Panacea Biotech scores a century
Share price of vaccine maker Panacea Biotech has breached the three digit mark and now ruling up 5% at Rs. 100.40. Company announced quarter results for three months ended 31st December 2013, yesterday after market close. While sales were flat QoQ to Rs. 112 crore, its PAT increased to Rs. 83 crore, from a loss of Rs. 56 crore in Q2. However, the company reported a green bottomline only thanks to change in accounting policy with respect to depreciation, and not due to improved working. Infact operating loss surges to Rs. 55 crore, from Rs. 20 crore QoQ.
Due to retrospective change in method of depreciating tangible fixed assets from written down value method to straight line method during the quarter, its other income jumped to Rs. 178 crore (versus Rs. 5.4 crore for FY13) on account of reversal of excess depreciation charged earlier. Since the company is loss making (FY13 net loss of Rs. 230 crore, is does not have any tax burden. Hence, despite a one time gain of Rs. 178 crore, its net profit was only Rs. 83 crore, as operating loss of Rs. 55 crore and finance cost of Rs. 40 crore ate into the other income.
In addition to poor operating performance, company is highly leveraged with debt equity ratio of 2.2:1, as of 30th September 2013. Moreover, with net debt of close to Rs. 920 crore, CARE has down-graded the credit rating on long term as well as short term bank facilities to ‘D’ (default expected to be in default) from ‘B' and ‘A4' respectively, which is again worrisome. Company has filed its proposal for bank borrowings with the CDR cell.
In all this gloom, there is one big positive announcement - the company’s pentavalent vaccine (Easyfive-TT) has been re-listed by WHO, post-audit of its manufacturing facilities at Lalru (Punjab) and Baddi (Himachal). Company has been awarded the supply for the vaccine for 2014-16, with award for additional requirement to be made at a later stage.
Thus, one must wait to see if this morning’s exuberance on the counter is short-lived or actually a turn-around for the company over the next 2 years.