Q1FY13 Results Preview
Pharma
Benefit from depreciating rupee
We expect the thirteen pharma companies under our coverage to post 22%YoY growth in sales during the quarter due to FTF opportunity of generic Lipitor in the US market and benefit of depreciating rupee. We expect Ranbaxy Labs (RLL) to report 46%YoY growth due to ~$100mn (Rs5.4bn) revenues of generic Lipitor in the US. Pharma companies with higher exports are likely to benefit from the 8%QoQ depreciation of rupee against the dollar. However, they would be impacted from MTM forex losses. We expect these companies to report 24%YoY growth in EBIDTA and 30bps improvement in EBIDTA margin from 19.5% to 19.8%. We expect 31%YoY decline in net profit due to large MTM losses and higher tax rate with the expiry of EOU benefits. Overall, we expect pharma companies to report excellent performance for the quarter except for Aurobindo Pharma (APL) and RLL.
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m Good revenue growth: We expect revenue growth of pharma companies at 22% on a YoY basis, on the back of good growth in the US market and benefit of depreciation of rupee. We expect RLL to generate revenues of ~$100mn (Rs5.4bn) from FTF of Lipitor in the US for the two-month period.
m Improvement in EBITDA margin: We expect the EBITDA margin of our coverage companies to improve by 30bps from 19.5% to 19.8% due to high margin FTF opportunities for generic Lipitor. However, the depreciating rupee has adversely impacted the imported raw material cost.
m MTM losses due to currency fluctuations: We expect APL and RLL to get adversely impacted from MTM losses due to 8% depreciation of rupee during the quarter. However, these companies would have higher revenue growth.
m Lupin and Wyeth remain our preferred picks in the space: Lupin and Wyeth continue to be our best picks in the sector on account of Lupin’s improved performance across geographies and launch of Prevenar 13 for adult usage by Wyeth. These companies are likely to report good growth in the domestic market.
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