Ranbaxy: Due for a correction? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Ranbaxy: Due for a correction?

Jun 21, 2000

There have been rumours about the imminent receipt of a milestone payment by Ranbaxy from Bayer, which seems to have propelled a movement in Ranbaxy’s stock price. Over the last one month (i.e. from May 22nd till June 20th 2000), the stock has jumped almost 33%.


Around the same time, Dr. Brian Tempest, President, Pharmaceuticals is reported to have indicated a figure of $ 500 m (approximately Rs 22.54 bn) of annual turnover for the current year ending December 2000. We beg to differ.

First, the company derives almost half of its turnover from India and the Middle East of which the Indian market accounts for 90% of the regional revenue. The Indian market has been witnessing a sharp slowdown over the last two years with overall growth of not more than 10% per annum. The antibiotic/antibacterial segment in which the company has a major presence (these account for almost 53% of the company’s domestic turnover) has been particularly slack.

Therapeutic Area Domestic % of Sales Exports % of Sales
Anti–Infectives 3,655.1 53.0% 1,755.1 57.8%
Gastro Intestinal tract 526.3 7.6% 378.1 12.5%
Nutritional/Multivitamins 554.6 8.0% 296.3 9.8%
Analgesics/NSAIDs 493.9 7.2% 163.0 5.4%
Dermatiologicals 541.0 7.8% 4.8 0.2%
Cardiovascular 292.0 4.2% 46.0 1.5%
Orthopaedics 293.9 4.3% 0.7 0.0%
CNS 223.4 3.2% 11.1 0.4%
Others 313.9 4.6% 379.2 12.5%
TOTAL 6,894.1 100.0% 3,034.3 100%

Second, even if one were to check out the domestic divisional performance, the pharma division’s (which targets general practioners) performance has been reflective of the slowdown. What is likely to lead to topline growth is the performance of Stancare and Solus, which deal with therapeutic areas such as cardiovascular and central nervous system.

Divisions CY99 CY2000E Growth (E)
Pharma 4,123.5 4,504.9 9.3%
Stancare 1,174.0 1,420.5 21.0%
Solus 356.3 481.0 35.0%
Rexcel 857.1 900.0 5.0%
Croslands 937.0 1,056.0 12.7%
TOTAL 7,447.9 8,362.4  
API 423.5 508.2 20.0%
Grand Total 7,871.4 8,870.6  
  • Pharma: This division deals with the old and famous brands of the company. Targets general practitioners
  • Stancare: Deals with specialised drugs and targets specialists
  • Solus: Deals in cardiovascular and central nervous system drugs
  • Rexcel: Deals with brands such acquired from Gufic for instance Mox
  • Croslands: Deals in drugs related to dermatology (skin infections) and orthopaedics

Thirdly, even in the first quarter of the current year Ranbaxy has reported a topline growth of hardly 3.2% (the bottomline has declined 19.4%). With almost over 50% of the company’s revenue accruing from products under the Drug Price Control Order (DPCO) it is difficult to visualise a 35% growth in the current year’s topline. Overall we expect the company to report a turnover in the range of Rs 17.85 bn for the year ending December 2000.

Perhaps, the only trump card in Ranbaxy’s armoury is the sale of RBx 2258 (the benign prostrate hyperplasia molecule) which is expected to be launched in the current year. If that does not happen, the scrip is unlikely to continue its outperformance for long.

Equitymaster requests your view! Post a comment on "Ranbaxy: Due for a correction?". Click here!

  

More Views on News

5 Stocks to Watch Out for Amid the Omicron Outbreak (Views On News)

Dec 3, 2021

As the new variant of Covid-19 emerges, keep an eye on these stocks.

This Stock Just Made a Historical Debut on the Exchanges (Views On News)

Nov 15, 2021

Shares of the company listed at premium of 253% from its IPO price, the highest ever.

3 Indian Pharma Companies that are Investing Big Time for the Future (Views On News)

Nov 9, 2021

In 2021, R&D of pharma companies roared to life in a never-before-seen way.

Demerger of Financial & Pharma Businesses puts Piramal Enterprises in Limelight (Views On News)

Oct 8, 2021

The company's shareholders will be issued 4 shares in the demerged entity for every 1 held in Piramal Enterprises.

Block Deal Disappoints Max Healthcare Shareholders. Stock Falls 6% (Views On News)

Sep 30, 2021

The divestment of 6.6% stake by the promoter is considered to be one of the largest block deals of the market.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

RANBAXY LAB SHARE PRICE


Apr 1, 2015 (Close)

TRACK RANBAXY LAB

  • Track your investment in RANBAXY LAB with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MARKET STATS