Cipla Ltd - Q1FY21 Result Update - ICICI Securities

Q1 revenues grew 9.0% YoY to Rs. 4346 crore due to 15.9% YoY growth in domestic formulations to Rs. 1608 crore. US revenues declined 8.8% YoY to Rs. 1021 crore. RoW markets grew 53.1% YoY to Rs. 672 crore due to base effect. EU grew 19.4% YoY to Rs. 240 crore. EBITDA margins improved 145 bps YoY to 24.1% on account of a sharp drop in other expenditure amid Covid lockdown, partly offset by lower gross margins due to higher contribution from margin dilutive trade generics segment. Subsequently, EBITDA grew 15.9% YoY to Rs. 1049 crore. Net profit grew 21.4% YoY to Rs. 578 crore in line with the operational performance.

Valuation & Outlook

We continue to focus on the management's long-drawn strategy of targeting four verticals viz. One-India, South Africa & EMs, US generics & specialty and lung leadership. Recent first generic approval by USFDA for Albuterol sulphate (Proventil HFA) amid rise in demand for Albuterol products in the ongoing Covid-19 pandemic are a vindication for its lung leadership quest. While US focus will be on specialty including hospitals, value accretive generics, India focus will be on branded (Rx), trade generics (TGx). On the Africa front, Cipla continues to rebase its business model towards private business in the backdrop of shrinking tender opportunities. Another key aspect to watch would be R&D recalibration. Across the board transformation from tenderised model to private model in exports market and towards rapid consumerisation of important TGx, Rx in India bode well to change the investors' perspective. Our revised target price is Rs. 900 based on 25x FY22E EPS Rs. 36.0.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Cipla_Q1FY21.pdf

Shares of CIPLA LTD. was last trading in BSE at Rs.778.7 as compared to the previous close of Rs. 795.65. The total number of shares traded during the day was 587770 in over 13029 trades.

The stock hit an intraday high of Rs. 802.6 and intraday low of 768.9. The net turnover during the day was Rs. 459275399.

Source : Equity Bulls

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