According to the report on earnings preview for the quarter ended March 2012, KR Choksey expects the pharma sector will show strong performance in the domestic pharmaceuticals market mainly due to recovery in Indian pharma market. "Overall Para IV opportunities should help Ranbaxy, Dr Reddy's & Glenmark to report robust growth in US market. Although rupee depreciation impact should be small as rupee stabilized to levels of around 49 to the dollar, positive impact could be observed on operating margins," the report said.
The research firm says that the pharma sector, which covered seven companies in its universe, is likely to report a PAT growth of 148.2% year-on-year to Rs 2,269 crore and sales growth of 36.3% to Rs 9,850 crore. EBITDA of these seven companies is expected to grow by 126.1% YoY to Rs 3,032 crore.
KR Choksey asked to watch out for following factors in the Q4FY12 result:
**First is forex loss or gain;
**Monetizing key Para IV/limited competition products & new product launches in US market.
Dr Reddy's Labs is likely to post 30% growth YoY in its fourth quarter sales of Rs 2,622 crore due to strong growth from US and domestic markets. Products like olanzapine and zafirlukast will continue its growth momentum.
EBITDA is expected to increase by 40% to Rs 616 crore mainly due to contribution from one off products like zyprexa. However, PAT is seen going up by 78% YoY to Rs 390 crore, but it is seen going down 24% QoQ due to increased depreciation and interest expense.
Sales ex-outlicensing income are expected to improve by 16.3% YoY to Rs 882 crore due o good growth from Indian, US & RoW countries while de-growth of 12.4% QoQ mainly due to less impact of rupee depreciation.
Yearly numbers are not strictly comparable as during the last quarter last year the company has changed its accounting policy from I-GAAP to IFRS.
Company's profit after tax is likely to fall by 26% QoQ to Rs 92 crore due to high depreciation and interest expense.
Operating profit margin is seen improving by 86 basis points QoQ to 19% due to contribution from high margin products of oral contraceptives and improved market share in existing products in US market.
Sales are likely to grow by 13% YoY to Rs 1,375 crore led by rebound in domestic division along with US sales.
EBITDA is expected to dip by 3% YoY to Rs 271 crore mainly due to higher other & R&D expenses, but 3% QoQ growth due to cooling of employee expenses.
Net profit is seen going down by 21% to Rs 170 crore due to higher depreciation and interest expense.
Company is likely to show massive growth of 77% YoY to Rs 3,925 crore led by Lipitor exclusivity and other limited competitive launches in US market.
Net profit is expected to increase by 323% YoY to Rs 1,519 crore.
Net profit margin is seen going down by 2249 basis points QoQ to 39% due to increase in tax expense.
Sales are expected to fall by 14% YoY to Rs 298 crore, but increase by 12% QoQ on account of improvement in CRAMS business.
EBITDA is likely to decline by 5% to Rs 55 crore due to higher employee and other expenses.
Net profit is seen going down by 38% YoY to Rs 13 crore on the back of increase in depreciation and interest expense, but 44% growth QoQ due to low base and lowering of tax expenses.
Operating profit margin is expected to improve by 179 basis points YoY to 18% due to growth from high margin business of CRAMS compared to marketable molecules.
Revenue growth is likely to be 19% YoY to Rs 211 crore led by growth from domestic and contract manufacturing segment.
EBITDA is expected to go up by 42% to Rs 34 crore due to reduction in other expenses.
Net profit is seen improving by 47% to Rs 22 crore on account of lower base and higher operating profit, but falling 8% QoQ due to higher tax expenses
Sales are likely to grow marginally by 8% YoY to Rs 537 crore due to lower impact of rupee depreciation (stabilized around levels of 49-50/dollar). KR Choksey expects domestic business of the company to grow by 14% albeit on a low base.
Net profit is expected to fall by 3% to Rs 63 crore due to higher tax expenses and depreciation.
Operating profit margin is likely to dip by 126 basis points to 19% due to higher employee expenses.