Burroughs Wellcome burrows up

Burroughs Wellcome burrowed higher on Thursday following the impressive results and huge dividend declared by the pharma MNC on Wednesday.

That was enough to spur the scrip higher by 1.88% to Rs 230.65 by 10:02 IST. Volumes were modest at 1,425 shares on BSE by then. In the three sessions between 7 and 12 March 2003, Burroughs Wellcome climbed 5.05% to Rs 226.40 from Rs 215.50.

Late Wednesday afternoon, Burroughs Wellcome announced its Q4 and FY 2002 results. For the quarter ended 31 December 2002, the pharma MNC posted a massive 396.35% rise in net profit to Rs 7.61 crore on a marginal 0.4% increase in total income to Rs 37.76 crore.

For the year ended 31 December 2002, the company's net profit rose 97.6% to Rs 35.11 crore on a 12.3% increase in total income to Rs 180.68 crore (Rs 1.8 billion).

The company also declared a creamy dividend of 110% or Rs 11 per share for FY 2002.

Burroughs Wellcome, is a 51% subsidiary of GlaxoSmithKline plc of UK. BWIL's major products are anti-bacterial, anti-pyretic, topical anti-infecitves and cold preparations. The company also has a presence in the anti-cancer, anti-viral, cardiovascular, anti-helmintic, anti-asthmatic, anti-gout, anti-leprosy and anti-Parkinson therapeutic segments.

BWIL is a leading manufacturer of sulphamethaxazole and paracetamol products and has established brands like Septran, Calpol, Actified and Neosporin. These four brands together form 81% of the company's revenues.

The company has most of its products in the anti-bacterial, anti-pyretic, topical antiinfectives and cold preparations, which are slow growth therapeutic segments. However, these segments form the largest part of the Indian pharmaceuticals market.

BWIL is rejuvenating its older brands and improving the formulations to lengthen their life cycle. At the same time, it is also trying to increase exposure to other segments like anticancer, anti-viral, cardiovascular, anti-helmintic, anti-asthmatic, anti-leprosy and anti-Parkinson therapeutic segments.

Analysts say considering the company's strong fundamentals, the stock's valuation seems rather low. For the FY ending 31 December 2002, on an equity of Rs 9.18 crore and face value of Rs 10, the EPS works out to Rs 38.24 on a P/E of 5.92, far lower than that of the pharma MNC sector.

Perhaps, investors have been put off by concerns over the company's proposed merger with Glaxosmithkline. Any merger, the market reckons, will not be favourable for BWIL.

As on 31 December 2002, the promoter's holding in the company was 51%. While the public and institutions held 30.82% and 11.22%, respectively.

BSE code: 500076