Ranbaxy

Ranbaxy Labs, for Q1FY15, posted a consolidated net loss at Rs.186 crore after making a one-time settlement provision of 240 crore. This is the same felony charges case where the company had pleaded guilty and had agreed to pay $500 million in civil and criminal fines. Later, it was slapped with more regulatory sanctions due to manufacturing violations as per US FDA. The only solace here is that hopefully, this provision will once and for all settle the case and remove the sword of uncertainty hanging over the company. This loss of Rs.186 crore is lower when we look at loss of Rs.524 crore in Q1FY14 but not enough for the analysts who had expected the company to post a net profit around Rs.30 crore. Also what we need to consider is the fact that the loss in current Q1 was stemmed by a forex gain of Rs.32 crore and a tax write back of Rs.5.6 crore. Its interest outgo fell 11% at Rs.142 crore,

Its consolidated revenue for the quarter fell 10% (YoY) at Rs.2426 crore and this was mainly on account of a 13% decline in exports, which was due to a 11% drop in sales to USA. Domestic revenue rose 12%.  Its EBITDA rose 19% at Rs.238 crore while EBITDA margin expanded 230 bps at 9.8%.  The silver lining here is that it recently received US FDA approval for launch of a chaper version of Novartis’s blood pressure pill Diovan. At the same time, it is the first company to file for FDA approval for launch of generic version of two drugs which are pending approval. If it gets the nod, it will have the exclusivity to sell it for the first six months. On the other hand, the recent decision of the Govt to cap prices of more than 100 drugs used to treat a wide array of diseases, right from diabetes to HIV, is expected to impact the company’s revenue to the tune of 1.2 to 1.5%.

Sun Pharma agreed to takeover the company in April from Japan's Daiichi Sankyo for $3.2 billion, creating the world's fifth-largest maker of generic drugs. This acquisition is expected to be completed by December’14.