Cipla - 1QFY2017 Result Update - Angel Broking

Cipla posted lower than expected numbers for 1QFY2017. Sales came in at Rs. 3,500cr V/s Rs. 3,743cr expected and V/s Rs. 3,761cr in 1QFY2016, a dip of 6.9% yoy. Domestic sales (Rs. 1,449cr) rose 5% yoy, while exports (Rs. 2,051cr) dipped by 14.0% yoy. On the operating front, the EBITDA margin came in at 14.8% V/s 18.6% expected, V/s 26.0% in 1QFY2016, and V/s Adj. OPM of 15.8% in 4QFY2016. Thus, the Adj. net profit came in at Rs. 365cr V/s Rs. 435cr expected and V/s Rs. 649cr in 1QFY2016, a yoy de-growth of 43.7%. We maintain our Neutral rating on the stock.

Results much lower than our expectations: The company posted lower than expected numbers for 1QFY2017. Sales came in at Rs. 3,500cr V/s Rs. 3,743cr expected and V/s Rs. 3,761cr in 1QFY2016, a dip of 6.9% yoy. Domestic sales (Rs. 1,449cr) rose 5% yoy, while exports (Rs. 2,051cr) dipped by 14.0% yoy. On the operating front, the EBITDA margin came in at 14.8% V/s 18.6% expected, V/s 26.0% in 1QFY2016, and V/s Adj. OPM of 15.8% in 4QFY2016. Thus, the Adj. net profit came in at Rs. 365cr V/s Rs. 435cr expected and V/s Rs. 649cr in 1QFY2016, a yoy de-growth of 43.7%.

Outlook and valuation: We expect the company to post a 16.3% CAGR in net sales to Rs. 18,089cr and EPS to record a 20.4% CAGR to Rs. 27.2 over FY2016–18E. We reiterate our Neutral stance on the stock owing to the company's poor return ratios.

Shares of CIPLA LTD. was last trading in BSE at Rs.553.55 as compared to the previous close of Rs. 516.65. The total number of shares traded during the day was 946384 in over 21034 trades.

The stock hit an intraday high of Rs. 557.4 and intraday low of 509. The net turnover during the day was Rs. 511408984.

Source : Equity Bulls

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