Pfizer Result Analysis & Implications

Pfizer Inc. is an American multinational pharmaceutical corporation headquartered in New York City. It is one of the world's largest pharmaceutical companies. It is listed on the New York Stock Exchange, and its shares have been a component of the Dow Jones Industrial Average since 2004. However, its Indian subsidiary is also doing equally well and we present below the results update for the stock.

Pfizer - Q4 FY20 (Audited –Cons)
CMP: 4,078

Total revenue from operations 502 Cr
536 Cr (-6.35%) YoY | 538 Cr (-6.65%) QoQ

Year ending revenue: 2,152 Cr Vs. 2,082 Cr (3.34%)

Net Profit of 103 Cr
109 Cr (-1.92%) YoY 139 Cr (-21.59%) QoQ

Year ending Net profit: 509 Cr Vs. 429 Cr (-18.61%)

EPS (in Rs.) 22.52
23.93 YoY | 30.40 QoQ

Year ending EPS: 111.28 Vs. 93.78

View: The result is below expectations. YoY and QoQ revenue and profit both have declined. EBITDA also declined in both the quarter.

Business Updates & Highlights:

Q4FY20 EBITDA is around INR 108 Cr Vs. 150.7 Cr in Q4FY19 Vs. 133.2 Cr in Q3FY20, therefore, declined by 60.1% in YoY and declined by 18.8% in QoQ. EBITDA margin in Q4FY20 is 21.5% Vs. 27.9% in Q4FY19 Vs. 24.7% in QoQ.

FY20 EBITDA is INR 571.8 Cr Vs. 565.8 Cr in FY19 therefore up by 1.1% in YoY. EBITDA margin is 26.5% Vs. 27.1% in YoY.

The Board of Directors at its Meeting held on 27 April 2020 declared a special (interim) dividend of ₹320 per equity share of ₹10 each (3200%) for the financial year ended 31 March 2020.

In addition to the above, the Board of Directors had further at its Meeting held today, recommended a final dividend of ₹10 per equity share of ₹10 each (100%) for the financial year ended 31 March 2020

Financial

ROE and ROCE is around INR 24% and 15% respectively and book value per share is around INR 690 and share is currently trading at 6x of its book value. The company is currently trading at annualized PE of around 37 which is fair as per industry benchmark. Promoter holding is around 63.9% in the company which is very fair and stable. FIIs and mutual fund hold around 3.7% and 9.3% in the company. Cash and cash equivalent from operating activities as of March 2020 is around INR 323 Cr Vs. 98 Cr as of March 2019. The good thing is the company is virtually debt-free and giving a good dividend which is around 8% of the current market price.

Position: Share strong support price is INR 3820/3680. Long term investor should continue with the company.

Share View: Share price high 5,172 (52 weeks) and now 4,078. Pfizer in a wide range of research areas, including depression, erectile dysfunction, high cholesterol, HIV infection, hypertension, bacterial infections and systemic fungal infections. Pfizer has more than 150 products across 15
therapeutic areas.

Opportunities: Consistent dividend-paying company and in this year paid dividends around 8% of CMP. MNC company with a strong follow corporate governance model. The diversified business model for multiple health area focus. Strong operating cash flow with Zero debt.

Risk: Result is declined on YoY and QoQ, EBITDA also declined. Low return on equity around 14% for more than 3 years now. Single-digit topline growth.

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