Rating Reduce
Price Rs309
Target Price Rs358
Implied Upside 15.9%
Sensex 13,570

The US FDA has recently issued warning letters and import alert to over 30 generic drugs of Ranbaxy Labs (RLL), manufactured at its Dewas and Paonta Sahib manufacturing facilities. We have scrutinized the actions of the US FDA and expect the company’s business to be impacted in the short term. Based on the above developments, we have reduced our EPS estimates for CY08 by 6%, FY09 estimates by 10% and CY10 by 5%. However, we also believe that the charges levied against RLL are not of serious nature and have risen due to the lapse in implementing current good manufacturing practices (cGMP) at the above facilities.

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