Fundamental and Technical Analysis of Ranbaxy

Manvi Jain(2993)

Priyanka Jethwani(2992)

Batch f3

About Ranbaxy

Ranbaxy Laboratories Limited (BSE: 500359) is an Indian multinational  pharmaceutical company that was incorporated in India in 1961. The company went public in 1973 and Japanese pharmaceutical company Daiichi Sankyo  acquired a controlling share in 2008. Ranbaxy exports its products to 125 countries with ground operations in 43 and manufacturing facilities in eight countries. In 2011, Ranbaxy Global Consumer Health Care received the OTC Company of the year award.

It is a research based international pharmaceutical company serving customers in over 150 countries. For more than 50 years, they have been providing high quality, affordable medicines trusted by healthcare professionals and patients. Most of its products are manufactured under licence from foreign pharmaceutical developers, though a significant percentage of their products are off-patent drugs that are manufactured and distributed without licensing from the original manufacturer because the patents on such drugs have expired.

It is a vertically integrated company that develops, manufactures and  market  Generic, Branded Generic, Value-added and Over-the-Counter (OTC) products, Anti-retrovirals (ARVs), Active Pharmaceutical Ingredients (APIs), and Intermediates. It has a large portfolio of over 500 molecules that cover multiple dosage forms including tablets, capsules, injectables, inhalers, ointments, creams and liquids.

Parent Company Ranbaxy

Category Pharmaceuticals

Sector Health care

Tagline/ Slogan New boundaries, new Horizons; Trusted medicines healthier lives

USP It is India’s largest pharmaceutical company

YEARS IN BUSINESS : Ranbaxy Laboratories Limited is an Indian multinational pharmaceutical company that was incorporated on 16th June, 1961 at Delhi.  The Company Manufacture drugs, medicines, cosmetics and chemical products. The company also markets a wide range of products including a number of life saving antibiotics.

Promoters background:  Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a Japanese company Shionogi. The name Ranbaxy is a portmanteau of the names of its first owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from his cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh joined the company in 1967, the company saw an increase in scale.                                                                        Listed or Unlisted: Listed on the Stock Exchange, National Stock Exchange of India Ltd., Luxembourg Stock Exchange, London Stock Exchange.

Legal issues with company or promoters :  India’s biggest drugmaker, fell the most in two years in Mumbai trading after Japanese parent Daiichi Sankyo Co. said it was pursuing “legal remedies” against former shareholders for hiding information relating to U.S. investigations of the company. “Daiichi Sankyo believes that certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the U.S. DOJ and FDA investigations. Daiichi Sankyo is currently pursuing its available legal remedies. The Daiichi issue adds to Ranbaxy’s legal woes and to the uncertainty around the business,” Sarabjit Kour Nangra, vice-president for research at Angel Broking Ltd. in Mumbai, said by phone. “There will be some overhang on the stock.

CUSTOMER PROFILE/ FEEDBACK/ LENGTH OF RELATIONSHIP: Ranbaxy Laboratories Limited is an integrated international pharmaceuticals company. The Company is engaged in the marketing, production and distribution of pharmaceutical products. The Company’s business activity falls within a single primary business segment viz. Pharmaceutical. The Company has ground operations in over 40 countries, products sold in over 150 countries, manufacturing facilities in approximately eight countries. The Company owns manufacturing facilities in seven countries, namely India, the United States of America, Ireland, Malaysia, Nigeria, Romania and South Africa. The Company’s markets include the United States of America, India, Europe, Russia/ CIS and South Africa. The research and development activities of the Company are principally carried out at its facilities in Gurgaon, near New Delhi, India.

TRANSPARENCY/ DISCLOSURE:

A. Related Party Transactions

The Company has not entered into any transaction of material nature with the promoters, the Directors or the management, their subsidiaries or relatives etc. that may have any potential conflict with the interests of the Company.

B. Disclosure of Compliances by the Company

During the last three years, no penalties or strictures have been imposed on the Company by the Stock Exchanges or SEBI or any other statutory authorities on matters related to capital markets.

C. Disclosure of Accounting Treatment

There have not been any significant changes in the accounting policies during the year.

