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FE Investor Bureau
NEW DELHI, NOV 5: Ranbaxy Laboratories has plunged to a five-year low though the scrip continues to trade cum-bonus. Thanks to the nine per cent dip in first half net profit, the bonus effect on the scrip has vanished. Worse, a sharp dilution in earnings resulting from the 1:1 bonus and warrant conversion have seen heavy institutional selling in the counter over the past seven days. Besides, a lacklustre growth in exports has added to the gloom around the counter.
The scrip has witnessed a relentless fall of more than Rs 140 in the past seven trading sessions from Rs 586 to the current level of Rs 450, its five-year low. Immediately after the bonus announcement, Ranbaxy's stock touched a high of Rs 621. Since then it has never seen the high of Rs 621 recorded on June 10.
According to marketmen, this sort of fall is unusual in the cum-bonus price of a strong company's scrip. Ranbaxy's stock is going ex-bonus on November 18 and the company has fixed December 16 as the record date. The recent fall has meantthat after a 1:1 bonus, a Ranbaxy stock is available at around Rs 225.
Unlike other pharmaceutical companies, both Indian and multinational, who have reported exceptional growth in earnings, Ranbaxy has disappointed the market with a 9 per cent drop in net profit for the first half.
A fall in the net profit coupled with equity dilution seems to be worrying the market and according to analysts, the huge equity dilution could dent the company's earning per share for the full year. Ranbaxy already has a relatively huge equity of over Rs 53 crore, which would swell to over Rs 100 crore after capitalisation of reserves.
According to Mumbai-based NSE members, most of the delivery has been in the demat form, suggesting that institutions have pressed the sales button in the counter.
Ranbaxy reported a nine per cent drop in net profit to Rs 87.1 crore on a 9.6 per cent rise in turnover to Rs 713.4 crore for first half ended September 1998.
There was a significant decline in the export sales of cefalor andits late stage intermediate 3-chloro-7ACCA both in terms of volume and price realisation reflecting the global trend. In addition, international prices of certain pencillin based APIs (active pharmaceutical ingredients) remained soft.
These were partially offset by a substantial increase in sales of higher value added dosage forms which constituted 65 per cent (1997-98-62 per cent) of the pharmaceutical sales, reflecting an aggregate increase of 15 per cent (12 per cent for domestic and 30 per cent for export markets).
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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