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Ranbaxy 2QFY02 net up 22% - Views on News from Equitymaster
 
 
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  • Jul 9, 2001

    Ranbaxy 2QFY02 net up 22%

    Ranbaxy Laboratories Ltd has posted marginally better than expected growth in topline in 2QFY02 on the back of strong growth in exports. US exports grew by 53% to touch US $ 24.5 m. There was however a 120 basis points drop in operating margins. The drop in operating margins appears due to below average growth in anti-infective segment, which contributes around 45% of the domestic formulations revenues.

    (Rs m) 2QFY01 2QFY02 Change
    Net Sales 4,236 4,993 17.9%
    Other Income 99 123 24.2%
    Expenditure 3,617 4,323 19.5%
    Operating Profit (EBDIT) 619 670 8.2%
    Operating Profit Margin (%) 14.6% 13.4%  
    Interest 158 138 -12.7%
    Depreciation 123 128 4.1%
    Profit before Tax 437 527 20.6%
    Tax 33 34 3.0%
    Profit after Tax/(Loss) 404 493 22.0%
    Net profit margin (%) 9.5% 9.9%  
    No. of Shares (eoy) (m) 41.4 115.9  
    Earnings per share* 39.0 17.0  
    *(annualised)      
    Current P/e ratio   28.3  

    Ranbaxy's global sales for the period 1HFY02 stood at US$ 269 m registering a growth of 17%. The company's international operations are expected to perform well in the coming quarters on the back of the 38 approved product basket for the US generics market. Though each filing is not large, collectively it is expected to provide a fillip to the company's revenues.

    The company has recently got a six month exclusivity for its generic dosage of Advil, an OTC cold and sinus drug with a market size of around US$ 50 m. Further, Ranbaxy claims to be only company to file for US FDA approval for Ceftum (Cefuroxime Axetil). The litigation for the same is on in the US and the court decision is expected soon. The patent court decision could provide a big fillip to the company's financials if the decision turns out in company's favour considering that the market for Cefuroxime Axetil is more than US$ 400 m. Ranbaxy can mop a fair share of this market if the decision turns out in its favour.

    On the R&D front, Cipro-D molecule licensed to Bayer is in the last, phase-III of clinical trials both in India and the US. The company is expected to soon announce launch of the same in India. Further, the company's BPH molecule (RBx 2258), has actively moved forward in Clinical Phase-II studies in India.

    At the current market price of Rs 482, the stock is trading at 21 times our expected earnings for FY02. In the immediate term there could be several triggers for the stock including a spurt in profitability from international operations, launch of Cipro-D and outlicensing of its BPH molecule. However, on the domestic front the company will have to reduce its dependence on anti-infectives quickly to provide a much needed boost to its operating margins.

     

     

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