D. Risk Management

The Board of Directors is apprised about Risk Management framework, methodology for categorization of risk and mitigation plans. 

SUCCESSION PLANS:

The CEO succession planning, Ranbaxy Laboratories Limited (Ranbaxy), India's largest pharmaceutical company.

It describes the concept of succession planning and its importance in managing large companies (especially family owned businesses). Parvinder Singh (Ranbaxy's promoter, also CEO) believed in running the business professionally and handed over the company's management to D S Brar, a professional (and a non-family member), amidst stiff opposition from family members. Then Brar transformed Ranbaxy from a small Indian pharmaceutical company into a research based global pharmaceutical major. The reasons for Brar's decision to step down as the CEO and comments on his succession plan.The case concludes with a discussion of whether Ranbaxy's promoters would takeover the company's management or continue to allow professionals to manage their business.

MANUFACTURING PLANT/ UNIT

QUALITY OF UTILITIES AND INFRASTRUCTURE : Ranbaxy partner with their stakeholders to assure high quality development, manufacture and distribution of reliable and safe medicines through:

Qualified, responsible, and motivated employees Integrity of our behaviour and actions

Effective and efficient GxP compliant quality systems Continuous quality improvement

NATURE OF TECHNOLOGY/ PRODUCTION FACIITY:  They have a pool of highly qualified R&D scientists with a varied knowledge base and global exposure covering all areas of pharmaceutical research. Expertise in developing Active Pharmaceutical Ingredients (APIs), Generic Drug Products, Novel Drug Delivery Systems and New Drug Development Processes is a key strength acquired over decades of experience. Creative teams from R&D and business development generate innovative concepts and ideas which are aligned to synergies across therapeutic areas and business needs. The focus of R&D is on quality product development, keeping in view safety and efficacy of drugs on target populations.

They have one of the best clinical facilities and bio-analytical laboratories in the industry which work as per international regulatory requirements, meeting strict GCP and GLP requirements. Their facilities have been inspected by national and international regulatory agencies on multiple occasions with successful outcomes leading to site and product approvals.

They have a specialised global Information Technology (IT) team that focuses on enabling business process improvements, productivity and compliance while providing world-class secure IT infrastructure and technology across our business.

As part of its slogan to “Deliver Value Everyday”, their  IT team is dedicated to value creation and alignment with the company’s business strategy. To this end, the top three priorities for IT are:

Accelerate Time to Market for Products Enable Supply Chain Excellence Deliver Business Intelligence

Shareholding pattern of Ranbaxy

Share Holding Pattern as on :

 31/12/2013  30/09/2013  30/06/2013

Face Value  5  5  5

No. Of Shares % Holding No. Of Shares %

Holding No. Of Shares % Holding

PROMOTER'S HOLDING

Foreign Promoters  268711323.00  63.41  268711323.00  63.51  268711323.00  63.51

Indian Promoters  0  0.00  0  0.00  0  0.00

Person Acting in Concert  0  0.00  0  0.00  0  0.00

Sub Total  268711323  63.41  268711323  63.51  268711323  63.51

NON PROMOTER'S HOLDING

Institutional Investors

Mutual Funds and UTI  4031561  0.95  3716089  0.88  9615827  2.27

Banks Fin. Inst. and Insurance

 33313008  7.86  34507061  8.16  34189037  8.08

FII's  45494559  10.74  44106315  10.42  43962886  10.39

Sub Total  82839128  19.55  82329465  19.46  87767750  20.74

Other Investors

Private Corporate Bodies  12926792  3.05  12730853  3.01  12868280  3.04

NRI's/OCB's/Foreign Others

 3461786  0.82  2378407  0.56  2620284  0.62

GDR/ADR  7028499  1.66  11614861  2.74  8710333  2.06

Directors/Employees  0  0.00  0  0.00  0  0.00

Government  0  0.00  0  0.00  0  0.00

Others  0  0.00  0  0.00  0  0.00

Sub Total  23417077  5.53  26724121  6.32  24198897  5.72

General Public  48774254  11.51  45364600  10.72  42423019  10.03

GRAND TOTAL  423741782.0000 100.00  423129509.0000 100.00  423100989.0000 100.00

Interpretation from above data:-

1. Promoter holding, as seen is at 63.51%, which is greater than 50%. Hence the company is stable.

2. It is also evident from the above data that the chances of Ranbaxy being acquired by other company is very less as the promoter holding stands at 63.51%.

