Ranbaxy delivers strong nos; SBI Cap Sec advises to buy

Ranbaxy Laboratories has reported a consolidated net profit of Rs 754 crore in the third quarter of current calendar year as against loss of Rs 464 crore in the corresponding quarter of last fiscal due to forex gain.

In an interview to CNBC-TV18, Vivek Kumar, SBI Cap Securities spoke about Ranbaxy’s results and his outlook going forward. Below is the edited transcript of his interview to CNBC-TV18. Q: Can you give us a word on Ranbaxy? The top-line is Rs 2,691 crore, a gain of 28 percent. On the bottom-line, it is Rs 754 crore including the forex gain. What have you made of that? A: I think the numbers, which have been delivered by Ranbaxy, has been quite a strong. I think the core business profitability has definitely improved. As my estimates, they must have delivered around Rs 280-300 crore, on the core EBITDA basis, So, I guess that the, overall, performance has been quite robust at this point in time. Q: We have calculated the margins, which is inclusive of forex. So, I presume the margins would be lower, but within this range. With the forex gain, it has come in at around 15.5 percent and an EBITDA figure of Rs 417 crore. How exactly would you read that because that is above expectations of around 12-13 percent? A: If you exclude all the forex losses, which are being accounted over there, above the EBITDA line, I see that 12-13 percent is the margins they would have ideally reported. I still sense that maybe 11-12 percent is definitely a number that should be taken as a very positive thing by the street. Q: How much more would you give the stock now because it has had a great run from Rs 400 to Rs 560, since the start of the year. Post numbers, where are you placed on the stock? A: I think most of the worst is behind for the Ranbaxy at this point in time. Given the near-term triggers, launches scheduled for December end, I think that this stock is not being purely valued at this point in time. So, I think you can still look at stocks running upto Rs 620-630. We still have a buy rating on this stock. Q: How would you read the Indian business? We do understand that the Indian business was up 13 percent to Rs 583 crore this time around, wouldn’t that be a little in line or pretty much with what the industry delivers? A: No, I think I take up your point. When we will have the word with the management, it is a mix bag. It was quite clear that in terms of the growth as the base is also being slightly increasing up. They would take some time to ramp up in terms of above the market kind of a growth rate. They have been reporting 13-14 percent kind of a INR growth terms. But however, dollar terms slightly flattish kind of scenario. But if you look at the INR growth rate, it is still around 14-15 percent. For the full year basis if you work out, that still would be around 13 percent which should be equal to the market growth rate. Q: What is your call on Sun Pharmaceuticals post numbers? How are you placed on the stock and what did you make of the numbers? A: Sun Pharmaceutical has also delivered quite strong numbers. If I look at the margins, they have delivered more than 43 percent. I believe on the topline also they have delivered in excess of 20 percent growth.