Buy Ranbaxy Laboratories

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Buy Ranbaxy Laboratories

Mukarram Bhagat of ASK Raymond James is of the view that one can buy Ranbaxy Laboratories.

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Excerpts from Your Stocks on CNBC-TV18 Watch the full show » ALSO READ See what other Experts & Brokerages are saying about Ranbaxy Labs See messages about Ranbaxy Labs Ranbaxy Labs BSE | NSE 28/05/12 Are Mutual Funds betting on Ranbaxy Labs?

Mukarram Bhagat of ASK Raymond James is of the view that one can buy Ranbaxy Laboratories .

Bhagat told CNBC-TV18, "The worst is over for Ranbaxy Laboratories; Q1 itself reflected that with a significant improvement in margins, lowering of SGA (Selling, General and Administrative) cost, lowering of R&D cost. We were expecting about Rs 165 crore PAT but what has turned out has around is about Rs 140 crore. Obviously this may look like a big miss and it is a significant miss from what we had estimated."

He further added, "A year ago the PAT was only Rs 18 crore, so if one look at it in that perspective we had expected a very significant turnaround this time primarily because of cost decreases and these products, some of these statins, having an exclusivity period and getting launched around July, August. So that full effect is now coming in and going forward the next quarter will be even better as the full effect of this new drug launch comes in. So it clearly is in a turnaround phase and number of acquisitions they have made in recent quarters, in Europe, will also start contributing very well especially from next year onwards."

"The stock looks like a very good turnaround story in a big cap stock. If one look at in the Nifty, it is probably the worst performing stock for nearly two calendar years now and last year if one see 52-week high-low, it is way below that and it has stayed way below that for a long time; the 52-week high is about Rs 550 and the price currently is around Rs 410-420. So it is a single kind of most underperforming stock in the Nifty. It's a very big cap stock. It's a largest Indian pharmaceutical company and I think it is probably one year behind Dr Reddy in terms of full-blown story coming on and this is certainly a buy recommendation from our side."