Ranbaxy Labs Over optimism in the stock, Downgrade to Reduce::Emkay

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Ranbaxy Labs

Over optimism in the stock, Downgrade to Reduce

REDUCE

CMP: Rs534                                        Target Price: Rs424

---

n     Ranbaxy’s Q2CY11 results were below expectations. Revenue de-grew 2% YoY to Rs21bn, EBITDA de-grew 56% to Rs1.8bn and APAT de-grew 67% to Rs1.5bn

n     Adjusted for FTF exclusivity (Valtrex in Q2CY10 and Aricept in Q2CY11), base business revenues grew at 8.2% YoY and domestic business grew by 6% only

n     Current valuations have over factored the future potential of FTF opportunities and current performance of the business doesn’t justify these valuations

n     Downgrade to Reduce with a target price of Rs424 (20xbase business earnings + Rs82 Para-IV NPV)