The Hindu Business Line : Solvay Pharma gains on improved results

WITH improved results, Solvay Pharma gained around 7 per cent to touch Rs 498.55 on the BSE. In the quarter to June 30, 2005, the company reported 150 per cent jump in net profit at Rs 8.7 crore compared to the corresponding period last year.

In the first quarter to March 31, 2005, (the company follows the calendar year) it had reported a net loss of Rs 63 lakh.

According to the fund manager, the Q2 EPS of the company is Rs 17.23. "If this is annualised, the EPS for the current year could be around Rs 68.91 and P/E would stand at around 7, much lower than other MNC pharmaceuticals companies," he added. The company's return on capital employed in the fiscal to December 31, 2004, was 53.99 per cent.

Ms Shahina Mukadam, research head of IDBI Cap and pharma analyst, said among the counters of small-sized (equity Rs 5.05 crore) drug manufacturers, this appears relatively cheap. The virtually debt-free and cash-rich company has left behind a dispute with a local co-promoter and is now concentrating on scaling up business by increasing its strength of medical representatives.

"It is looking for growth through new launches from the portfolio of its European parent and also local brand acquisitions. It seeks sales expansion in the speciality product segment and is comfortable launching patented products in India. Products with reasonably good demand in the local markets seem to be on the company's radar," Ms Mukadam added.

According to the management of the company, apart from the launch of a flu vaccine and products in the gastroenterology segment, patented products in the cardiovascular segment are also on the cards this year.

According to analysts, the company has also overcome teething troubles in VAT implementation. "The change in the excise duty is also unlikely to affect the company," Ms Mukadam observed.

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