3. Non promoters holding in the company is minimal in comparison to the promoters holding so the company enjoy a stable position in the market.

Share Holding Pattern in (%)  DEC' 13 SEP' 13 JUN' 13 MAR' 13

Promoter 63.41 63.51 63.51 63.52

FII 10.74 10.42 10.39 10.55

DII 8.81 9.04 10.35 10.03

Others 17.04 17.03 15.75 15.90

Total 100.00 100.00 100.00 100.00

DEC SEPT JUNE MAR0

10

20

30

40

50

60

70

PromoterFIIDIIOthers

Shareholding Pattern

PromotersIndividualsInstitutionsFIIGovt.Others

Public shareholdings

Holder's Name No of Shares % Share Holding

OtherCompanies 12926792 3.05%

ForeignPromoter 268711323 63.41%

GeneralPublic 48774254 11.51%

ForeignInstitutions 45494559 10.74%

FinancialInstitutions 33313008 7.86%

NBanksMutualFunds 4031561 0.95%

ForeignNRI 2146671 0.51%

ForeignOcb 1315115 0.31%

Mutual fund holdings

Description Percent of Share (%)

Promoters 63.67

Individuals 10.58

Institutions 10.91

FII 9.56

Govt. 0.00

Others 5.28

Scheme Holding(%)

Kotak Equity Arbitrage Scheme - Growth 2.11

Birla Sun Life MNC Fund - Growth 0.54

Franklin India Index Fund- Nifty Plan - Growth 0.29

Tata Index Fund - Nifty Plan - Growth 0.29

Canara Robeco Nifty Index - Regular Plan - Growth 0.28

Birla Sun Life Nifty Exchange Traded Fund 0.28

ICICI Prudential Nifty Exchange Traded Fund 0.27

Kotak Nifty Exchange Traded Fund 0.27

IIFL Nifty Exchange Traded Fund 0.27

ICICI Prudential CNX 100 ETF 0.23

ICICI Prudential Blended - Plan A - Regular Plan - Growth 0.23

Birla Sun Life Index Fund - Growth 0.23

ICICI Prudential Index Fund - Regular Plan 0.20

Kotak Multi Asset Allocation Fund - Growth 0.05

Growth rate of the company

Ranbaxy Laboratories Limited is an integrated international pharmaceuticals company. The Company is engaged in the marketing, production and distribution of pharmaceutical products. The Company’s business activity falls within a single primary business segment viz. Pharmaceutical. The Company has ground operations in over 40 countries, products sold in over 150 countries, manufacturing facilities in approximately eight countries. The Company owns manufacturing facilities in seven countries, namely India, the United States of America, Ireland, Malaysia, Nigeria, Romania and South Africa. The Company’s markets include the United States of America, India, Europe, Russia/ CIS and South Africa. The research and development activities of the Company are principally carried out at its facilities in Gurgaon, near New Delhi, India.

Key Products of the company in detail with segmental breakup

Brand name Generic name Therapeutic segmentREVITAL Ginseng, Vitamins and Minerals VMS-Vitamins, Minerals and

SupplementsREVITAL LIQUID Ginseng, Vitamins and Minerals VMS-Vitamins, Minerals and

SupplementsREVITAL WOMAN Ginseng, Vitamins and Minerals

(Specially formulated for women)VMS-Vitamins, Minerals and Supplements

REVITAL SENIOR Vitamins, Minerals, Ginseng and Isoflavones(Specially formulated for 50

VMS-Vitamins, Minerals and Supplements

years+)

REVITALITE Soy Protein Supplement VMS-Vitamins, Minerals & Supplements

VOLINI GEL Pain relief Gel ANALGESIC-TopicalVOLINI SPRAY Pain relief Spray ANALGESIC-TopicalVOLINI ACTIV GEL Ayurvedic Pain relief Gel ANALGESIC-TopicalCHERICOF COUGH SYRUP

Complete Cough Syrup for family CCA-Cough, Cold & Allergy

PEPFIZ Effervescent digestive enzymes GI-GastrointestinalGARLIC PEARLS Garlic oil for all round health GI-GastrointestinalGESDYP Digestive Enzymes GI-Gastrointestinal

Peer Comparison

CompanyMarket Cap

(Rs. in Cr.)

