>Aventis Pharma (KARVY)

Net revenues for the quarter were up by 5.4 % To Rs 2287 mn. The main de-growth has been due to loss of Rabipur revenues. Operating margins are expected to fall from 18.7 % to 17.9 %. The main reason for the fall in margins has been due to decline in high margin Rabipur revenues. Profits for the quarter are expected to decline from Rs 345 mn to Rs 320 mn for the quarter.

The company's top 6 brands grew by 21.6 %. Amaryl, Clexane, Targocid and Allegra rank no 1 brand in their respective segments. On the domestic front the company has introduced Combiflam cream to leverage on its Combiflam brand. Aventis also has an ambitious project to target Tier 2 towns with new products and a dedicated sales force. The company has given lower export growth estimates for CY 2009E. Export of Panadeine tablets to Malaysia would commence in the current year.

If one were to remove the cash per share of Rs 265 the stock would be quoting at attractive valuations of 11.5x CY 2009E. We introduce CY 2010 estimates and roll over our price target to CY 2010 basis. We rate the core business of the company at 12x CY 2010 at Rs 828 and add Rs 315 cash per share to the company's core price and arrive at a price target of Rs 1145. We upgrade the stock to Outperformer.

To see full report: AVENTIS