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Cipla 3QFY2014 performance highlights and results update

February 13, 2014, Thursday, 09:43 GMT | 04:43 EST | 15:13 IST | 17:43 SGT
Contributed by Angel Broking


For 3QFY2014, Cipla posted numbers above our expectations on the sales front, while OPM and net profit came below our expectations. The company posted sales of Rs.2,553cr (vs an expected Rs.2,366cr), posting a yoy growth of 23.3%. The OPM for the quarter came in at 17.2% vs 23.2% in 3QFY2013, impacted by a 46.4% yoy rise in the salary cost and 33.5% yoy rise in other expenditure. Thus,the net profit came in at Rs.284.3cr (vs an expected Rs.439.3cr), posting a dip of 16.4% yoy. We maintain our Buy recommendation on the stock with a price target of Rs.496.
 
Results lower than expectations, except for sales: Cipla posted sales of Rs.2,553cr (vs an expected Rs.2,366cr), posting a yoy growth of 23.3%. The sales growth was driven by exports, which posted a yoy growth of 31.9%, while domestic formulations posted a yoy growth of 12.6%. Overall, exports contributed 59.1% (vs 54.4% in 3QFY2013) to overall sales, while domestic sales contributed the rest. The OPM for the quarter came in at 17.2% vs 23.2% in 3QFY2013, impacted by 46.4% yoy rise in the salary cost and 33.5% yoy rise in other expenditure. Thus, the net profit came in at Rs.284.3cr (vs an expected Rs.439.3cr), posting a dip of 16.4% yoy.
 
Outlook and valuation: We expect the company’s net sales to post a 18.7% CAGR to Rs.11,400cr and EPS to record a 11.5% CAGR to Rs.23.6 over FY2013–15E. The growth in the top-line would be driven by domestic formulation sales and exports (through consolidation of Medpro). While the acquisition would have an impact on OPM, on back of valuations, we maintain our Buy on the stock with a price target of Rs.496.

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