Ranbaxy March quarter performance disappointing, all eyes on clearance of merger with Sun Pharma

Drug major Ranbaxy, the acquisition target of Sun Pharma, didn’t fail to disappoint investors in its latest show for the quarter ended March 2014. Flat growth in revenues, net loss of Rs 73.6 crore against a profit of Rs 125.7 crore in the March quarter of previous year led to a dismal show in the quarter. The stock closed over a percent lower for the day.

A 19% growth in revenues from the US generic business, aided by sales from generic Absorica, and maintenance of the operating margin at 6% were the only major positives. Except the US, the company underperformed in its other segments. Revenues from India business remained flat. Sales from Asia Pacific and Latin America as well as Middle East & Africa regions declined marginally and those from the active ingredients business declined by over 60%.

The rupee appreciation during the quarter resulted in forex gain with the company posted a gain of Rs 155.9 crore on foreign currency derivatives. However, provisions towards inventory writeoff, impairment of goodwill and provision for investment in an associate all amounting to Rs 90 crore pushed the company’s bottomline in red.

Regulatory injunctions had a clear negative impact on the March quarter performance and will continue to have an adverse effect on the company’s performance in the forthcoming quarters. For investors, the saving grace could be an early regulatory clearance for the company’s merger with Sun Pharma.