H1FY20 revenues grew 12.6% YoY to | 2053.7 crore, mainly due to strong growth in key therapies & power brands. EBITDA margins improved 169 bps YoY to 18.4% mainly due to better operational leverage and impact of Ind- As 116. Net profit grew 34.2% YoY to | 295.3 crore. Delta vis-à-vis EBITDA was mainly due to lower tax rate.
The domestic pharma industry is expected to grow in the range of 9-11% per annum. Issues such as NLEM and other regulatory aspects are mostly in the price. On the flip side, the looming threat of Jan Aushadhi and trade generics are some head winds at this juncture. However, we continue to believe in Abbott’s strong growth track in power brands and capability ofnew launches on a fairly consistent basis (100 products in the last ten years). We expect revenues, EBITDA and PAT to grow at ~12%, 14% and 17% CAGR, respectively, in FY19-21E. We arrive at a target price of Rs 10190 based on 35x FY21 EPS of Rs 291.