Cipla Limited - Unwarranted street optimism - Maintain HOLD! - Antique

Cipla reported a sequentially subdued quarter on back of lower export growth given reduced contribution from Lexapro.(155 crores contribution last quarter).Revenues at INR20.7bn (up +18% yoy & -6% qoq) were marginally ahead of our estimates(Beat by 3%). EBITDA margins at 24%.are in line with our estimates. PAT at INR3.39bn (up +26% yoy & -32% qoq) were inline with our estimates but considerably below Bloomberg consensus estimate of 3.7bn. Missing street by close to 10%.

Domestic sales grew by more than 10% on a YoY basis but were flat sequentially.This corresponds to an industry wide seasonal slowdown. For the 9m period the domestic sales growth has been up by 17% which should Export sales grew by about 28% yoy but declined sequentially on account of exceptional Lexapro contribution last quarter. Material cost has decreased by about 3% on a yoy basis mainly on account of changes in product mix viz. higher contribution of anti-depressant segment (Escitalopram) and anti-allergic (Dymista) coupled with increased realizations. The increase in staff cost of INR710m is due to annual increments and increase in manpower. Other expenditure has increased by INR570m for the quarter mainly on account of increase in travel expenses, professional charges, etc. Maintain HOLD.

Source : Equity Bulls

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