Cipla - 3Q margins muted; maintain Neutral - Nomura

Cipla's 3Q results were lower than our ests (net profit 14% below ests), on lower margins and higher tax rates. We believe Lexapro did contribute to an extent to the earnings (though significantly less than the previous qtr) and could fall materially going ahead. With expansion in the front-end, the company is guiding towards higher overheads and an EBITDA margin of 22%.

Domestic revenue growth slowed on weak anti-infective season. We expect Cipla to trade at a discount to other front-line peers on weaker growth and ROE profile.

We maintain our Neutral rating.

Source : Equity Bulls

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