Market Strategy : Fundamental & Qualitative Analysis

Name : Lakshya Garg

Date : November 30, 2019

Recommendation -> BUY

Abbott India Ltd. |Sector: Pharmaceuticals |NSE: ABBOTINDIA
CMP – 12578.40 | 52 Week L/H – 7151.20/13050.00 | P/E – 50.86 | Industry P/E – 30.26 | M. Cap (Rs. Cr) – 26728.22
P/B – 13.31 | ROE – 18.61 | ROA – 15.31

Investment Argument
 7.66% YoY increase in Sales and 30% increase in Profits in Q2.
 Constant Promoter shareholding of as much as 75%.
 High ROE of 18.61% and ROA of 15.31% compared to the peer
average of -4.97% and 0.85% respectively.
 A number of environment centric initiatives were taken to
conserve water, reduce emissions and improve efficiency. In
addition to it, CSR activities were undertaken in partnership with
organizations like SEWA to positively impact the community.

Risk and Concern

 Lower Current Ratio of 3.04 compared to the peer average of
4.07.
 Low volume trading at a 10-day average of 9703 shares per day
leading to the loss of liquidity. 1 Year Price Comparison
 Factors like expansion of pricing regulations and increasing
regulatory interventions could potentially put pressure on the
growth in this industry.

Company Background
Abbott India Ltd., incorporated in the year 1944, is a large cap company operating
in Pharmaceuticals sector and its key products/revenue segments include
Injectables, Tablets, Liquids and Capsules. The Company recognises Risk
Management as an integrated, forward-looking and process-oriented approach. It
has developed a Risk Framework which is directed to enable the Management to
effectively deal with uncertainty and associated risk and opportunity, enhancing
the capacity to build value. The Company’s philosophy on Corporate Governance
is to conduct its business in a manner, which is ethical and transparent with all the
stakeholders of the company, including members, creditors and employees.

Sector Background
India is the largest provider of generic drugs globally. Indian pharmaceutical
sector industry supplies over 50 per cent of global demand for various vaccines,
40 per cent of generic demand in the US and 25 per cent of all medicine in UK.
The National Health Protection Scheme is largest government funded healthcare
programme in the world, which is expected to benefit 100 million poor families in
the country.
The Government of India unveiled 'Pharma Vision 2020' aimed at making India a
global leader in end-to-end drug manufacture. Approval time for new facilities has
been reduced to boost investments.
Medicine spending in India is projected to grow 9-12 per cent over the next five
years, leading India to become one of the top 10 countries in terms of medicine
spending.

1 Year Risk-Return Comparison