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Cipla Ltd Research Report - 10th Jun 2016

Pharmaceutical | Published on Jun 10th 2016

IT

Cipla’s results for 4QFY2016 have come much below our expectations. Sales came in at Rs3,207cr V/s Rs3,274cr expected, a yoy growth of 7.6%. The sales growth was driven by domestic formulations (Rs1,258cr), as expected, which grew 15.9% yoy, while exports posted a yoy growth of 7.4%. On the operating front, the EBDITA came in at 5.0% V/s 13.3% in 4QFY2015 and against 13.8% expected. The reported EBDITA margins include a lot of one-offs, adjusting for which the OPM was at 15.8%. The net profit thus came in at Rs81cr V/s Rs399cr expected and V/s Rs260cr in 4QFY2015, a yoy de-growth of 68.9%. We remain Neutral on the stock. Results much lower than expectations: Sales for the quarter came in at Rs3,207cr V/s Rs3,274cr expected, a yoy growth of 7.6%. The sales growth was driven by domestic formulations (Rs1,258cr), as expected, which grew 15.9% yoy, while exports posted a yoy growth of 7.4%. Exports of formulations increased 3.2% to Rs1,744cr during 4QFY2016, while exports of APIs were flat at Rs204cr during 4QFY2016. On the operating front, the EBDITA came in at 5.0% V/s 13.3% in 4QFY2015 and against 13.8% expected. The decline was mainly owing to a dip in gross profit margins, which came in at 55.8% V/s 61.1% in 4QFY2015. The reported EBDITA margins include a lot of one-offs, adjusting for which, the OPM was 15.8%. The net profit thus came in at Rs81cr V/s `399cr expected and V/s Rs260cr in 4QFY2015, a yoy dip of 68.9%. Outlook and valuation: We expect the company to post a 16.3% CAGR in net sales to Rs18,089cr and EPS to record a 20.4% CAGR to Rs27.2 over FY2016–18E. We recommend our neutral stance on the stock owing to the company’s poor return ratios.

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CMP 469
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)45,955.82
MCAP NSE (Rs in Cr)45,939.73
P/E (x)48.91
EPS (Rs.)11.68
BV (Rs.)153.11
Div Yield (%)0.35
FV (Rs.)2.00
P/BV (x)3.74
EV/Sales (x)3.69
EV/EBITDA (x)19.67

Shareholding Pattern (%)

Promoter37.0
Foreign26.0
Public & Others17.0
Institution16.0
Corporate4.0
Grand Total100.0

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