Abbott India (AIL), a 50.44% subsidiary of Abbott Capital India Ltd., UK, is
involved in the manufacture and marketing of pharmaceutical, diagnostic,
nutritional and hospital products. Consolidation of Solvay Pharma India Ltd. (SPIL)
with the company is expected to improve operating efficiencies, leading to
expansion of EBITDA margin and an extended product portfolio with addition of
brands from SPIL. We expect the company to post a 24% CAGR top-line over
CY2010-13E on the back of continued focus on advertising, increased employee
expenses, new therapeutic segments and its agreement with Zydus Cadila. At the
current price of Rs1,434, the stock is trading at 13.9x CY2013E EPS, which we
believe is attractive for an MNC. We Initiate Coverage on AIL with a Buy rating
and a target price of Rs.1,852.
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