Analysts' corner

Ranbaxy & GSK Consumer

RANBAXY
Reco price: Rs 434
Target price: Rs 580
The US FDA has approved Ranbaxy's generic version of Lipitor, enabling the company to launch the product with 180-day exclusivity, along with the innovator Pfizer, and the authorized generic, Watson. Analysts expect Lipitor to add Rs 31 to Ranbaxy's EPS during the exclusivity period, assuming 25 per cent profit sharing with Teva. According to an agreement signed by Ranbaxy with Teva, the former will share profits with the latter during the exclusivity period. Analysts assume 25 per cent of the profits will be shared with Teva. Pfizer's aggressive steps to retain 33 per cent market share and the agreement with Teva are likely to restrict Ranbaxy's upside from the Lipitor opportunity. Analysts assume a 45 per cent price erosion and 35 per cent market share for Ranbaxy within the exclusivity period. Maintain buy.

—Anand Rathi Securities

GSK CONSUMER
Reco price: Rs 2,506
Target price: Rs 3,000
GSK Consumer is well positioned to continue its 18-20 per cent revenue growth trajectory in the next 3-4 years. The headroom to grow in its core malted foods segment continues to be very high, while the company itself is maintaining high velocity of new product variants launches. A strong push on distribution including rural distribution, premiumisation into value-added malted foods and continued ramp up in north and west India would be key growth pillars. Input cost inflation notwithstanding, analysts estimate a 20 per cent earnings CAGR over CY10-13. Maintain buy.

-IIFL