Aventis Pharma - Growth Stocks to BUY

Posted by admin in Articles, Companies, Mid Term Picks on Aug 8th, 2009 | no responses

Aventis Pharma – whose majority stake is held by international pharmaceutical major Sanofi-Aventis — specialises in drugs related to areas such as cardiovascular diseases, metabolic disorders, oncology, internal medicines, vaccines and disorders of the central nervous system.

Why should you buy (even at current prices)?

Here are some of the reasons that make Aventis Pharma an attractive buy at current levels.

It has a portfolio of strong brands and some of them, such as Combiflam, Allegra and Cardace, feature among the Top 100 brands in the retail market.
It doesn’t run the risk that Indian players do in the generics market. For example, Dr Reddy’s Laboratories, Ranbaxy and Sun Pharmaceutical are mired in regulatory and market-related troubles. Aventis Pharma’s India focus and strong brands give it a higher predictability in earnings.
In the year ended December 2008, it has reported healthy figures in spite of challenging domestic and international environments. Net sales increased year-on-year (y-o-y) by 12.6 per cent.
Growth in domestic sales was 10 per cent as compared to the industry average of 9.8 per cent. Export sales, too, grew by a robust 23.4 per cent. The cost was kept under control in spite of high commodity prices in first half of the year. That resulted in its bottom-line growing faster, at 19.23 per cent.
Aventis’ core strengths are its drugs for chronic ailments, such as diabetes and respiratory diseases. The company already has a strong presence in urban areas.
The stressful lifestyle there is expected to increase chronic ailments and this would provide an even larger market for Aventis Pharma.
Further, the company plans to target tier-II cities with new products. This would provide it with stable income in the long term. Considering this and a PE of 15.57, which is less the PE of the industry (31) as well as those of major players such as Biocon and Cipla, Aventis Pharma’s stock is attractively priced.

Source: http://business.rediff.com/slide-show/2009/aug/07/slide-show-1-7-steady-rise-stocks-to-buy.htm