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Ranbaxy reported a lower-than-expected performance for 3QCY2011. While the
company’s top line was more or less in-line with our expectation, its bottom line
came in much lower than our expectation on the back of below-expectation OPM.
The company’s OPM during the quarter dipped to 5.0% vis-à-vis our expectation
of 6.7%. Management is optimistic of monetizing Lipitor and other key FTFs in the
US. We recommend Buy on the stock.
Lower-than-expected performance: Ranbaxy reported net sales of `2,023cr, up
7.4% yoy and just in-line with our estimate of `2,143cr. Gross margin also came
just in-line at 58.2%, lower than our estimate of 60%. Ranbaxy reported OPM of
5.0%, which was lower than our estimate of 6.7% for the quarter. This along with
forex loss of `613cr led to loss of `400cr during the quarter.
Outlook and valuation: The stock is trading at EV/Sales (ex. FTF) of 2.2x
CY2011E and 1.7x CY2012E. We recommend Buy on the stock with a revised
target price of `577, valuing the base business at `483 at 2.2x CY2012E
EV/Sales and attaching `95/share for Para IVs.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ranbaxy reported a lower-than-expected performance for 3QCY2011. While the
company’s top line was more or less in-line with our expectation, its bottom line
came in much lower than our expectation on the back of below-expectation OPM.
The company’s OPM during the quarter dipped to 5.0% vis-à-vis our expectation
of 6.7%. Management is optimistic of monetizing Lipitor and other key FTFs in the
US. We recommend Buy on the stock.
Lower-than-expected performance: Ranbaxy reported net sales of `2,023cr, up
7.4% yoy and just in-line with our estimate of `2,143cr. Gross margin also came
just in-line at 58.2%, lower than our estimate of 60%. Ranbaxy reported OPM of
5.0%, which was lower than our estimate of 6.7% for the quarter. This along with
forex loss of `613cr led to loss of `400cr during the quarter.
Outlook and valuation: The stock is trading at EV/Sales (ex. FTF) of 2.2x
CY2011E and 1.7x CY2012E. We recommend Buy on the stock with a revised
target price of `577, valuing the base business at `483 at 2.2x CY2012E
EV/Sales and attaching `95/share for Para IVs.
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