Accumulate Ranbaxy Labs; target of Rs 670: KRChoksey

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26 Aug, 2025 12:21

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KRChoksey`s research report on Ranbaxy Labs “Ranbaxy’s total income grew by 16.4% YoY to Rs. 3,260.5 crs mainly driven by Diovan exclusivity in US during the quarter. Base business sales were driven by high growth in Domestic & Western Europe market. However API sales was impacted due to supply challenges from Dewas & Taonsa facilities. EBIDTA grew by 247% YoY to Rs. 807 crs & EBITDA margins stood at 24.8% during the quarter on account of one time sales of Diovan during exclusivity period. Base business margins remained flat on YoY basis. Company reported profit of Rs. 478 Crs due to higher sales and operating performance. Outstanding Derivatives position is around USD 373mn from USD 470mn out of which USD 32mn matures every month. Total debt is around USD 1078mn & Net debt is USD 739mn. Cash & Bank balance is USD 339mn.""North America sales have shown growth of 61.7% YoY in INR terms to Rs. 1415 crs. Sales in US showed growth of 72% YoY to Rs. 1355 crs mainly driven by Diovan exclusivity. Company has launched Diovan 40Mg, 80mg, 160mg, 320mg under 180 days exclusivity post approval on 26th June 2014. We believe sales from Diovan would be around USD 110mn. Company is maintaining 20% market share in Absorica. Management is confident of retaining its exclusivity on Nexium FTF & will launch on approval. We expect around USD 245mn of sales from Nexium during exclusivity and have taken the estimates of 4months in FY15 & 2 months in FY16. We believe base business sales will continue to improve on back of Absorica, & OTC business. Western Europe grew by 15% on account of strong sales in UK, Germany & Spain. Asia Pacific & LATAM showed degrowth of 16.2% YoY in INR terms to Rs. 187 crs during the quarter on account of change in business model in Thailand & sales return in Malaysia. However sales were strong in Australia. Company has extended its agreement with Cipher to sell Absorica in Brazilian markets post the regulatory approval. Domestic formulations grew by 18% YoY on account of strong performance in branded category of business post pricing policy impact stabilizes. Company has seen strong growth in anti-infectives & Derma segment in domestic market. However, OTC business degrew by 13% YoY. Ranbaxy is working on consolidating its branded presence both in acute and chronic segments. Growth in East Europe & CIS degrew by 15% impacted by ARV sales in Russia. Africa & Middle East showed degrowth of 3.8% impacted by lower ARV sales. Company plans to strengthen infrastructure, especially in Nigeria & Egypt.""At CMP of Rs. 634 the stock is trading at 69.6xFY15E base EPS & 58.1xFY16E base EPS (excluding FTF opportunity). Going ahead we believe base business sales will improve on back of recovery in domestic market & other international markets. We believe clearance of any facility by USFDA will provide potential upside to our target price. We believe stock is expected to follow the movement of Sun Pharma. We maintain ‘Accumulate’ rating & value the stock at Rs 670 based on 0.8x Sun Pharma’s target price of Rs 835,” says KRChoksey research report. 

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