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EQUITY RESEARCH May 18, 2010
Ranbaxy Laboratories Ltd Hold
Astonishing results, but uncertainties remain
In Q1’10, Ranbaxy Laboratories (Ranbaxy) posted above expectation top line
Market Cap BSE Sensex Reuters Bloomberg Avg. Volume (52 Week) 0.5 mn 52-Week High/Low Shares Outstanding
Rs. 189.0 bn
number with the consolidated revenues growing by 59.9% yoy to Rs. 24.9 bn 16,875.76 primarily driven by Para-IV exclusivity of Valtrex and settlement income from RANB.BO Flomax. On a standalone basis the Company’s revenues shot up 105.5% yoy RBXY IN to Rs. 16.5 bn. Though the Company posted robust performance during the
Rs. 449.50 Rs. 538 / 208.15
quarter due to improvement across geographies and favourable currency, the continued uncertainty over the timing of the resolution of USFDA issues will
remain a concern in the near term. However, we have increased our revenue estimate for CY10 by 390 bps to 9% and upgrade our rating on the stock from
(Consolidated) Year to 31 December 2010E 2011E Sell to Hold with a target price of Rs. 460. EPS (Rs.) 16.2 18.1 Robust growth across the board: During the quarter the Company witnessed EPS Growth (%) nm 11.6% broad based growth with strong business performance in the USA (up by 266% PER (x) 27.7x 24.8x
to USD 251 mn) and 10% yoy jump in the revenues from Europe (including
EV/Sales (x) 2.6x 2.3x
Romania). Going forward, we expect Romania to be on the growth trajectory,
EV/EBITDA (x) 17.5x 15.6x
following the cost rationalization exercise taken last year and strong growth in the over-the-counter segment. In the domestic market, for project Viraat, the
Shareholding Pattern (%)
Company has increased the field force and entered into new therapeutic
segments, which is likely to result in 15-20% growth in the domestic FIIs 7.6 formulations from H2’10. Additionally, we expect the Japan market to be one of Institutions 11.6 its key growth drivers in the medium to long term and would develop, Public & Others 16.9 manufacture and supply products to the newly formed company (Daiichi
Holding >1% (Non-Promoter)
Sankyo Espha Co. Ltd) by Daiichi Sankyo to market generic products.
6.7 Bajaj Alianz Life Insur. Com.
LIC of India
1.6 Uncertainties is likely to remain in the near-term:
On the US Food and Drug Administration (USFDA) issue the Company is still waiting inspection of the Dewas facility, while the corrective action plan for Pantoa Sahib is under
way. However, Ranbaxy continues to remain upbeat on the resolution of issues
with the USFDA, we remain cautious on the timing of the same.
Key Figures (Standalone)
Quarterly Data Q1'09 Q4'09 Q1'10 YoY% QoQ%
(Figures in Rs. mn, except per share data) Net Sales 8,022 15,229 16,485 105.5% 8.2% EBITDA (1,410) 7,787 8,722 nm 12.0%
RBXY Rebased BSE Index
Net Profit (9,188) 4,882 8,718 nm 78.6% Margins(%) EBITDA (17.6)% 51.1% 52.9% NPM (114.5)% 32.1% 52.9% Per Share Data (Rs.) EPS (4.1) 9.7 19.8 nm 103.8%
Please see the end of the report for disclaimer and disclosures.
9% yoy to Rs. Gurgaon . has achieved a market share of over 60%. and contributed 39% to sales.448-451. the Company’s consolidated revenue in USD terms grew by whooping 65% yoy to USD 542 mn and in rupee terms it jumped 59. The top line growth was also aided by a favourable currency and one-time income from settlement. • Sales in North America were USD 264 mn (Rs. • Sales in the CIS region recovered well to USD 24 mn (Rs. 436 mn (USD 10 mn). 8. • Europe recorded sales of USD 67 mn (Rs. on standalone basis.RANBAXY LABORATORIES LTD RESEARCH EQUITY RESEARCH May 18.). During the quarter EBITDA returned to positive at Rs. a growth of 26%.5% yoy to Rs. • The domestic pharmaceuticals business recorded sales of Rs. 3989666 . a growth of 222%. exhibiting buoyant growth of 266%. The net profit stood at Rs. 2010 Result Highlights In Q1’10. 662 mn). Udyog Vihar.7 bn from negative Rs. 9. and grew by 14%. sales in emerging markets were USD 212 mn. Plot No. a growth of 15%.O.7 bn in Q1’10 versus a loss of Rs. 1. 12. Valacyclovir.4 bn in Q1’09. a growth of 10%. Haryana. a growth of 6% in rupee terms. a de-growth of 38%.V.2 bn in Q1’09.Indiabulls (H. The Company also launched an authorised generic of Oxycodone ER tablets. -2.5 bn. a growth of 50%. Excluding a large government tender in Q1’09. Other key operational highlights: • During Q1’10. primarily driven by FTF sales. Sales in Romania showed a recovery during the quarter. 1. Valtrex and Oxycodone) exclusivities in the USA.5 bn (USD 75 mn).1 bn). • Asia Pacific recorded sales of USD 14 mn (Rs. Phase . 11. On standalone basis. 8. during the quarter.5 bn). an FTF product launched in Q4’09. primarily due to divestment of certain businesses in Vietnam and China in FY09. 16. Sales in the Consumer Healthcare business were at Rs. USA recorded sales of USD 251 mn (Rs. 3.1 bn).1 bn). revenue advanced 105. 3. 24. • In the USA.9 bn driven by two first to file (FTF.122 001. the growth was 15%. Ph: (0124) 3989555.
