Cipla Ltd - Result Update - Emkay

Reco: SELL
CMP: Rs 342
Target Price: Rs 318

No Earnings Catalyst – Downgrade to Sell

- Cipla's Q3FY12 results were below expectation with a) Revenues up 14% to Rs17.1bn b) EBITDA up 23% to Rs3.9bn and c) APAT up 16% to Rs2.7bn

- Revenues were driven by 18% growth in domestic biz. EBITDA margins declined 215bps QoQ despite strong growth in domestic biz and INR dep

- Going forward with no favorable impact of currency, we believe gross margins will return to ~55% from current levels of 58%, thereby restricting EBITDA margins to 21-22%

- On account of delay in Indore SEZ ramp-up and weakening in margins going ahead – we downgrade the stock to Sell with a target price of Rs318 (18xFY13 EPS of Rs17.6).

Source : Equity Bulls

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