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Cipla Ltd. | Q3FY13 Result Update




IndiaNivesh Securities Pvt Ltd


06 Feb 2013





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Cipla Ltd. | Q3FY13 Result Update | Profitability hit by higher than anticipated operating expenses & employee cost, however topline growth maintained Cipla’s revenue was inline with our estimates, while operating performance marginally lower. Company reported growth of 18.7% y-o-y (declined 5.4% q-o-q) to Rs 20.31 billion in Q3FY13 (V/s INSPL est= Rs 20.33 billion). The robust growth was mainly on account of exports formulation business, which grew 38% y-o-y to Rs 9.69 billion on account of healthy growth across the markets & improvement in base business linked with Lexapro supply to Teva (even after 180 days exclusivity) & Dymista supply to its partner MEDA in US market. Additionally, company’s domestic formulation business grew 10.2% y-o y to Rs 9.57 billion on the back of healthy growth in anti asthma, cardiovascular & anti biotic therapeutic segments. Overall growth was partially offset by 16% decline in API business due to one off item in the same quarter previous year. Valuation: At CMP of Rs 405, the stock is trading at PE 21.6x of FY13E & 20.7x of FY14E earnings estimates. On account of increase in contribution from high margins business from exports, positive outlook for domestic market & expansion in margins partially linked with higher price realization, We believe that company is likely to manage healthy growth across the markets going forward. We have adjusted numbers slightly for higher employee cost & increase in other expenditure for FY13 & FY14E. However, pharma pricing policy may have marginal negative impact on the margins of the company. We continue to maintain BUY rating on the stock with the target price of Rs 440 (Valuing at 22x of FY14e earnings estimates).

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