Glaxo India reported an EPS of Rs 4.9 per share for the quarter ended June, 2000 (Q2). The scrip quotes at Rs 480 and has a P/E of 28 on a forward yearly expected EPS of Rs 17. The stock price of Glaxo is fully priced at this level.

Burroughs Wellcome has reported an EPS of Rs 10.7 for Q2. It is quoting at Rs 330 at a P/E of 10 on a forward yearly expected EPS of Rs 32. The scrip can move up to Rs 374 where it will come up with a resistance. Valuation wise it has the potential to move upto Rs 490 but this scrip has not been a market favourite.

Smithkline Pharmaceuticals reported an EPS of Rs 2.9 for Q2. This scrip has moved up with a raise in volumes to Rs 168 and is quoting at a P/E of 16 with a forward yearly expected EPS of Rs 11. Again, this is fully priced but punters might try to hike it to Rs 200.

The Smithkline Consumer scrip has been languishing and can move up easily to Rs 613 with a resistance at Rs 530.

Mahindra & Mahindra
The tractor industry has been going through a rough phase of late. The scenario in the rural automotive sector is no better with the sales tax rationalisation and drought conditions taking their toll. M&M's poor financial results for the quarter ended on June 2000, have to be viewed against this backdrop.

Thirty one per cent reduction in interest cost to Rs 27.23 crore and a 51 per cent increase in other income at Rs 35.74 crore have saved the company's bottomline from going into the red. While sales fell by nearly 2 per cent, the total expenditure moving in the other direction by a similar percentage figure, combined to hit the company's operations badly. In line with that, the operating profit margin (OPM) was squeezed from 12 per cent to 8.27 per cent. Operational profits dipped by 32.29 per cent to Rs 70.20 crore. The only positive thing was the reduction in the interest cost. It came down significantly due to the redemption of a $28 million foreign currency convertible bonds (FCCB) loan. Out of this, a $23 million loan was converted into global depository receipts (GDR). The company's debt-equity ratio has improved because of this.

The company has bucked the trend as far as tractor sales are concerned. The number of units sold increased by 131 units to 19,792 units against the 17.7 per cent decline registered by the industry. The light commercial vehicle (LCV) segment also put up a decent show with 30 per cent incremental sales to 1,904 units. However, it was the performance of multiutility vehicles which negated improvements on other fronts. A 13 per cent fall in volumes to 13,624 units, coupled with the high values of products from this segment has affected the topline adversely. During the quarter, there were two new product launches in the company's multiutility vehicles (MUV) division and one in the tractor division. Mahindra Savari and Marshal Deluxe were the new models launched recently. The current quarter will see the launch of `Bolero', a MUV designed for the urban market. `Arjun', a new tractor, has been developed with technological inputs from an Austrian company.

The product is reported to have been well received by the market. With this product, the company intends to make its presence felt in the lower horsepower (HP) segment of the tractor market.

The company has taken a lot of initiatives in the information technology (IT) field. Mahindra Information Technology Systems Ltd, a wholly-owned subsidiary of the company, is the holding company for all IT-related investments made by the parent company. One subsidiary called E-Mahindra, has set up a website called propertymartindia.com, a real estate site, in association with HDFC. These investments are the company's hidden strengths. The decision to unlock the value of its gold mine, Mahindra British Telecom (MBT) by getting it listed on the bourses is expected to be well received by the stock market. This news may partially negate the bad news of a 33 per cent fall in net profit to Rs 34.28 crore. Post results, the stock has already seen a hammering with a 9 per cent fall to Rs 179.

Burrough Wellcome (India)
Burrough Wellcome also reported its Q2 performance in tune with the performance of its parent company Glaxo Ltd. Sales for the quarter ended June 30, 2000 increased by 23 percent to Rs 60 Crore. Higher growth in second quarter improved the overall performance of the first half. Sales during the first half increased by 14.83 percent.

The growth in operating expenditure by 20 per cent was a little lower than the growth achieved on the sales front. The operating expenditure increased from Rs 40 crore to Rs 48 crore. This helped the company to increase its operating profit from Rs 13 crore to Rs 16 crore. But operating profit margins remained at same level of 27 percent.

The interest burden of the company declined steeply from Rs 67 lakh to Rs 37 lakh due to efficient utilisation of funds. The net profit of the company increased by 31.6 percent to Rs 9.78 Crore.

The company manufactures various products based on sulphamethaxazole. This drug is under drug price control order (DPCO). Recently, the government has reduced the prices of sulphamethaxazole from Rs 440 per kg to Rs 330 per kg. Septran is the largest brand in the market under this therapeutic segment. However, the company will have to pass on the benefits to users.

Panacea Biotech
This little known company is taking rapid strides ahead. During the first quarter ended on June 30, 2000, the company's sales increased by 23 percent to Rs 32 crore. The company exercised efficient control over its material expenditure as a result of which operating expenditure increased by 16.86 percent to Rs 26 crore. Higher growth in sales and lower growth in expenses boosted the operating profit margins. The operating profit increased from Rs 4.1 crore to Rs 6.4 crore. Operating profit margins jumped from 15.73 percent in the corresponding quarter in the previous year to 20 percent. Net profit of the company registered a 61.27 percent growth which increased from Rs 2.04 crore to Rs 3.29 crore. On an equity base of Rs 5.71 crore, the annualised earning per share works out to Rs 23.05 per share.

The reason attributed to the growth of the company is that the company manufactures one of the fastest growing Hepatitis-B vaccine. The brand name of the company's product is Enivac HB.

The company is among one of very few companies to manufacture these vaccine. The current year has seen a dramatic rise in the demand for the vaccine. The government has earmarked more than Rs 2,800 crore for nation-wide Hepatitis B vaccination programmes. The huge amount can be compared with the other vaccination programmes which were much smaller in size - in the range of around Rs 180 to 200 crore.

There are very few manufacturers of this vaccine in India who will reap the benefits of the vaccination drive initiated by the government. Smithkline Beecham, Cadila Healthcare, Alkem, Wockhardt, Shanta Biochem and Panacea are prominent among them.

Demand for the Hepatitis B vaccine has increased from one million doses in 1995 to 45 million doses in 2000 and registered a compounded annual growth rate (CAGR) of 114 per cent.

-- KSESH(with contributions from Manish Joshi and Dhruv Rathi)