Q3FY21 Result Update - Cipla Ltd - ICICI Direct

Q3 revenues grew 18.2% YoY to Rs. 5169 crore led by strong growth in domestic and RoW markets. Domestic sales grew 25.5% YoY to Rs. 2231 crore. RoW markets business grew 47.2% YoY to Rs. 823 whereas South Africa business fell 2.5% YoY to Rs. 579 crore. US grew 9.6% YoY to Rs. 1037 crore. EBITDA margins expanded 647 bps YoY to 23.8% mainly due to significantly lower other expenditure. Hence, EBITDA grew 62.3% YoY to Rs. 1231 crore. PAT more than doubled to Rs. 748 crore vs. Rs. 351 crore in Q3FY20.

Valuation & Outlook

Q3 revenues were in line with I-direct estimates (albeit skewed). Profitability was better amid lower than expected other expenditure, 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 pandemic are 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 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, towards rapid consumerisation of important TGx, Rx in India bode well to change the investors' perspective. We maintain BUY with a target price of Rs. 975 (vs. earlier Rs. 965) including base business value of Rs. 935 (25x FY23E EPS Rs. 37.4 + Rs. 42 NPV for gRevlimid.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Cipla_Q3FY21.pdf

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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