Analyst Research Report Snapshot

Title:

News Updates | Cipla defers Medpro buyout

Price:

$12.00

Provider:

IndiaNivesh Securities Pvt Ltd

Date:

11 Feb 2013

Pages:

2

Type:

AcrobatPDF

Companies referenced:

CIPL.NS

Available for Immediate Download
Summary:

Cipla defers Medpro buyout: According to media reports, Cipla has decided to defer 51% stake acquisition of Cipla Medpro South Africa, proposed in November 2012. According to given proposal, Cipla was likely to take controlling stake (~51%) in Cipla Medpro South Africa (CMSA) at offered price of ZAR 8.55 per share, valuing CMSA at $430 million, which was at 20% premium of prevailing market price. Our Take: At offered price (ZAR 8.55 per share) Cipla valued CMSA at P/sales = 1.95x of CY11 & P/E =20x of CY11 adjusted earnings, which was fair in our view. Currently deferring the acquisition has been mainly due to higher valuation demanded by minority share holders. This will be a setback for Cipla due to company’s strategic fit in South Africa. But we appreciate wise move of Cipla for not increasing the offer price mainly due to two reasons A) Cipla is almost inexperienced in acquisitions & bringing out synergy from that. Hence, acquisition at high price would not have been a wise decision for the company. B) In our view, 2x of Sales was fair offer, any price above that would not be justifiable given business model & operating performance of the company. Additionally, we would like to highlight the fact that in Q3FY13 conference calls also management indicated to acquire certain front ended strategically fit targets & denied to acquire CMSA at higher valuations. Valuations: At CMP of Rs 391, the stock is trading at P/E multiple of 20.8x of FY13E & 19.9x of FY14E earnings estimates. We maintain BUY on the stock with the target price of Rs 440.

Why buy analyst research?

  • Institutional quality research
  • Available for Immediate Download
  • Detailed company or industry insight
  • Print or save
  • 24 hour customer support
Return to previous page without adding this item to your cart.
Email Customer Support.

About Analyst Research

Analyst research reports are available for immediate download after purchase. You will have unlimited access to the report for 24 hours after purchase, to download, print or save it as many times as you wish. Analyst Research provided by Reuters does not constitute investment advice, and is not endorsed by Reuters Research. This information is protected by copyright and intellectual property laws. More information on Analyst Research.