Results much lower than expected
Stock down by 1.0%
Ranbaxy Labs (CMP: `700/ TP: /Upside )
For 3QFY2015, the company posted a disappointing set of numbers. The revenues came in at `2,587cr V/s `3,570cr expected, posting a yoy de-growth of 9.5%. The sales were impacted by the dip in the US and currency depreciation in Russia and Ukraine. Its key regions like US region, posted sales of `896.3cr V/s `1,018.7cr, a yoy dip of 12.0%, India (`590.9cr) a yoy growth of 2.0%, East Europe & CIS (`372.5cr) – a yoy dip of 18.3%. The region that posted strong growth was, Asia Pacific and LATAM, which posted a yoy growth of 46.0%. On the operating front, the EBIDTA came in at 3.2% V/s 23.8% expected a yoy dip of 475bps. Apart from lower sales which impacted the gross margins which came in at 59.5% V/s 63.4% during the last corresponding period, which along with operating forex loss of `132.6cr, lead the OPM come in 3.2% V/s 7.9% in last corresponding period. This along with the tax expense during the period, which came in at`888.1cr, lead the company report a loss of `1030cr. On Adj. PAT, the company posted a loss of `966cr V/s profit of `112cr, in 4QFY2014, much lower than the `499cr expected. We maintain our neutral rating on the stock.
IPCA Labs- Update: The U.S. Food and Drug Administration (FDA) has banned imports from Indian generic drugmaker Ipca Laboratories Ltd’s plant at Ratlam in Madhya Pradesh due to violations of standard production practices. The company had received a 483 earlier for this plant. Ipca had voluntarily halted shipments to the United States from the plant in July last year after the FDA outlined half a dozen violations including data integrity issues. We are not changing our estimates as we had already pruned the same when company got a 483’s. Thus we maintain our buy recommendation with a price target of `817.
Lupin Receives USFDA Approval for Generic Celebrex Capsules: Lupin Limited (Lupin) has received final approval for its Celecoxib Capsules, 50 mg from the United States Food and Drugs Administration (FDA) to market a generic version of G.D. Searle LLC’s (a subsidiary of Pfizer Inc.) Celebrex® Capsules 50 mg. Lupin also received tentative approvals for its Celecoxib capsules 100 mg, 200 mg and 400 mg strengths from the FDA. Lupin’s Celecoxib Capsules 50 mg, 100 mg, 200 mg and 400 mg are the AB-rated generic equivalents of G.D. Searle LLC ‘s Celebrex® Capsules 50 mg, 100 mg, 200 mg and 400mg and are indicated for Osteoarthritis, Rheumatoid Arthritis, Juvenile Rheumatoid Arthritis in patients 2 years and older; Ankylosing Spondylitis, and Acute Pain. Celebrex® Capsules had annual U.S sales of US$ 2.44 billion (IMS MAT June, 2014). Currently there is a limited competition for the product and the company can, conservatively garner sales of US $50-60mn in sales for the 50 mg capsules. We maintain our neutral, on back of valuations.