P/E (TTM)

(x)

P/BV (TTM) 

(x)

EV/EBIDTA(x)

ROE(%)

ROCE(%)

D/E(x)

Sun Pharma.Inds. 126,788.51 0.00 16.28 112.59 6.6 8.3 0.01

Dr Reddy's Labs 46,373.51 25.21 5.96 14.62 17.5 20.0 0.25

Cipla 30,586.48 22.17 3.45 13.35 18.4 23.4 0.06

Cadila Health. 19,969.32 27.41 6.86 22.22 18.2 14.8 0.56

Ranbaxy Labs. 15,684.10 0.00108.5

372.87 0.0 0.0 2.38

Glenmark Pharma. 15,165.50 41.30 6.01 28.85 16.4 14.3 0.23

Aurobindo Pharma 14,755.80 16.30 5.02 7.02 18.3 14.8 1.03

Ipca Labs. 10,452.52 25.14 6.66 12.28 23.4 24.9 0.40

Torrent Pharma. 9,393.40 13.58 5.69 8.14 37.0 32.1 0.43

Piramal Enterp. 9,063.19 0.00 0.86 60.64 -2.1 1.2 0.28

Biocon 8,845.00 30.84 4.01 12.28 12.8 14.6 0.07

Alembic Pharma 5,277.06 23.89 11.48 8.35 38.4 31.8 0.66

Wockhardt 5,048.41 15.35 6.17 23.16 63.8 31.3 0.66

Mylan Lab. 3,273.19 5.13 1.32 0.00 29.4 30.0 0.69

Natco Pharma 2,793.09 30.59 4.32 10.63 15.6 17.0 0.59

Financial Ratio Analysis

Dec '12 Dec '11 Dec '10

Investment Valuation  Ratios

Face Value 5.00 5.00 5.00

Dividend Per Share -- -- 2.00

Operating Profit  Per Share (Rs) 10.47 25.45 29.98

Net Operating Profit Per Share (Rs) 149.05 184.81 134.10

Free Reserves Per Share (Rs) -- -- 112.02

Bonus in Equity Capital 69.44 69.59 69.75

Profitability Ratios

Operating Profit Margin(%) 7.02 13.77 22.35

Profit Before Interest And Tax Margin(%) 3.91 9.97 17.77

Gross Profit Margin(%) 4.07 10.25 18.31

Cash Profit  Margin(%) 6.17 12.39 16.55

Adjusted Cash Margin(%) 6.17 12.39 16.55

Net Profit Margin(%) -2.47 -38.04 19.74

Adjusted Net Profit Margin(%) -2.47 -38.04 19.74

Return On Capital Employed(%) 7.68 17.60 12.82

Return On Net Worth(%) -8.45 -158.61 22.41

Adjusted Return on Net Worth(%) 11.39 37.43 14.33

Return on Assets Excluding Revaluations 45.42 45.60 121.74

Return on Assets Including Revaluations 45.42 45.60 121.74

Return on Long Term Funds(%) 13.25 35.54 15.00

Liquidity And Solvency Ratios

Current Ratio 0.81 0.76 1.40

Quick Ratio 0.95 0.84 1.60

Debt Equity Ratio 2.48 2.02 0.83

Long Term Debt Equity Ratio 1.02 0.49 0.57

Debt Coverage Ratios

Interest Cover 1.73 3.42 22.22

Total Debt to Owners Fund 2.48 2.02 0.83

Financial Charges Coverage Ratio 2.36 4.34 26.44

Financial Charges Coverage Ratio Post Tax 1.08 -8.29 26.41

Management Efficiency Ratios

Inventory Turnover Ratio 3.64 4.71 3.95

Debtors Turnover Ratio 2.46 3.14 3.99

Investments Turnover Ratio 3.64 4.71 3.95

Fixed Assets Turnover Ratio 2.06 2.78 2.13

Total Assets Turnover Ratio 0.95 1.36 0.61

Asset Turnover Ratio 1.01 1.03 0.67

Average Raw Material Holding -- -- 134.51

Average Finished Goods Held -- -- 40.24

Number of Days In Working Capital 71.39 2.08 220.31

Profit & Loss Account Ratios

Material Cost Composition 38.91 32.35 38.63

Imported Composition of Raw Materials Consumed 63.93 58.74 50.65

Selling Distribution Cost Composition -- -- 7.42

Expenses as Composition of Total Sales 62.68 71.56 67.06

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit -- -- 8.54

Dividend Payout Ratio Cash Profit -- -- 7.13

Earning Retention Ratio -- -- 86.64

Cash Earning Retention Ratio 100.00 100.00 89.81

AdjustedCash Flow Times 11.76 3.91 4.42

Dec '12 Dec '11 Dec '10

