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Ranbaxy Laboratories an outperformer: Karvy

Posted on: April 20th, 2009 and is filed under Brokerage Recommendations.

Karvy Stock Broking has upgraded its rating on Ranbaxy Laboratories to outperformer with a price target of Rs 215 in its April 20, 2009 research report.

“Revenues for the quarter are expected to be lower by 6.2 % to Rs 15926 million for the quarter. The dollar revenues have degrown by 25 % to USD 305 million for the quarter mainly on back of lower revenue traction in US on account of import ban and lower offtake in regulated markets and CIS. On account of lack of clarity on US import ban and lower traction in some of the markets we downgrade our revenues in US, regulated and CIS regions. We downgrade our earnings by 54 % to Rs 6.3 for CY 2009E and introduce CY 10 estimates at Rs 11.51.”

“We believe the company would have be able to deliver the USD 2.5 million per month on account of derivative losses (company’s liability as has been stated in press report). Hence we are excluding the same in our valuation. On account of uncertainity in its US business we downgrade the company’s multiple from 16x to 14x. We value the core business of the company at 14x and value it at Rs 123. We ascribe a 1x value to Valcyclovir FTF upside at Rs 2.74 and value the Nexium upside of Rs 6.34 at 14x as it is a recurring business and value it at Rs 89. We hence value the stock at Rs 215 and upgrade the stock to Outperformer,” says Karvy Stock Broking’s research report.

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