Nicholas Piramal
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Showing posts with label Nicholas Piramal. Show all posts
Showing posts with label Nicholas Piramal. Show all posts
Wednesday, November 26, 2008
Wednesday, May 14, 2008
Wednesday, April 30, 2008
Tuesday, April 29, 2008
Monday, April 28, 2008
Nicholas Piramal: Buy
Investors with a 12-month perspective should consider buying shares of Nicholas Piramal, a leading pharma company engaged in custom manufacturing drugs for Western companies and selling branded formulations in India. It is one of the top contenders in India to capture a fair share of the $15-billion outsourced pharmaceutical manufacturing market, as it has both the expertise and capacities to make the cut.
At the current market price of Rs 355, the stock trades at 17 times its estimated 2008-09 earnings per share. This appears reasonable given the company’s strong growth in 2007-08, which has the potential to improve over the next couple of years.
In the last 12 months, Nicholas Piramal’s sales grew by a handsome 16.2 per cent and net profit by 53 per cent. The company has turned its focus to contract research and manufacturing services recently, buying Pfizer’s drug unit in 2006 and Avecia’s unit in 2005 (both in the UK).
Operating margins have scope for improvement to 20 per cent-plus on greater momentum in its India-based custom manufacturing (CMG) contracts and the rationalisation measures at its UK operations. With increasing number of long-term supply contracts (shipments to five started this year) and rising profitability of the CMG business with the expected entry into injectables, Nicholas Piramal has significantly expanded its portfolio to over 175 molecules. This endows the company with a strong product pipeline.
Nicholas Piramal also derives about 45 per cent of its revenues from the domestic market through sale of branded formulations. The company is set to see good growth in anti-infectives, nutritionals and anti-diabetic segments, where it has already outpaced the market.
Sales from the newly acquired Anafortan and CEFI brands, introduction of a new derma-cosmetic division and launch of new over-the-counter products are some of the initiatives to watch out for. Along with a huge field-force (above 3,000), Nicholas Piramal is positioned to perform well.
Adverse movement in euro-rupee rates may hurt the drug major’s profitability, because of euro denominated realisations. The historical pattern suggests that first half results may be muted. Given the significant domestic component, any increase in the scope of drug price controls or restrictive policies on the same, will hurt the company.
Friday, March 07, 2008
Saturday, February 23, 2008
Friday, February 15, 2008
Today's Pick - Nicholas Piramal
We recommend a buy in Nicholas Piramal India from a short-term perspective. From the charts of Nicholas Piramal India we note that it has been on a healthy uptrend, making higher peaks and higher troughs from its June 2006 low of Rs 150. However, it has witnessed a medium-term counter trend, falling from its all-time high of Rs 383 marked in late December 2007 to its January low of Rs 250. Following this, the stock has consolidated sideways between Rs 290 and Rs 320.
On February 14, it made a conclusive upward breakout from its sideways consolidation with an above average volume. Besides, the daily momentum indicator also appears to be rising towards the bullish region. We observe a crossover in the daily moving average convergence divergence, which could likely enter the positive region. While the long-term uptrend is still in place, we are bullish on the stock over the short-term also. We expect the stock to move up to our target price of Rs 375 in the short-term. Investors with a short-term perspective can buy the stock with stop loss at Rs 300 levels.
Via Businessline
Friday, February 01, 2008
Wednesday, January 23, 2008
Monday, January 21, 2008
Tuesday, January 08, 2008
Thursday, December 20, 2007
Thursday, December 06, 2007
Wednesday, November 21, 2007
Tuesday, November 20, 2007
Sunday, November 11, 2007
Nicholas Piramal: Buy
Investors with a two-three year perspective can buy the stock of Nicholas Piramal India (NPIL). After cementing its position in the branded formulations business– its top10 brands and lifestyle products contribute over 50 per cent of formulations portfolio sales–NPIL forayed into the international market not through costly intellectual property rights (IPR) tussles but through partnerships with “Big Pharma”. These relationships have begun to bear fruit.
