Merck

There's been lots of action around Merck. First, the Indian arm sold off it's Life Sciences & Analytics business in 2006. As a result, the company's sales fell by 31% and PAT by 14% for the last quarter. Secondly, the news of May 13th says that Mylan has acquired Merck KGaA for USD 6.7 billion.

Two other pieces caught my attention however -
1. a single line in the Merck website page on investor relations page which reads "the company has investments in bank deposits and liquid funds of Rs. 3054 million". Or rupees 305 crs. At 1.68 cr outstanding shares, the cash in the company comes to Rs. 181. The current price of the share is 405 rupees. Cash constitutes 44% of the CMP of the company !! (cash-rich company)

2. A news item on the internet which reads how Merck is sending top executives to India to size up the situation here. They plan to introduce new drugs soon. (I dont really read much into these news articles, but it did "catch" my attention)

On a more financial front, the current quarter yielded 15.9 crs on sales of 77.2 crs. This is not bad .. a NPM of 20%. Extrapolating these numbers and adding a downside risk of 18%, the annual profits for Merck should be around 50 crores. Or an EPS of 29.76 rupees per share, hence a P/E of 13.6 (which is on track for a pharma company)



Interestingly, Merck is at it's all-time low for the year. There is some muddle around the company, but I think the numbers add up. I'll invest some in the company.