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Pfizer Ltd>
  • CMP : 4,222.2 Chg : 22.55 (0.54%)
  • Target : 4,810.0 (10.52%)
  • Target Period : 12-18 Month

24 May 2022

Margins uptick; Outlook for brands positive …

About The Stock

Pfizer collectively addresses 15 therapy areas in the domestic formulations with a portfolio of over 150 products that include therapeutics & vaccines. The company has been continuously restructuring its portfolio in the last few years to improve the productivity of its core brands.

  • Fourth largest multinational pharma company in India
  • Manufacturing facility in Goa with run rate of 1 billion tablets per annum

Revenues growth was subdued this quarter due to decline in VMS and Anti-Infective therapies offtake in Q4FY22 on YoY basis.

  • Sales were up 3% YoY to ₹ 550 crore
  • EBITDA improved 32% YoY to ₹ 166 crore, with margins at 30%
  • PAT for the quarter was at ₹ 126 crore (up 25% YoY)
What should Investors do?

Pfizer’s share price has grown by ~2.5x over the past five years (from ~₹ 1706 in May 2017 to ~₹ 4378 levels in May 2022).

  • Downgrade from BUY to HOLD as we keep watch on uptick in growth tempo for ex-top 10 brands and implications of the VRS scheme for field force.
Target Price Valuation

Valued at ₹ 4810 i.e. 30x P/E on FY24E EPS of ₹ 160.3

Key Triggers for future price performance
  • Brands like Eliquis, Mucaine, Magnex, Corex-Dx etc. have shown significant uptick amid muted performance in Pfizer’s top brands like Becosules and Prevenar-13, which holds Pfizer in good stead with more Power Brands.
  • Pfizer is following a measured approach with de-focusing and hiving off of tail brands and focusing on core strengths areas such as vaccines, pain management, VMS, GI and CVS
  • Strong brand recall, consistent new product launches, volume growth in top brands and intermittent price hikes provide comfort on the financials front
Alternate Stock Ideas

Apart from Pfizer, among MNC coverage we like Abbott.

  • We continue to believe in Abbott’s strong growth track in power brands and capability in new launches on a fairly consistent basis

BUY with target price of ₹ 20560

Key Financial Summary

Particulars FY19 FY20 FY21 FY22 5 Year CAGR(FY17-FY22) FY23E FY24E 2 Year CAGR (FY22-FY24E)
Revenues 2,081.5 2,151.7 2,238.6 2,611.0 5.8 2,801.1 3,081.2 8.6
EBITDA 565.2 572.6 712.1 835.7 19.1 871.4 985.8 8.6
EBITDA margins (%) 27.2 26.6 31.8 32.0 - 31.1 32.0 -
Net Profit 429.1 509.2 497.6 612.6 24.3 642.4 733.3 9.4
EPS (|) 93.8 111.3 108.8 133.9 - 140.4 160.3 -
PE (x) 46.4 39.1 40.0 32.5 - 31.0 27.2 -
M.Cap/ Revenues (x) 9.6 9.3 8.9 7.6 - 7.1 6.5 -
EV to EBITDA (x) 31.8 30.9 26.4 21.9 - 20.4 17.4 -
RoCE (%) 21.7 18.5 27.6 26.1 - 23.5 23.0 -
ROE (%) 14.2 15.0 20.8 21.4 - 19.2 18.7 -
Source: Company, ICICI Direct Research

Key takeaways of recent quarter

Q4FY22 Results: Steady performance

  • Pfizer posted growth of 3% YoY in top-line to | 550 crore. EBITDA margins expanded 659 bps YoY to 30.1% while EBITDA grew 32%YoY to | 166 crore. Net profit increased 25% YoY to | 126 crore. The board recommend a dividend of | 35 per equity share.

Q4 revenues was below I-direct estimates while margins were a beat. According to IQVIA MAT Mar,22, Respiratory, Anti-Infective and Cardiac were the top growing therapeutic areas on YoY basis. However, besides quarterly variations Pfizer posted revenues growth of 20% to | 2611 crore with margins at 32% in FY22. We continue to believe in Pfizer’s strong growth track record in power brands and capability in new launches on a fairly consistent basis.

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