AstraZeneca -Good Results with Delisting Kicker

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  • Update Report
  • 16-Aug-2016

We came out with a first report on AstraZeneca Pharma India in Feb2016 at price of Rs. 1190 (Report Here -AstraZeneca India -Improving Fundamentals + Delisting support). Even though the price is down to Rs. 1080, we think that recent results and management strategy should yield to better times for AstraZeneca India. Additionally, the delisting order from SEBI is awaited and if it comes timely can also be a strong trigger for the stock price.
 


  • The company has been continuously launching new product and increasing reach through new distribution tie-ups for fast growing products. 


  • Some of the above efforts have led to a robust growth of 76% YoY in FY16 from 5 key brands -Brilinta, Foxiga, Onglyza, Kombiglyze, and Symbicort. The robustness of growth should continue for all these brands.


  • The share of Diabetes portfolio has reached 25% of total sales due to acquisition from Bristol Myers-Squibb and launch of Forxiga.


  • The major therapy areas where AstraZeneca operates in India recorded double digit growth during the Financial Year 2015-16 indicating that AstraZeneca should be able to grow even better.


  •  The Q1FY17 results of the company showed a 15% YoY growth at the sales. The sales increased from Rs. 120 crores in Q1FY16 to Rs. 138 crores in Q1FY17. In addition to this, the gross margins without other operating income increase to 68% breaking up from the average of 60% for the last 8 quarters.


  • Delisting: As directed by SAT, SEBI was supposed to issue an order regarding the delisting of AstraZeneca. The final order is awaited from SEBI and the matter is still pending.


Considering its key brands are having above normal growth rates, the management indication of aligning the Indian portfolio with its global products, and improving financials make the company very interesting. At the same time, if the delisting goes through from SEBI side, it should lead to immediate upside for the stock. We suggest a HOLD on the stock.


Dhruvesh Sanghvi is a Research Analyst registered with SEBI having registration No: INH000000875.


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DISCLOSURES by RESEARCH ANALYST UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014 is as under:
• Introduction: Prospero Tree Financial Services is an independent equity research proprietorship firm of Mr Dhruvesh Sanghvi.
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• Report Written by: Dhruvesh Sanghvi
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• Disclosure with regards to ownership and Material Conflicts of Interest:
1. Neither Dhruvesh Sanghvi, Prospero Tree Financial Services, its associates, its Research analysts hold any position in the subject company.
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• Disclosure with regards to Receipt of Compensation:
1. Neither Dhruvesh Sanghvi, Prospero Tree Financial Services or its associates, or Research Analyst has received any compensation or other benefits from the subject company or the third party in connection with the research report in past twelve months.
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• Other Disclosures:
1. The Research Analyst has not served as an officer, director, or employee of the subject company.
2. The Research Analyst is not engaged in market making activity for the subject company.



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