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Ranbaxy Laboratories 4QFY2014 performance highlights and results update

February 10, 2014, Monday, 07:44 GMT | 02:44 EST | 13:14 IST | 15:44 SGT
Contributed by Angel Broking


Ranbaxy Laboratories (Ranbaxy) posted results, better than expected, on the operational front. It posted sales of Rs.2,859cr (vs an expected Rs.2,758cr), posting a yoy growth of 7.0%. The main positive was its OPM, which came in at 7.9% (vs 6.6% in 3QFY2014 and 2.5% in 4QCY2012), mainly on back of gross profit margin improvement, which expanded by 665bp. Thus, the adjusted net profit came in at Rs.112cr vs Rs.10cr during the corresponding period of last year. The Management has guided that the import alert on the Toansa plant will not impact the overall sales significantly, as the company has already got in third party outsourcing for the product. We remain Neutral on the stock.
 
Better than-expected performance on OPM front: Ranbaxy posted sales of Rs.2,859cr (vs an expected Rs.2,758cr), ie a yoy growth of 7.0%. Indian formulation sales posted a growth of 8.5% yoy. Export sales grew 19.7% in the US, by 20.4% in Eastern Europe & CIS , and by 4.4% yoy in Western Europe. The main positive factor was the OPM, which came in at 7.9% (vs 6.6% in 3QFY2014 and 2.5% in 4QCY2012), mainly on back of gross profit margin improvement, which expanded by 665bp. Thus, the adjusted net profit was around Rs.112cr vs Rs.10cr during the corresponding period of last year.
 
Outlook and valuation: The company has allayed all fears with respect to the recent import ban on the Toansa plant by already having put in place third party outsourcing. The company has a major portion of its facilities under the USFDA import alert and any major recovery in sales and profitability will likely take time. We believe that in the near term, the company will continue to trade at a huge discount to its peers. Thus, while investors could benefit in the long term, we recommend a Neutral stance on the stock considering the concerns.