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ICICI Securities Report
Abbott India Ltd.’s Q1 FY23 performance was below our estimate on the profitability front. Revenue grew 7.1% YoY to Rs 13.0 billion (our estimate: Rs 12.5 billion).
Ebitda margin contracted 110 bps YoY to 20.7% led by lower gross margins and higher ‘other expenses’. Adjusted profit after tax grew 5.0% YoY to Rs 2.1 billion (our estimate: Rs 2.1 billion).
Declining Covid cases have paved the way for a normalised environment. Yet, near-term growth could be limited due to high base and high competition in key products as well as elevated costs, which will keep margins in check.
We remain positive on Abbott India given its exposure exclusively in domestic formulations, strong balance sheet with deep cash reserves, healthy return ratios, and strong brand equity built over the years. However, the recent run-up in stock price (~9% in three months) has made valuations fair.
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