Cipla - 2QFY2013 Result Update - Angel Broking

For 2QFY2013, Cipla's numbers came much better than expected both on the top-line and bottom-line front. The net sales and profits for the quarter came in at Rs.2,146cr and Rs.500cr, registering a growth of 23.9% yoy and 61.8% yoy respectively. However, the major positive highlight of the quarter was the improvement in the OPM which expanded by 684bp yoy for the quarter at 29.0%. For FY2013, the management has upgraded its revenue guidance from 12-15% to 15%+, with the bottom-line growing higher than that. We recommend an Accumulate rating on the stock.

Results better than expectations: For 2QFY2013, the company reported better-than-expected numbers. The net sales and profits for the quarter came in at Rs.2,146cr and Rs.500cr, registering a growth of 23.9% yoy and 61.8% yoy respectively. On the profitability front, the gross margins and operating profits came in much higher than expectations. The gross margin and operating margin came in at 63.3% and 29.0%.The expansion in the margins came on the back of an improvement in the product mix. Consequently the net profit came in at Rs.500cr, higher than the expectations mainly on the back of the higher-than-expected sales and OPM.

Outlook and valuation: For FY2013, the management has revised its revenue guidance upwards from ~12-15% to 15%+ growth. We expect the company's net sales to post a 14.0% CAGR to Rs.9,130cr and EPS to record a 21.2% CAGR to Rs.20.9 over FY2012–14E. We recommend an Accumulate on the stock.

Source : Equity Bulls

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