Cipla - Q3FY21 First Cut - ICICI Direct

(CMP: Rs. 826; MCap: Rs. 66581 crore)

Cipla's Q3FY21 revenues were in line with I-direct estimates (albeit skewed), whereas profitability was better on account of lower than expected other expenditure, higher other income and lower depreciation.

Q3FY21 Earnings Summary

- Revenues grew 18.2% YoY to Rs. 5169 crore (I-direct estimate: Rs. 5058 crore) led by strong growth in domestic and RoW markets. Domestic sales grew 25.5% YoY to Rs. 2231 crore (I-direct estimate: Rs. 2044 crore). RoW Markets business grew 47.2% YoY to Rs. 823 crore (I-direct estimate: Rs. 783 crore) whereas South Africa business declined 2.5% YoY to Rs. 579 crore (I-direct estimate: Rs. 618 crore). US grew 9.6% YoY to Rs. 1037 crore (I-direct estimate: Rs. 1111 crore). Europe business grew 32.6% YoY to Rs. 252 crore (I-direct estimate: Rs. 247 crore). API segment grew 21.8% YoY to Rs. 201 crore (I-direct estimate: Rs. 190 crore)

- EBITDA margins expanded 647 bps YoY to 23.8% (I-direct estimates: 22.0%) mainly due to significantly lower other expenditure. Subsequently, EBITDA grew 62.3% YoY to Rs. 1231 crore (I-direct estimate: Rs. 1113 crore)

- Net profit more than doubled to Rs. 748 crore (I-direct estimate: Rs. 608 crore) vs Rs. 351 crore in Q3FY20. Delta vis-a-vis EBITDA was due to higher other income and lower depreciation

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 launch of Albuterol sulphate (Proventil HFA) amid rise in demand for Albuterol products in the ongoing Covid-19 pandemic are a vindication of 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.

We will be coming out with a detailed report soon.

Shares of CIPLA LTD. was last trading in BSE at Rs.825.6 as compared to the previous close of Rs. 841.55. The total number of shares traded during the day was 212660 in over 5687 trades.

The stock hit an intraday high of Rs. 850.05 and intraday low of 821.15. The net turnover during the day was Rs. 177896345.

Source : Equity Bulls

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