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Narasimhan's review
Investment Sector: Equities Submitted by Narasimhan 
, Owner
at Krish Systems
5 months ago Add Tag |
Daiichi Sankyo, a Japanese company, was basking in glory after buying out the promoter’s share of 34.82% in Ranbaxy at a reported deal valued at $ 6 Billion. Little did they realize that there could some hard days ahead. Pfizer, US based drug giant, has announced its intent to better the offer to the investors who hold balance 65% that include institutional holding of 41.28%.
Any offer by Pfizer will help the institutions to get more for their holdings and in the end individuals too are likely to gain. It is worthwhile remembering that Pfizer had held talks with Ranbaxy promoters a year ago to buy controlling interest in the company. As the law stands Daiichi is in for a bumpy as counter offer from Pfizer can mean more $s for the same controlling interest which they seemed to got when shares are favorably priced. It is also interesting to know that Pfizer and Ranbaxy are battling over Lipitor, the largest selling cholesterol drug in 18 countries with an annual sales of $ 13 Billion, where the patent will expire starting 2011.
The financials of Ranbaxy for the past 5 quarters are presented below
| Rs Millions | Mar ' 08 | Dec ' 07 | Sep ' 07 | Jun ' 07 | Mar ' 07 |
| Sales | 9,967 | 10,039 | 10,487 | 10,274 | 9,991 |
| Operating profit | 126 | (179) | 1,324 | 3,401 | 1,609 |
| Interest | 263 | 248 | 263 | 248 | 157 |
| Gross profit | 740 | 821 | 2,215 | 3,887 | 1,730 |
| Depreciation | 322 | 300 | 325 | 277 | 288 |
| Net profit / loss | 1,034 | 484 | 1,682 | 2,912 | 1,153 |
| Equity capital | 1,865 | 1,865 | 1,865 | 1,864 | 1,864 |
| EPS (Rs) | 2.77 | 1.3 | 4.51 | 7.81 | 3.09 |
| OPM (%) | 1.26% | -1.78% | 12.63% | 33.11% | 16.10% |
| GPM (%) | 7.43% | 8.18% | 21.12% | 37.84% | 17.32% |
| NPM (%) | 10.38% | 4.82% | 16.03% | 28.34% | 11.54% |
The company has not returned best of the results to the investors in past three quarters struggling with margins and patent cases taking their toll. It is good relief to investors to realize a better price on their holdings those who believe a longer course to better days ahead. With Daiichi they can be assured of larger volume of outsourced research moving to India and company gaining more.
For the near term traders the share likely to offer large number of opportunities as the battle of Daiichi heats up with Pfizer.
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