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Cipla 1QFY2015 performance highlights and results update

August 18, 2014, Monday, 16:31 GMT | 11:31 EST | 21:01 IST | 23:31 SGT
Contributed by Angel Broking


Cipla’s 1QFY2015 results came in below our expectations. For the quarter, the company posted consolidated sales of Rs.2,647cr V/s an expected Rs.2,720cr and V/s Rs.2,331cr in 1QFY2014 (a yoy growth of 13.6%). On the operating front, the EBDITA margin came in at 17.7% V/s an expected 24.5% and V/s 23% during the corresponding period of last year. The gross margin came in at 61.3% V/s 60.3% in the corresponding period of last year; still the OPM dipped due to a 48.5% and 24.5% yoy rise in employee expenses and other expenditure, respectively. The PAT came in at Rs.295cr (V/s an expected Rs.575cr), registering a yoy de-growth of 39.3%. We maintain our Accumulate rating on the stock with a price target of Rs.480.

Results lower than expectations: For the quarter, the company posted consolidated sales of Rs.2,647cr V/s an expected Rs.2,720cr and V/s Rs.2,331cr in 1QFY2014 (a yoy growth of 13.6%). The growth in the top-line came on back of domestic sales posting a growth of 17% yoy to Rs.1,289cr, while exports posted a low growth of 10.5% yoy. On the operating front, the EBDITA margin came in at 17.7% V/s an expected 24.5% and V/s 23% during the corresponding period of last year. The EBDITA margin for the quarter was however better than 13.1% during 4QFY2014. The gross margins came in at 61.3% V/s 60.3% during the corresponding period of last year; still the OPM dipped due to a 48.5% yoy rise in employee expenses and 24.5% yoy rise in other expenditure. Further, the depreciation rose by 47.5% yoy, which led the PAT to come in at Rs.295cr V/s an expected Rs.575cr and V/s Rs.485cr in 1QFY2014, registering a yoy de-growth of 39.3%.

Outlook and valuation: We expect the company’s net sales to post a 16.1% CAGR to Rs.13,152cr and EPS to record a 17.9% CAGR to Rs.24 over FY2014–16E. The growth in the top-line would be driven by domestic formulation sales and exports. We maintain our Accumulate rating on the stock with a price target of Rs.480.