Ranbaxy Labs - Rating – Sell; Target Price – Rs360 - Centrum

- We expect Ranbaxy Labs (RLL) to register revenue growth of 4.2%YoY and 0.8%QoQ to Rs28.24bn.

- We expect RLL's EBIDTA margin to improve by 430bps YoY to 7.3% from 3.0%

- The company's domestic business has got impacted by NPPP due to steep price fall for its major brands Storvas, Mox, Cilanem and Zanocin.

- RLL's Mohali facility received import alert from US FDA during Q3CY14. The company's Dewas and Paonta Sahib facilities continue to face regulatory challenges and have not been cleared by US FDA.

- RLL is likely to report forex gain of Rs20mn against forex loss of Rs282mn on foreign loans.

- We expect RLL to report net loss of Rs370mn against Rs1,267mn before EO items.

- RLL is likely to report Rs830mn forex gain against forex loss of Rs3,659mn on derivative contracts.

- We expect RLLto report net profit of Rs460mn against net loss of Rs4,926mn after EO items.

- The company has commenced marketing of its new drug Synriam in India. The drug is used for the treatment of falciparum and vivax malaria.

- RLL has completed 20 years in Russia and Ukraine.

- The company is setting a new manufacturing facility in Malaysia.

- RLL has changed the year end from Dec'13 to Mar'14 and hence the current year will be a 15m period.

- We have retained our Sell rating with target price of Rs360 based on 20x Dec'15 EPS of Rs17.9+ FTF of Rs2.

Source : Equity Bulls

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