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Cipla Ltd Research Report - 24th Feb 2016

Pharmaceutical | Published on Feb 24th 2016

IT

Cipla has posted a lower-than-expected set of numbers for 3QFY2016. Sales came in at Rs3,027cr (V/s `3,367cr expected) V/s Rs2,625cr in 3QFY2015, a yoy growth of 15.3%, mainly led by exports. On the operating front, the OPM came in at 12.0% V/s 19.9% expected and V/s 15.7% in 3QFY2015. According to the Management, the revenues took a 2.5% impact on account of change in distribution policy and an ~0.7% impact on back of currency impact of ZAR. Thus, the Adj. net profit came in at Rs343cr V/s Rs400cr expected and V/s Rs328cr in 3QFY2015, registering a yoy growth of 4.7%. We maintain our Buy on the stock with a price target of Rs605. Results better than expectations on the OPM front: Sales for the quarter came in at Rs3,027cr (V/s Rs3,367cr expected) V/s Rs2,625cr in 3QFY2015, a yoy growth of 15.3%, mainly led by exports. Domestic sales (Rs1,194cr) posted a dip of 0.4%, while exports (Rs1,833cr) posted a yoy growth of 28.5%. On the operating front, the OPM came in at 12.0% V/s 19.9% expected and V/s 15.7% in 3QFY2015. The lower OPM yoy is owing to decline in the GPM which came in at 58.9% V/s 63.9% expected and V/s 62.3% in 3QFY2015. The R&D expenditure during the quarter was 8% of sales compared to 6% of sales during the corresponding period of last year. Thus, the Adj. net profit came in at Rs343cr V/s Rs400cr expected and V/s Rs328cr in 3QFY2015, registering a yoy growth of 4.7%. Outlook and valuation: We expect the company to post an 18.7% CAGR in net sales to Rs16,447cr and EPS to record a 18.3% CAGR to Rs27.5 over FY2015– 17E. The growth in the top-line would be driven by domestic formulation sales and exports. We maintain our buy recommendation on the stock.

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CMP 523
Target Price 605
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)46,241.33
MCAP NSE (Rs in Cr)46,233.29
P/E (x)49.21
EPS (Rs.)11.68
BV (Rs.)153.11
Div Yield (%)0.35
FV (Rs.)2.00
P/BV (x)3.76
EV/Sales (x)3.71
EV/EBITDA (x)19.79

Shareholding Pattern (%)

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

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