| Both these companies recorded an annual turnover of over one billion Swedish kroners (about $ 132 million) in 2004 and are major suppliers to leading passenger car and commercial vehicle manufacturers such as Volvo, Scania, SAAB, DAF, Perkins, MAN and Iveco. |
| The Imatra Group acquisition is the fourth by BFL, the last being the takeover of Federal Forge Inc, USA in June 2005. This will give another boost to BFL's presence in the European commercial vehicle, diesel engine and passenger car markets, as BFL will get access to new global OEM customers. |
| The report continues to remain bullish on BFL and expect it to benefit significantly considering its global scale of operations and hence it looks best positioned to take advantage of the auto components outsourcing trend. |
| Ranbaxy: Caught in pricing game |
| ICICI Securities maintains its "hold" rating on Ranbaxy. In its earnings revision, the report states that pricing pressure in the US generics market will continue for the next 18-24 months. |
| This is hurting large generics companies such as Ranbaxy the most, which is reflected in the sharp 63 per cent decline in the company's PAT in H1 2005 (40-50 per cent below estimates). Ranbaxy, now, expects much lower EPS for 2005 than the 'flat' guidance issued in April 05. |
| The report has cut EPS estimates by 28-37 per cent for the next three years. On the positive side, Ranbaxy could benefit from potential upsides like the launch of generic Lipitor, a favourable ruling on Accupril, exclusivity for generic Zocor 80mg and a big-ticket acquisition/merger in the US/EU. |
| The stock trades at 2006E P/E of 30x, which is close to its bull market average P/E of 37x and higher than past five years' average of 26x. |
| Lupin: Better revenue mix |
| Edelweiss Securities, initiating coverage on Lupin, recommends a "value buy". The report states that with the US initiatives now gaining traction, the revenue mix is set to get better. Higher contribution is expected from the US formulation market, 25 per cent by FY08 from two per cent currently. |
| The near-term focus of its US strategy is on next-generation cephalosporins and branded paediatrics-generic ceftriaxone and Suprax, respectively. |
| With very limited competition, modest price erosion, and an able marketing partner, ceftriaxone alone may contribute to nine per cent of total sales in FY06. Longer-term growth will come from product pipeline expansions in the US and the EU (blockbusters like simvastatin and pravastatin). |
| The company's business model is built on established manufacturing strengths. The report finds comfort with Lupin's regulated market strategy and its established reverse chemistry. Its targeted products include a basket of cephalosporin, prils, and statins. |
| Its focus on injectable cephalosporin gives it an edge as there are very few USFDA-approved injectable cephalosporin facilities globally. |
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