Ranbaxy disappoints on lower OPM, net profit: Angel Broking

Sarabjit Kaur Nangra, VP - Research Pharma, Angel Broking believes the Q2 earnings of pharma major Ranbaxy is lower than expectations as both the operating performance and the net profit of the company are disappointing. 

Speaking to CNBC-TV18 Nangra says the most important issue for the company is to get the USFDA clearances and if, in such bad times, it is able to maintain its momentum, then the company is doing a commendable job.

Below is the verbatim transcript of her interview on CNBC-TV18

Q: What have you made of Ranbaxy numbers this quarter?

A: The numbers have been pretty disappointing on key parameters that we are watching out right now in terms of both operating performance as well as the net profit and mainly the net profit is currently getting impacted by OPMs. So, the operating performance has been disappointing.

We were expecting margins of around 8.5 percent and the company has delivered around 6.6 percent. On the positive side, there has not been much slippage in comparison to last quarter. Last quarter QoQ, the margins have not slipped but have marginally expanded. So on the positive side, the sales growth has been a tad higher than expectation and margins tad better than the last quarter. That is the positive from the result but overall lower than ours and street expectations.

Q: Just wanted your perspective on the guidance which is provided by Ranbaxy of around Rs 13000-13500 crore. Do you think they could possibly achieve it or do you think that they could even exceed it?

A: The guidance that they have given is achievable because it is a guidance of 15 months which will be ending in March and so, that guidance is not an issue. Everybody is concerned in terms of USFDA issues getting cleared in Ranbaxy more than the run rate that we are looking.

If in such a difficult situation, it is implying that the run rate or the momentum would be maintained, so that is a commendable thing. However, the clearance of facilities is more important pointer that everybody is looking around for this stock or this company to turn around its performance.