at its facilities in Gujarat, Chhattisgarh and Andhra Pradesh, and this should help to bring down operating costs in the medium term.

However, with the stock trading at 17 times estimated FY08 earnings, the street appears to have factored in the company's growth opportunities.