Cipla - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, Cipla reported better-than-expected results on the top-line front, while the bottom line came just in-line with expectations. However, the disappointment came mainly on the back of OPM, which came in at 19.1% vs. our expectations of 21.5%. For FY2013, management has given a guidance of 10% growth , while the bottom line is expected to grow at 10-15%. We recommend Buy on the stock.

Results better than expectations: For 4QFY2012, the company reported better than expected top-line performance. Net sales for the quarter stood at Rs.1,814cr, registering growth of 12.8% yoy. However, the company's gross margin and operating margin came in lower than expectations at 57.4% and 19.1%, respectively. Margin expansion on a yoy basis came on the back of improvement in product mix. Consequently, the company's net profit came in at Rs.292cr (up 36.3% yoy), higher than our expectation, mainly on the back of higher sales and other income during the quarter.

Outlook and valuation: For FY2013, Cipla has guided for ~10% overall revenue growth, while the bottom-line growth is expected to grow by 10-15%. The company is expected to maintain its OPM at 21-22% (excluding tech fees) for FY2013. We expect the company's net sales to post a 13.7% CAGR to Rs.8,804cr and EPS to record a 13.5% CAGR to Rs.18.9 over FY2012-14E. The stock is trading at 19.3x and 16.8x FY2013E and FY2014E earnings, respectively. We recommend a Buy rating on the stock with a target price of Rs.379.

Source : Equity Bulls

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