Ranbaxy
Ranbaxy Labs behaved in the most Quixotic manner- after posting a huge loss for Q2 CY13 on the back of forex losses, it was the top Sensex gainer on that day. The company, for Q2 ended 30th June 2013, posted a net loss of Rs.524 crore and this was mainly on forex loss of Rs.540 crore and it also booked a loss of goodwill at Rs.120 crore at its overseas subsidiaries. The market is probably looking at the fact that if these two items were excluded, the company had actually booked a net profit at Rs.135 crore. Yet the fact that its performance remains poor and this is further indicated by the fall in net revenue, which at Rs.2633 crore was down 18% (YoY). The company has explained this fall in sales, stating that it was due to, “large contribution to sales from exclusivity opportunities in the earlier quarter.” The stock gaining despite the falling numbers was probably on account of bargain hunters, taking stock post the consistent beating down it has gone through for some months now.
The company’s EBITDA was down 23% (YoY) at Rs.200 crore and margins fell 70 bps at 7.4%. In terms of break-up of sales, that from USA stood better at Rs.770 crore and this was on account of higher sales of its prescription drug, Absorica. On the other hand, domestic sales dropped to Rs.525 crore, due to poor growth in anti-infective segment and implementation of price control. In this quarter, the company also adjusted the US $500 million penalty towards its settlement with US Department of Justice. A dark cloud continues to loom over the company post the US FDA debacle and worries remain over the company getting product approvals. Regarding this worry, the company has stated that it will focus on differentiated product portfolio in the US and will launch products primarily in the oral contraceptives and dermatology segment. The company JV in Malaysia, Ranbaxy Malaysia Sdn Bhd was been allocated a site for setting up a Greenfield $35 million plant in Malaysia. This will be its second manufacturing plant in the country and will make dosage forms, including tablets and capsules, primarily in the cardiovascular, anti-diabetic, anti-infective and gastrointestinal segments. Once the new plant is fully operational, Ranbaxy’s total output in Malaysia will be increased from one billion doses a year to three billion doses a year. The US FDA dagger which hangs low over the neck of the company is too hard to ignore, causing a lot of disrepute and uncertainty. Till this entire issues does not get cleared the stock is unlikely to see any major upswings.