Ph: (0124) 3989555.3% Per Share Data (Rs. 460.251 2.3% 13.O.970 82. Moreover.2% EBITDA Margin 13.122 001.822 7. we have upgraded our top line growth estimate for CY10 by 390 bps.5% 13. which provides a marginal upside of 2% over the current market price of Rs.8% 14. Hence.3)% 3.). Phase .V. our DCF based valuation (assuming a 14.9% 3.7% Adjusted net Profit 7.9% 8.6) 4.917 10.0% (10.6 16. Haryana.60 12.808 91.50.0% 696 631 499 576 528 5.3 (19.0% -3.Indiabulls (H.5% 593 545 443 503 466 623 571 460 525 484 5.4% PER (x) 23. For APIs. except per share data) (CY09-11E) Net Sales 66.41 4 75.5% 14.8% NPM 11.) EPS 18.5% 657 599 478 549 505 6. Udyog Vihar.965 6.9% 14.7x 24. and 33 approvals were received. we upgrade our rating on the stock from Sell to Hold. Cost of Capital 459.RANBAXY LABORATORIES LTD RESEARCH EQUITY RESEARCH May 18.056 12.3x nm 97 .0% 14.48 8) 2. Plot No.224 13. Key Figures (Consolidated) Year to December CY07 CY08 CY09 CY10E CY11E CAGR (%) (Figures in Rs.2 18.7x 27.39 6 9.637 22.0% EBITDA 9. a total of 34 filings were made. Gurgaon .2% 8. 449.3% WACC and a 5% terminal growth rate) gives a target price of Rs.0% 4. the Company made 43 filings and received 45 approvals for dosage forms.480 72.8x Valuation Factoring the better than expected Q1’10 results and recent successful launch of two FTFs. mn.0% 567 523 428 484 449 4. 2010 • During the quarter. 3989666 .3 % 11.448-451.612 60.319 (7.1 98.
Haryana. It is for the general information of clients of Indiabulls Securities Limited. Phase . directly or indirectly related to specific recommendations or views expressed in this report. This report is not to be considered as an offer to sell or the solicitation of an offer to buy any stock or derivative in any jurisdiction where such an offer or solicitation would be illegal. and we are not soliciting any action based upon it. Past performance is not necessarily a guide to future performance.RANBAXY LABORATORIES LTD RESEARCH EQUITY RESEARCH May 18. financial situations. Neither Indiabulls Securities Limited nor any of its affiliates. Past performance is not a guide for future performance. The Report should not be reproduced or redistributed to any other person or person(s) in any form. This report is based upon information that we consider reliable. Any opinions expressed here in reflect judgments at this date and are subject to change without notice. 3989666 . The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject stock and no part of his or her compensation was. while making investment decision. Ph: (0124) 3989555.122 001. This material is for the general information of the authorized recipient. and encourages investors to seek the advice of a financial adviser. In addition. ISL has no obligation to continue to publish reports on all the stocks currently under its coverage or to notify you in the event it terminates its coverage. which is in violation of rules and regulations of National Stock Exchange or Bombay Stock Exchange.O.V. associates. Plot No. Indiabulls Securities Limited shall not be responsible for any transaction conducted based on the information given in this report. and it should not be relied upon as such. You are advised to independently evaluate the investments and strategies discussed herein and also seek the advice of your financial adviser. The report does not provide individually tailor-made investment advice. or needs of individual clients. No part of this material may be duplicated in any form and/or redistributed without Indiabulls Securities Limited prior written consent. The value of. Indiabulls Securities Limited recommends that investors independently evaluate particular investments and strategies. is or will be. but we do not represent that it is accurate or complete. No action is solicited on the basis of the contents of this report.448-451.Indiabulls (H.). It does not constitute a personal recommendation or take into account the particular investment objectives. directors or employees shall in any way be responsible for any loss or damage that may arise to any person from any error in the information contained in this report. Indiabulls Securities Limited (ISL) and any/all of its group companies or directors or employees reserves its right to suspend the publication of this Report and are not under any obligation to tell you when opinions or information in this report change. Gurgaon . The information given herein should be treated as only factor. Udyog Vihar. 2010 Disclaimer This report is not for public distribution and is only for private circulation and use. and income from investments may vary because of changes in the macro and micro economic conditions. -4.
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