Earnings Per Share -3.84 -72.32 27.28

Book Value 45.42 45.60 121.74

Market share of the company

Market cap .(Rs.cr)-   15751.90

BSE- 346.90

NSE- 347.45

PARTICULARS                                                                                                                                                      SHARE PRICE

Open Price 350.45

High Price 351.45

Low Price 342.25

Prev. Close 347.90

Spot Price 347.45

Open Int PCR 0.65

Prev OI PCR 0.64

Bid Price 347.15

Bid Qty 2,000

Rollover % 1.36%

Average Price 346.50

No. of Contracts Traded 3,713

Turnover (Rs. in lakhs) 12,865.55

Market Lot 1000

Open Interest 13,018,000

Open Int. Chg -172,000

Open Int. Chg % -1.30

Offer Price 347.40

Offer Qty 1,000

Rollover Cost 1.95

Fundamental Analysis of ranbaxy

Beta  0.857

Confidence in Beta 2.89%

Earnings Per Share (EPS) 7.42

Book value(rs.) 3.40

Relative strength index

RSI is 53.8. According to RSI analysis, ranbaxy is at it's resistance.

BCG and SWOT analysis\

BCG Matrix

Products Offered By Ranbaxy

STAR- Dermatology, Orthopedics, Nutritionals, and Urology segments

QUESTION MARK- HIV/AIDS products

CASH COWS- Cardiovascular, Central Nervous System, Respiratory

DOGS- Revital ( A daily food supplement from Ranbaxy Global Consumer Healthcare) and Chlor-trimeton(allergy product of Ranbaxy Laborotories)

SWOT Analysis

Strength –

1. Large pool of R&D personnel2. Strong Financials3. 14000 skilled workforce

4. Largest Distribution Network- 2500+skilled field force5. Increasing liberalizations of government policies6. Effective technology for large number of generic drugs7. Strong brand image

Weakness –

1. Lack of experience to exploit efficiently the new patent regime2. Stricter registration procedure3. Alternatives are easily available.4. No or low switching over costs for the customers5. Severe competition6. Inadequate funds7. Lack of inadequate infrastructure

Opportunities

1. Growing income2. Growing attention to health3. Globalization4. New therapy approach5. New diagnosis and new social diseases6.  Saturation point of market is far away7. Ageing of the world organization

Threats

1. High entry cost in new market2. High cost of sales and marketing3. High cost of discovering new products(few discoveries)

Industry life-cycle

Dividend record

Ranbaxy Laboratories had last declared a dividend of 40.00% for the year ending December 2010.* As per the Profit & Loss account

Dividend Declared

Annoucement Date

Effective Date

Divident Type

Divident (%)

Remearks

22-02-11 28-04-11 Final 40.00 -28-03-08 21-05-08 Final 120.00 -18-10-07 01-11-07 Interim 50.00 -16-03-07 04-04-07 Interim 120.00 Second Interim Dividend19-10-06 02-11-06 Interim 50.00 -19-04-06 15-06-06 Final 120.00 AGM(of par value of Rs.5 

each)

CAGR of sales

if you look at the pharma sector then Ranbaxy Laboratories is the first Indian blooded multinational company not only in this sector but across the industrial 

sector. If you measure the growth prospects of the company then in the next two-three years the growth path will be clearly seen. Investors will get appreciation of at least 20 to 25% CAGR in the next two-three years