We always believed one should buy stock of companies where promoters are reputed, Sector has growth potential and stock is undervalued. Additionally, We also believe market knows everything in advance and Bhav Bhagwan (price is god). So, our stock picks are always combination of Technical and Fundamental factors. Lets briefly check why we like Ranbaxy Lab (CMP Rs. 538).
Fundamentally, We like Ranbaxy Labs because of several reasons first being the Promoter - DaiIchi - Sankyo Japan's reputation and excellent track record in Japan. Parent's sales was 938,677 Million Yen for CY11. Secondly, Ranbaxy Labs has cleaned up a lot after taken over by DaiIchi - Sankyo. Company has signed consent Decree with USFDA paving its way for major US foray. Thirdly, We like granted exclusivity to company in US market for its generic versions of Actos (Launched on Aug 17, 2012) Diovan, Provigil, Avandia, Excelon (Yet to be launched - all have innovator market size above $100 M). These launches in coming weeks will make sure we see good growth in sales. We think current market cap of around Rs. 22,700 CR (US$ 4.28 B) against CY12 sales of 10,595 CR doesn't fully discount capability of promoter to seize very big global generic opportunity. For Q2 CY12 company showed sales of 3,228 CR , OP of 581 CR, Forex losses were 849.77 CR so EPS was -13.89. Q3 CY13 results will be declared on Nov 08, 2012. Looking at Rupee's appreciation in Sep 2012 we may see reversal of forex losses coupled with generic version of Actos may help company give better results than Q2 CY13.
Now see attached weekly chart:
If we check above weekly chart we see that stock after making high in Nov 2010 started coming down steadily and made a bottom in Dec 2011. From Dec 2011 stock has started going up in rising channel and currently near support area in rising channel suggesting possibility of strong up move may be post Q3 CY13 results?. Also note our own Trend Indicator suggesting Green (UP) trend currently. If someone looks at Monthly chart (Not posted here) of last 10 years one can see once stock touches 640 - Dec 2004 high it will complete rectangle - a very powerful pattern crossing of which will bring lot of fireworks.
Disc: We in personal capacity and our clients hold this stock as on date of writing. We personally/clients may Sell/Buy/Trade in stock in future.
Note: Above is our view and we could be 100% wrong. Please make your own judgement. All trademarks for products mentioned are acknowledged.
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4 comments:
HI,
Just browsed through your blog..
I liked it ...I am the beginner in the market so I am always in search of good tips..Just read your Ranbaxy post and decided to buy few of those..And I found that besides fundamentals one should also look at its technicals I have already book marked this excellent blog.. Thanks for sharing.......
Also I accidentally found this blog (www.bhavikkshah.blogspot.in) and I am thinking to buy that big ticket stock i.e MCX....
Kindly advice me should I buy MCX at this rate..whats you view on the Stock.
Regards
Bhushan Sheti
Mumbai
hi jignesh
Will you please see after new pharma policy can we still expect fireworks in ranbaxy. I am beginner but not able to form view on this
Regards
Priyesh
Priyeshbhai,
Ranbaxy exports 77% of sales and this will go up due to huge generic opportunity over next 2 years. We are not betting on Ranbaxy for its domestic business. Wait for few more months and once it crosses all time high around 625 we will see fireworks.
Dear Jignesh
Thank Your for your valuable reply
Regards
Priyesh
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