himani.singh@icicidir ect.com Nicholas Piramal (NICPIR) Lucrative ...

CMO from Indian assets gathering momentum
Custom manufacturing operations from Indian assets are gathering
momentum and the company is likely to rake in Rs 237.83 crore over FY06-
09E on account of more contracts. The company is sitting on an order
book, which can generate peak sales of US$105 million per annum at an
EBIDTA margin of 25%.
Exhibit 5: CMO from Indian assets rising
Sales (Rs Crore)
70
60
50
40
30
20
10
0
Q2FY06
Q3FY06
Q4FY06
Q1FY07
Q2FY07
Source: Company, ICICIdirect Research
Q3FY07
Q4FY07
Avecia operations turned around in Q4FY07E
NPIL had acquired the loss-making Avecia in Europe for UK£9.5 million
pound to consolidate its contract manufacturing business. Avecia’s
operations have now reached an inflection point due to increased sales
and enhanced sourcing from Indian assets. We expect its revenues to
grow at a CAGR of 42% over FY06-09E to Rs 289 crore. The company
turned around in Q4FY07 and we believe the acquisition would be
earnings accretive for NPIL from FY08E.
Exhibit 6: Avecia acquisition paying-off
Sales (Rs Crore)
90
80
70
60
50
40
30
20
10
0
Q1FY07
Q2FY07
Q3FY07
Q4FY07
Source: Company, ICICIdirect Research
Q 1FY08E
Q 2FY08E
Q1FY08E
Q 3FY08E
Q2FY08E
Q3FY08E
Q 4FY08E
Q4FY08E
Q 1FY09E
Q1FY09E
Q 2FY09E
Q2FY09E
Q 3FY09E
Q3FY09E
Q4FY09E
Q 4FY09E
4 | P age