Nicholas Piramal India has been one of the major gainers among pharma stocks in the recent rally.

The stock of the domestic pharma major advanced largely on the back of the improved FY 2002-03 results and the company's aggressive growth plans.

From a recent low of Rs 205 touched on 31 March 2003, the Nicholas Piramal India stock has risen by 36.21% to Rs 279.25 on the BSE on 16 May 2003. The BSE Healthcare Index has risen by 4%, while the 30-share BSE Sensitive Index (Sensex) has advanced by only 0.26% in the same period. Average daily volumes on the NPIL counter have multiplied, from slightly over 1,000 shares to over 50,000 shares in the same period, indicating rising investor interest.

The renewed buying on the NPIL counter is largely attributed to the company's impressive financial performance. For the quarter ended 31 March 2003, it posted a 1,335.90% rise in  net profit to Rs 39.63 crore (Rs 2.76 crore) on sales of Rs 267.19 crore (Rs 208.92 crore). Other income for the quarter rose by a whopping 181.20% to Rs 24.89 crore (Rs 8.85 crore). For the year ended 31 March 2003, the company's net profit rose by 144.90% to Rs 118.20 crore (Rs 48.24 crore) on sales of Rs 964.22 crore (Rs 803.85 crore). Other income for the year rose by 35.2% to Rs 50.56 crore (Rs 37.41 crore).

On consolidated basis, the Group has posted a net profit of Rs 116.72 crore for the year ended 31 March 2003 as against a net profit of Rs 47.88 crore for the year ended 31 March 2002. Total income (net of excise) stood at Rs 1,395.31 crore for FY-2003 as against Rs 1,089.05 crore in FY-2002. The board of directors of the company has recommended a dividend of 105% (Rs 10.50 per equity share) for the year ended 31 March 2003.

The results for the quarter and year ended 31 March 2003 are not strictly comparable with the figures of the corresponding period of the previous year as the current periods' figures include: a) Operations of pharma division of ICI India acquired by NPIL in March 2002. b) Operations of Global Bulk Drugs & Fine Chemicals for the period 1 January 2003 to 31 March  2003, consequent to its merger with the company.

NPIL chairman Ajay Piramal said (while announcing the Q4 and FY 2002-03 results), that though NPIL has put into place key capabilities in the last couple of years, he aims at making the company a leader in the domestic pharmaceuticals market and a major player in the export market in the next few years. The company has integrated all its acquisitions, realised tremendous efficiencies and grown organically, he added.

NPIL has brought down its interest burden over the last 12 months through a debt reduction of Rs 52.56 crore and the substitution of high-cost debt with low- cost loans. Net interest costs for FY 2002-03 has come down by 34.4 % to Rs 20.57 crore. NPIL has obtained a tax break of Rs 26.4 crore on account of the merger of group company Global Bulk Drugs and Fine Chemicals, which is a bulk drugs company. NPIL has strengthened its balance sheet by fully writing off the unamortised deferred revenue expenditure of FY 2001-02 by taking an exceptional charge of Rs 34 crore in its Profit & Loss Account for FY 2002-03.

Helped by operational synergy on account of the mergers, and improved financial management, the company has improved its efficiency.  The company's operational margin improved by 270 basis points to 19.9% in FY 2002-03 from 17.2% in the previous year. It has improved its earning per share before extraordinary items to Rs 41 from Rs 20.30 in the previous year. Return On Capital Employed stands at 32 % while the Return on Net Worth (RONW) after extraordinary items was at 32 %.

NPIL's domestic formulations business grew by 19.9%. Excluding the sales gained by the acquisition of the erstwhile pharmaceutical division of ICI, the formulations business grew by 13 % against an industry growth rate of 5.7 % (ORG-MARG MAT, March 2003). This business has outperformed the industry and increased the market share through a combination of new products and innovative brand management.

NPIL has launched 21 products during FY 2002-03, most of them in high growth lifestyle therapeutic segments such as oral anti-diabetics, anti-depressants, cardio-vascular and anti-arthritics. The company's raw material cost reduced from 52.2 % of net sales in FY 2001-02 to 48.9 % of net sales during FY 2002-03.