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Ranbaxy Laboratories (RBXY IN; Mkt Cap USD5.6b, CMP Rs585, Sell)
Revenue growth was mainly led by 95% YoY increase in the revenues from USA and 22% growth in India formulations business
Ranbaxy's 3QCY10 net sales grew 9.7% to Rs18.9b , EBITDA at Rs1.38b while reported PAT at Rs3.1b (vs est Rs2.1b) mainly due to Rs2.6b of MTM forex gains on loans and forex hedges.
Ranbaxy is currently valued at 49x CY11E core EPS and 31x CY12E core EPS. Our current DCF value of all potential Para-IV upsides is Rs91/sh. We believe that current valuations are discounting the best-case
scenario for both the core business as well as for the Para-IV upsides. We downgrade the stock to Sell with TP of Rs490 (25x CY12E EPS + FTF DCF value of Rs91/sh).
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