Abbott India: HUGE Investment Opportunity Unveiled! ICICI Securities Upgrades to BUY - See the New Target! 🚀

ICICI Securities released a research report on Abbott India, upgrading the stock to a 'BUY' and setting a new target price of INR 34,500, based on 38 times FY27 earnings. In the second quarter of fiscal year 2026 (Q2FY26), Abbott India's revenue saw a modest year-over-year increase of 7.6%. This slower growth is primarily attributed to Novo Nordisk's decision to stop selling its insulin pens, including Human Mixtard, Levemir, and Xultophy, in India. Novo Nordisk is shifting its manufacturing capacity towards its high-demand GLP-1 medications, Ozempic and Wegovy. Despite the revenue slowdown, Abbott India demonstrated strong operational performance. A better product mix helped expand gross margins by 192 basis points (bps), while cost-saving measures pushed EBITDA margins to an unprecedented 28.6%.

Outlook: Looking ahead, ICICI Securities anticipates that timely price adjustments on products not under the National List of Essential Medicines (NLEM) and the benefits of operating leverage will likely lead to further margin improvements in the coming year. The company concluded the first half of FY26 with a substantial cash reserve of approximately INR 12.8 billion, representing about 2% of its market capitalization. Based on these factors and anticipating better margins, ICICI Securities has increased its Earnings Per Share (EPS) estimates for FY26 and FY27 by approximately 2%.

Impact This report suggests a positive outlook for Abbott India, driven by margin expansion and operational efficiencies, despite short-term revenue headwinds. The BUY recommendation and target price signal confidence from analysts, potentially influencing investor sentiment and stock movement. Rating: 8/10

Difficult Terms Explained: YoY: Year-over-year, meaning a comparison of financial results from the current period to the same period in the previous year. GLP-1 brands: Glucagon-like peptide-1 receptor agonists, a class of drugs often used for managing type 2 diabetes and weight loss. Gross Margin: The difference between revenue and the cost of goods sold, indicating profitability from selling products before other expenses. EBITDA Margin: Earnings Before Interest, Taxes, Depreciation, and Amortization as a percentage of revenue, showing operational profitability. Cost Efficiencies: Measures taken to reduce operational costs without compromising quality or output. Operating Leverage: The degree to which a company's costs are fixed versus variable. Higher operating leverage means that a small increase in sales can lead to a larger increase in operating income. NLEM: National List of Essential Medicines, a list maintained by the Indian government of essential medicines that should be available at affordable prices. MCAP: Market Capitalization, the total market value of a company's outstanding shares. EPS: Earnings Per Share, a company's profit divided by the number of outstanding shares, indicating profitability on a per-share basis. TP: Target Price, the price at which an analyst or investor expects a stock to trade in the future.