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April 3, 2001
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Money > Stocks > Market Impact > Report April 3, 2001 |
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CSFB puts buy on SmithKline Consumer, forecasts 15% growthNetScribes/Prabodh Chandrasekhar Foreign brokerage Credit Suisse First Boston (CSFB) has recommended a 'buy' on the SmithKline Beecham Consumer Healthcare (SBCH) stock. In a report released on April 2, 2001, the investment bank has set a 12-month target price of Rs 550 for the scrip, projecting a potential upside of 48 per cent from the current level of Rs 360. Analysts say that the company could show an estimated net profit growth of Rs 1.25 billion in 200-01, compared to the previous year's Rs 1.12 billion, with earnings before interest, depreciation, tax and amortisation (EBIDTA) at Rs 1.93 billion compared to the previous year's Rs 1.633 billion. "The company is strong in terms of return on investment, high networth ratio and excellent growth prospects. It also has one of the most innovative marketing strategies," says Jigar Shah, an analyst at KR Choksey Securities, a Bombay-based brokerage outfit. SBCH has its strength in marketing energy drinks like Horlicks, Boost, Maltova and Viva. Horlicks is the largest-selling consumer brand in the country, contributing 78 per cent of the company's overall sales. CSFB expects the company's net sales to touch Rs 9.97 billion in 2001-02, compared to estimated sales of Rs 8.66 billion in the previous year. In 2000, the company had posted sales of Rs 7.52 billion. The growth is expected to come from a strong 46 per cent growth in the Boost brand. In addition to the strong core business of food drinks, the company has an array of OTC products like Crocin (paracetamol), Eno (fruit salt), Tums (antacid) and the recently launched Aquafresh in the toothpaste category. "The company is not getting the valuation it deserves, possibly because it has taken time to disclose relevant information regarding future strategies. Also, there could be confusion as to how the company plans to restructure itself after the global merger of Glaxo and SmithKline," says Shah.
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