Ranbaxy (Q1 CY12)

India Infoline News Service | Mumbai |

Improvement is sales and focus on cost optimization laid to the improvement in margins.

  • Largely in line with our estimates, Ranbaxy reported revenue growth of 71% yoy to Rs37.9bn.
  • The growth in revenue was mainly driven by higher realization (55% growth in dollar terms) and its exclusivity launches of generic Lipitor and Caduet-Authorised generic (AG).
  • Domestic formulation market recorded moderate growth at 13%; 200 bps below market growth
  • Adj. EBITDA margin improved by 215 bps qoq to 27% and Adj PAT grew by 13% qoq.
  • Improvement is sales and focus on cost optimization laid to the improvement in margins.
Quarterly Result table
(Rs mn)
Q1CY12
Q1CY11
% yoy
Q4CY11
% qoq
Net sales
37,868
22,142
71.0
38,496
(1.6)
(Inc)/dec in stock
(418)
(1,401)
(70.2)
338
(223.8)
Con of Materials
(4,806)
(6,337)
(24.2)
(6,212)
(22.6)
Pur of Trad Goods
(4,534)
(2,588)
75.2
(4,382)
3.5
Employees' Cost
(4,702)
(4,169)
12.8
(3,973)
18.3
Other Expenditure
(14,093)
(6,189)
127.7
(16,150)
(12.7)
Operating profit
10,152
4,261
138.2
7,442
36.4
OPM (%)
26.8
19.2
756 bps
19.3
748 bps
Depreciation
(799)
(736)
8.5
(1,681)
(52.5)
Net Interest income
(187)
(393)
(52.5)
(877)
(78.7)
Other income
1,366
690
97.9
942
45.1
PBT
10,533
3,823
175.6
5,825
80.8
Forex (loss)/gain
3,447
20
17,274.8
(8,379)
(141.1)
Other Exceptional
-
-
-
(26,480)
-
Tax
(1,374)
(782)
75.7
(747)
84.0
Effective tax rate (%)
13.0
20.5
(741) bps
13
23 bps
PAT
12,606
3,060
311.9
(29,781)
(142.3)
Min and share of Ass
139
16
741.4
47
194.2
Reported PAT
12,468
3,044
309.6
(29,828)
(141.8)
Adj Pat
8,507
3,025
181.2
7,499
13.4
PAT margin (%)
22
14
880 bps
19
298 bps
Ann. EPS (Rs)
32
11
180.9
28
13.4
Source: Company, India Infoline Research
 

Revenues up by 71% yoy in rupee term; grew by 55% in dollar terms

Ranbaxy started its year with big bang. The company posted revenues growth of 71% yoy in rupee term whereas it grew by 55% in dollar terms. Again, like last quarter the growth was mainly led by its much awaited launch of generic Lipitor. There was an arrangement between Ranbaxy and Teva for the generic Lipitor launch. We believe the payment to Teva has limited the EBITDA expansion. Management indicated that Lipitor has ~47% market share ahead of its innovator and authorized generic. Management remains confident about retaining the higher share post exclusivity with its generic Lipitor launch in various geographies. But, we remain cautious at margin front as we believe price erosion would be steep (~95%) after the competition creeps in post exclusivity.

 

Geographical sales Break-up; healthy mix

Sales in North America were up by 145% to US$415mn due to large contribution from the growth in the USA. Sales in the USA for the quarter were US$401mn driven by strong base business and continued exclusivity sales. In India sales for the quarter were Rs5bn, 13% higher yoy led by robust CHC performance.

 
Sales Break-up (Rs mn)
Q1CY12
Q1CY11
% yoy
Q4CY11
% qoq
Domestic
5,037
4,436
13.5
5,071
(0.7)
Out-side India
31,917
16,979
88.0
32,362
(1.4)
Total Sales
36,954
21,415
72.6
37,433
(1.3)
Other operating income
914
727
25.8
1,115
(18.0)
Total
37,868
22,142
71.0
38,496
(1.6)
 

Adj. EBITDA margin improved by 215 bps qoq to 27% and Adj PAT grew by 13% qoq

Ranbaxy reported an OPM of 27% in Q1 CY12. Management indicated the improvement in EBITDA margins for the quarter is on the back of improvement in the base business and revenues from Lipitor. Adjusted PAT grew by 13% qoq to Rs8.5bn. Rupee depreciation had a large positive impact on the company's results.


Cost analysis 
As a % of net sales
Q1CY12
Q1CY11
bps yoy
Q4CY11
bps qoq
Raw material
12
22
(1,070)
17
(543)
Purchases
12
12
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