Technology

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.

Download Full Report