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Outpacing IPM & Sustaining Higher EBITDA Margins

Est. Vs. Actual for Q3FY25: Revenue – INLINE; EBITDA Margin – INLINE ; PAT– INLINE

Changes in Estimates post Q3FY25

FY25E/FY26E: Revenue: 0%/0%; EBITDA Abs.: 0%/0%; PAT: 0%/0%

Recommendation Rationale

* AIL reported revenue growth of 12.3% YoY in Q3FY25, slightly ahead of expectations of 8% YoY.

* Abbott’s growth of 12.3% outpaced the IPM's growth of 8.0%. An increase in secondary sales and a higher share of Duphalac, Udiliv, and Rybelsus, which reported QoQ growth of 17.1%, 19.4%, and 51% respectively, contributed to the improved market share.

* The company reported EBITDA margins of 27%, flat on QoQ/YoY, primarily due to higher COGS.

Sector Outlook: Positive

Company Outlook & Guidance: Abbott India is growing 1.2x to 1.5x faster than IPM, driven by high brand recognition and an excellent product portfolio.

Current Valuation: PE 42x for 1HFY27E Earnings (Earlier Valuation: PE 42x 1HFY27)

Current TP: Rs 31,000/share (Earlier TP: Rs 31,420/share)

Recommendation: BUY

Financial Performance

AIL reported revenue growth of 12.3% YoY in Q3FY25, slightly ahead of expectations of 8% YoY. Abbott’s growth of 12.3% outpaced the IPM's growth of 8.0%. The company achieved higher sales growth due to a change in product mix as well as a higher share of Duphalac, Udiliv, and Rybelsus, which reported QoQ growth of 17.1%, 19.4%, and 51% respectively, contributing to improved market share capture. However, this was partially offset by Mixtard and Novomix, which recorded de-growth of 4.5% and 7.2% but still led to double-digit topline growth.

Growth in other key therapies, such as Cardiac (+15.8% QoQ) and Gastro (+13.5% QoQ), was above IPM growth. The company’s 35% Anti-diabetic segment grew by 5%, while the rest of the portfolio grew by around 15%, outpacing IPM

The company’s gross margins deteriorated by 125bps QoQ, attributed to changes in stock adjustments. EBITDA margins stood at 27%, flat YoY/QoQ, driven by higher COGS but a reduction in employee expenses. The company also reported PAT of Rs 361 Cr, marking a 16% YoY growth, driven by high operating profitability.

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