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Ranbaxy: Marching ahead - Views on News from Equitymaster
 
 
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  • Jan 11, 2002

    Ranbaxy: Marching ahead

    Recently, Ranbaxy announced that its US subsidiaries have achieved the crucial US$ 100 m revenue mark. The full year results for the company are just round the corner (29th Jan'02) and we expect the company to cross US$ 600 m revenue mark on a consolidated basis for the current year. The company seems well on its way to achieve its revenue target of US$ 1 bn by 2004 end.

    (Rs m) 4QFY01 4QFY02E % Change FY01 FY02E % Change
    Sales 4,785 5,646 18.0% 17,418 20,631 18.4%
    Other Income 268 25 -90.7% 485 321 -33.8%
    Expenditure 4,401 4,664 6.0% 15,446 17,559 13.7%
    Operating Profit (EBDIT) 384 982 155.8% 1,972 3,072 55.8%
    Operating Profit Margin (%) 8.0% 17.4%   11.3% 14.9%  
    Interest 0 204 0 691
    Depreciation 129 130 0.8% 501 516 3.0%
    Profit before Tax 523 673 28.8% 1,956 2,186 11.8%
    Extraordinary Income/Provisions 0 0 0 960
    Provisions/Contigencies 0 0 0 (300)
    Tax 40 71 76.8% 147 286 94.4%
    Profit after Tax/(Loss) 483 603 24.8% 1,809 2,561 41.6%
    Net profit margin (%) 10.1% 10.7%   10.4% 12.4%  
    No. of Shares (eoy) (m) 116 116   116 116  
    Diluted Earnings per share* 16.7 20.8   15.6 22.1  

    (*- annualised)

    On a standalone basis, we expect the company to record sales growth of around 18% for FY02, with 360 basis points rise in operating margins. The spurt is expected to be on the back of ramp up in last two quarters. Operating margins for the last quarter (4QFY02) are expected to jump by 940 basis points on the back of rising contribution from high margin generic exports. We expect the company to register a PBT (before extra-ordinary/one time items) of Rs 2.1 bn, a growth of around 12%. Net profit is however, likely to register a faster growth rate due to extra-ordinary income.

    The year would also be marked with considerable presence of one time/ extra-ordinary charges/ income in the company's financials. In the first quarter of FY01, Ranbaxy received Rs 233 m (US$ 5 m) as technology licensing income from Bayer AG. Again in the third quarter, there was an extra-ordinary income of Rs 727 m on account of profit from sale of its stake in joint venture with Eli Lilly. The company also booked Rs 300 m loss on account of its stock market activity through its subsidiary, Vidyut Investments. There was a considerable drop in other income due to discontinuance of its stock market activity.

    Ranbaxy has ramped up its product approvals in last few months for the International markets. The latest one being generic manufacturing and marketing approval for all combinations of Lisinopril drug, which is a multi-billion cardiovascular molecule. The company now has a basket of 44 products for the US markets, far ahead of any other Indian generic company. The company's targeted penetration in Germany, Brazil and UK also seems to be working well.

    Export strategy of the company.

    With expected global sales in excess of US$ 600 m and export presence in 50 countries across the globe, the company has already achieved critical mass in the International pharma business. If Ranbaxy is successful in its ambitious foray into the global markets, it would be truly be a multinational giant from India. At the current market price of Rs 735, the stock trades at a P/e of 33 x its FY02E earnings on a standalone basis.

     

     

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