Wockhardt posted a net loss of Rs 191.6 crore for Q4FY12 due to exceptional items such as derivative liabilities and goodwill impairment. Excluding exceptional items, net profit grew 57% YoY to Rs 261.6 crore. Net sales grew 32.2% YoY to Rs 1,241.4 crore. The brokerage expects the company to benefit from its product portfolio and focus on high margin products, projecting a revenue CAGR of 14.8% over FY12-FY14. However, it has lowered earnings estimates for FY13-FY14 to factor in higher taxes and the potential delay of a nutrition business sale. The stock currently trades at attractive valu
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Wockhardt Q4FY12 Results Drive Growth
1. Quarterly Result Update
Wockhardt Ltd.
Focus on high margin products drives growth
Outlook Recommendation (Rs)
Wockhardt surprisingly posted losses for Q4FY12 on the back on exceptional items pertaining to payment of CMP 718
derivative liabilities, provisions on CDR and goodwill impairment. Ex- exceptional items, the net profit registered Rating BUY
robust growth and stood at Rs 261.6 crore, up by 57% yoy. The stock had been reeling under the pressure of
derivative liabilities and FCCBs repayment over a long time. However, with the settlement of derivative liabilities Index Details
and strong cash flows, we expect the company to settle all the dues and return back to an era of strong growth in Sensex 16,026
profitability. Wockhardt business had always been strong even at the resilient times but with focus back on the Nifty 4,861
business and a strong pipeline of FTFs, we expect the company to post better growth in times ahead. Industry Pharmaceuticals
However, we have scaled down our earnings for FY13 and FY14 to factor in higher taxations and a likely Scrip Details
possibility of the deal fell through. Currently the stock is trading at 8.7x and 7.3x of its FY13 and FY14 earnings Mkt Cap (Rs cr) 7,284
estimates indicating cheap valuations. We, recommend a BUY with a revised price objective of Rs 885 at 10x Eq Shares O/s (Cr) 10.9
FY14EPS. Avg Vol (Lakhs) 0.6
52 Week H/L 741/251
Key Takeaways Dividend Yield (%) 0.0
Beating street expectations handsomely, Wockhardt surprised the street with stellar performance registering Face Value (Rs) 5.0
adjusted net profit (for exceptional items) of Rs 261.6 crore against expectations of Rs 204.9 crore on the
back of strong EBITDA margins. The EBITDA margins for the quarter stood at Rs 34.6% (+640 bps) yoy. Latest shareholding pattern (%)
However, post providing for exceptional items and higher tax rate, the company posted losses to the tune of – Promoters 73.6
Indian Institutions 4.2
Rs 191.6 crore for the quarter ended on March 2012.
FII’s 3.2
Public 19.1
Net sales for the quarter stood at Rs 1241.4 crore v/s Rs 938.7 crore, registering a strong growth of 32.2% Total 100
yoy on the back of good growth in the existing business and in line with our estimates. With FTF opportunities
and robust product portfolio, we expect the company to register a strong CAGR of 14.8% over three year Stock performance (%)
period to Rs 5681.5 crore in FY14.
1m 3m 6m
Wockhardt -4.8 38.1 75.9
On the exceptional items front, the company provided for Rs 450.04 crore for the fourth quarter and Rs 528.2 Nifty -7.3 -12.5 2.7
crore for the full year 2012 which included Rs 133.7 crore on account of settlement of derivative losses, Rs BSE- HC -2.6 4.0 13.3
160 crore on account of CDR recompense provisions and Rs 333.5 crore on account of good will impairment.
The company gained Rs 99.7 crore from restructuring activities.
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Tuesday, 22 May, 2012
.
2. Quarterly Result Update
On the earnings front, the depreciation and interest expenses were in line with our expectations. However,
the tax rate at 31%, stood higher than our estimates. Factoring in higher tax rate, we have scaled down our
earnings to Rs 808.2 crore and 968.4 crore for FY13 and FY14 respectively v/s Rs 889.6 crore and Rs
1070.1 crore previously.
Further, the Wockhardt- Danone deal for the sale of nutrition business was supposed to be culminated in the
month of March. However, it got delayed, considering the management has not given time line of the deal, we
have scaled down our earnings and have not factored in the deal. However, the deal if sails through would be
EPS accretive, we estimate the company to post an EPS of Rs 164 for FY13 v/s the current forecast of Rs
82.4.
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Tuesday, 22 May, 2012
6. Quarterly Result Update
Ventura Securities Limited
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Tuesday, 22 May, 2012