Abbott India hits all-time high, surges 35% in two months

Shares of Abbott India hit an all-time high of Rs 11,297, up 4 per cent on the BSE on Thursday in an otherwise range-bound market, on hopes that high growth momentum will continue. In comparison, the S&P BSE Sensex was down 0.29 per cent at 38,219 levels at 12:47 pm.

In the past two months, the stock of the pharmaceutical company has surged 35 per cent after reporting a strong set of numbers for the quarter ended June 2019 (Q1FY20). The benchmark index was up 4 per cent during the same period.

Abbott India had reported a 42 per cent year-on-year (YoY) jump in net profit at Rs 117 crore for Q1FY20. Net sales grew 18.2 per cent YoY to Rs 999 crore on the back of strong growth in women healthcare care segments. EBIDTA (earnings before interest, depreciation, tax and amortization) margin was expanded by 426 basis points (bps) YoY to 17.4 per cent on better product mix.

Abbott India operates in various therapeutic areas such as women’s health, gastroenterology, central nervous system, metabolics, multi-specialty, vaccines, consumer health, etc.

It is a net cash company with low working capital requirements. The company has low capex (capital expenditure) as most of its products are made by third-party manufacturers. Given the continued strong performance, healthy return ratios, and strong free cash flow or FCF/EBITDA, analysts rate Abbott as one of the best companies amongt multinational peers.

After attaining a leadership position in top 10 brands (no 1 position in 8 brands and no 2 in two) in India, the management is set to build next set to 10 brands which should drive the growth. The management also indicated to enter new therapy areas like Menopause and liver disease, etc to tap unmet needs, which should jack up the growth, analysts at IDBI Capital had said in a company update dated August 27.