Merrill Lynch has maintianed buy rating on Ranbaxy Laboratories with target price of Rs 529 implying upside potential of 44%. Ranbaxy expects operational net profit of approx Rs 8 billion+ in CY08E versus Rs 6.1 billion operational profit in FY07 (30% growth YoY).
Merrill Lynch has maintianed buy rating on Ranbaxy Laboratories with target price of Rs 529 implying upside potential of 44% in its January 18, 2008 report. "For CY08E, Ranbaxy has guided to 20% revenue growth, EBITDA margin range of 17.5-18% (vs. 16.5% in CY07) and net profit growth of 20-25% (includes operational profits + one-off other income). Ranbaxy expects operational net profit of approx Rs 8 billion+ in CY08E versus Rs 6.1 billion operational profit in FY07 (30% growth YoY). We estimate this translates into Rs 25 EPS guidance for CY08E vs. MLe Rs 22.7 (excluding one-off other income). Ranbaxy's 4Q net profit of Rs 1.88 billion (2% growth YoY) came in 8% ahead of MLe, while revenues grew by 5% YoY, 4.6% ahead of Mle on back of 20%+ growth in emerging markets and marginally higher gross and EBITDA margins. We remain upbeat on Ranbaxy's prospects, noting bullish '08 guidance, visibility on product upsides till 2010, and possible deals with big pharmas. We maintain our Buy rating and PO of Rs 529/sh (Rs 454/sh for the core business + Rs 75/sh NPV for three Para IVs announced), which offers upside potential of 44%," says Merrill Lynch report.
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