Ranbaxy Poised for Biggest Increase in Four Years: Mumbai Mover
Stock Chart for Ranbaxy Laboratories Ltd (RBXY)
Shares of the Gurgaon, India-based company surged 13 percent to 318.25 rupees at 12:08 p.m. in Mumbai, poised for the biggest gain since May 2009. The company reported a profit of 1.35 billion rupees ($22 million) excluding foreign-exchange related losses and exceptional items, according to a statement yesterday. The stock has dropped 37 percent this year.
Brokerages including Kotak Securities Ltd. and Antique Stock Broking Ltd. raised their recommendation on the stock citing improving sales outlook at the company’s operations in North America, where it has been struggling with charges over the safety of its drugs. Rising demand for Absorica, an acne medication, and Atorvastatin, a generic cholesterol treatment, may boost profits, brokerage IIFL Ltd. said.
“There are initial signs of turnaround with improving sustainability in U.S. earnings,” Krishna Prasad, an analyst at Kotak said in a report today. There’s also an “increasing visibility of the U.S. pipeline,” he wrote.
Revenue at the North American operations rose 24 percent to 8.5 billion rupees from the preceding quarter, according to IIFL.
Losses of 3.67 billion rupees arising from a weak rupee and goodwill impairment for its operations in France resulted in a net loss of 5.24 billion rupees in the quarter ended June from a year ago, Ranbaxy said in the statement. That compared with the median estimate for a 1.29 billion rupees profit.
India’s currency has slid 10 percent this year against the dollar and is the worst-performing currency in Asia after Japan.
“There has been a significant improvement in our core businesses if you remove exceptional items,” Arun Sawhney, Ranbaxy’s chief executive officer told analysts yesterday.
Kotak raised its recommendation on the stock to buy from reduce. Antique also increased it to a buy as did Anand Rathi Securities Ltd.
The company controlled by Daiichi Sankyo Co. admitted it sold batches of drugs improperly manufactured, stored and tested in the U.S. and agreed to pay $500 million to settle the allegations made in the whistle-blower’s lawsuit.
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