The custom manufacturing (CMG) business, grew 22 per cent to Rs 340 crore in Q2 FY-08. CMG revenues from Indian facilities, in particular, increased over three-fold to Rs 70 crore, as shipments for a supply contract with a big pharma company commenced.
A five-year formulations contract with a Fortune 500 company is set to commence from third quarter and another contract for anti-glaucoma active pharmaceutical ingredients is already underway with Allergan Inc. NPIL is set to clock peak sales of $30 million per year from both these contracts.
Numerous contracts to be executed in the next two years give NPIL admirable earnings visibility. At the current market price of Rs 301, Nicholas Piramal trades at 16 times its likely FY-09 per share earnings.
Custom manufacturing model
NPIL has, till date, invested Rs 900 crore to transform itself into a full-service custom manufacturing organisation. Its strong early stage capabilities provide a strong value proposition to shift active pharmaceutical ingredients (API) and dosage-form manufacturing to NPIL. Notably, its strategy to stay away from conflicting customer intellectual property rights (IPR) has enabled a comfortable equation with western innovator companies.
With the help of its global outsourcing strategy, NPIL sources cheap raw material from China and uses its US FDA-approved Indian facilities spread across Hyderabad, Pithampur, Digwal, among others, as manufacturing hubs. While raw material costs are a bit higher in India, conversion costs are significantly lower.
This helps NPIL post higher margins than its other facilities. Its US and UK units form the last end of the value chain helping with sales and distribution, apart from R&D expertise-led innovation at Avecia Pharma and Morpeth in the UK. Fixed costs are already covered and with Indian assets making a higher contribution to revenues, profitability is likely to improve.
There has also been a significant rise in NPIL’s global contract manufacturing and research business with molecules in pre-clinical and clinical trials (PDS) in the last six months. There are now 17 molecules in Phase-III compared to 12 in the second half of 2007. Sixty three molecules are in Phase-II as against just 44 six months ago. Encouraging data in some molecules will mean commercialisation that will give NPIL a boost. This is inline with the company’s strategy of trying to build a strong PDS pipeline, which would ultimately lead to contracts eventually on the Pharmaceutical Manufacturing Services.
Formulations and Pathlabs
Apart from its CMG business, strong foothold in the domestic formulations (finished dosages) market will see the company acquire momentum.
While the June quarter was a bad one for NPIL’s top selling cough syrup, Phensedyl, September has seen the situation normalise as the company has received enough quantities of Codeine — the most important ingredient for Phensedyl. Some recovery is expected in the rest of the year for the company’s best brand.
Nicholas has also continuously launched products (11 in the last three months) that could go in a long way in de-risking its portfolio. Products launched in the last two years have managed to garner 8 per cent of Q2 FY-08 formulations sales.
Revenues from its Pathlabs segment (Wellspring) grew 72 per cent to Rs 31 crore in the September quarter.
While the segment by itself has contributed just 3 per cent of sales in FY-07, the acquisition of Jankharia Imaging (Mumbai) has helped it deliver an all-encompassing range of high-end health imaging in Wellspring’s plans.
R&D demerger
NPIL recently announced the demerger of its Research and Development unit dealing with new drugs, with effect from April 1, 2007. Recognising that innovative research entails a higher risk profile than its core business nature, the division has been hived off. Shareholders will get one share of the research outfit for every 10 held in NPIL.
The new company will be listed by June-July 2008. With a strong pipeline of four products under clinical trials and nine additional ones undergoing pre-clinical tests, the new company’s R&D pipeline targets a potential market size of $48.5 billion.
The new company’s lead oncology molecule P-276 continues to do well in the clinic as extended phase I/II study carried out in Canada and India progress. If all goes well, the drug could be launched by 2011.
Tuesday, October 30, 2007
Friday, October 26, 2007
Monday, September 17, 2007
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