Pfizer Q4 Results Review - Subpar Performance; Growth Concerns Ahead: Nirmal Bang

Nirmal Bang Report

Pfizer Ltd.'s India’s Q4 FY24 performance was a mixed bag, with revenue below our and consensus estimates and a decline seen across all parameters on YoY basis.

We believe that product recalls and weak growth in Acute therapies and key segments caused operational de-leverage.

In Q4 FY24, revenue declined by ~5% YoY to Rs 5.46 billion due to slower growth in key therapy areas. Ebitda margin improved by 289 bps YoY to 34.7% due to softening raw material prices and reduction in other expenses. Adjusted profit after tax grew by 23.3% YoY to Rs 1.78 billion on the back of improvement in gross margin and other income.

For FY24, revenue declined by ~10% to Rs 21.9 billion due to weak growth in Acute therapies and key segments. Additionally, the company conducted a voluntary recall of three products in Q1 FY24, causing operational deleverage.

Although the company has strong brands in its portfolio, we have some concerns about the slowdown in revenue growth (seven-year compound annual growth rate of 1.6%) and persistent under-performance in key segments in the long run.

Since we are concerned about future growth of key therapeutic segments, we maintain “Sell” on Pfizer India with a revised target price of Rs 3,619, valuing it at 25 times FY26E earnings per share.

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