07 October 2010
Macquarie Research: Ranbaxy Laboratories (RBXY IN, Rs569, Neutral, TP: Rs450)
Ranbaxy Laboratories
(RBXY IN, Rs569, Neutral, TP: Rs450)
Key takeaways
According to the management, the comprehensive settlement between the company, DoJ and
USFDA is to start by the end of CY10 and the whole process will take 2-3 months to settle.
Management said the US, India and Japan are to be the key focus markets for Ranbaxy.
India business: Project Viraat is on track with 1,500 sales people recruited in the last nine
months for the domestic market. Current sales force is ~ 4,000 people. Domestic sales to benefit
starting 2HCY10. Rural focus to increase market share of the company in India. Management
expects 15-20% of growth from domestic franchise.
Japan: Company has identified products for the Japanese market. The total lead time to launch
products in Japan is around three years.
Management believes with the comprehensive settlement in place, the EBITDA margin of the
base business will improve significantly to the mid-teens level.
Our view
Ranbaxy, after adjusting for exclusivity value, trades at 32x CY11E earnings. A favourable DoJ
resolution remains the key upside risk to our Neutral call.
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