Mumbai: Drug maker Piramal Healthcare Ltd on Wednesday posted a lower-than-expected 25% rise in quarterly net profit as its contract manufacturing business continued to be muted amid the global downturn.
For the year ending March 2010, the Mumbai-based drug maker is targeting earnings of Rs24 a share on a 16% revenue growth aided by an 18-20% domestic formulations business growth, chairman Ajay Piramal said.
Earlier this year, the company had said revenue from the contract manufacturing business was expected to remain flat for the current fiscal. “In the immediate term, if you talk in the next six to nine months, I think it is a bit slower,” Piramal said of the contract manufacturing business.
“One reason ... many of the customers are de-stocking. Secondly ... (a) lot of the small biotech companies, the mid-sized biotech companies have also pulled back on some of their budgets.”
For 2008-09, the company reported earnings of Rs21.3 a share on revenue of Rs3,281 crore, up 14.4% over a year earlier.
Earnings Below Expectation
A 17.4% fall in contract manufacturing revenue in the June quarter, due in part to the closure of one of the company’s drug making units in the United Kingdom earlier this year, hurt the company’s earnings for the quarter.
The shutdown of the UK unit, however, helped the Mumbai-based maker of drug formulations and provider of contract manufacturing services to improve its operating margins to 19.5% from 16.9% last year.
The margins for the full year are seen at 21%, Ajay Piramal said.
Piramal Healthcare notched up a net profit of Rs851 million on revenue of Rs822 crore for the June quarter, well below a Reuters poll forecast of Rs108 crore net profit on revenue of Rs870 crore.
Larger rival Dr Reddy’s posted a market-beating quarterly earnings and maintained its forecast for the fiscal year on the launch of new generics in overseas markets.
Jubilant Organosys, which too posted a sharply higher quarterly profit, buttressed by forex gains, maintained its full-year forecast.
The drugmaker’s shares have risen about 40% this year, faster than the BSE Healthcare index’s 26% rise in the period.