Cipla Ltd. share price target

At CMP, valuations remain unsupportive (29x FY19E and 23x FY20E EPS). Maintain NEUTRAL with a TP of Rs 595 (22x FY20E). Ciplas top line at Rs 39.4bn grew 11.7%YoY and 6.5%QoQ with India and the US business growing 21.5% and 3.7% YoY respectively. EBITDA was Rs 7.3bn, up 12.4% YoY. The margin was 18.4%, flat YoY/up 338bpsQoQ, led by favourable business mix. However, it was 200bps below our estimates as 1Q has always been a good quarter for Cipla owing to its domestic acute portfolio.

ICICI Securities Ltd | Retail Equity Research Revenues grew 11.7% YoY to | 3939 crore (I-direct estimate: | 4137.2 crore) due to 21.5% YoY growth in India to | 1544 crore (Idirect estimate: | 1588.8 crore) and 17.8% YoY growth in South Africa to | 575 crore (I-direct estimate: | 585.6 crore). US revenues grew 3.7% YoY to | 670 crore (I-direct estimate: | 750.4 crore) EBITDA margins improved 10 bps YoY to 18.4% but came in lower than I-direct estimate of 20.3% due lower gross margins (63.9% against I-direct estimates of 66.6%)...

We maintain buy rating for Cipla and revise our TP to Rs750 (earlier Rs730) based on 24x March'20E EPS of Rs31.1. Cipla's Q1FY19 revenues and EBIDTA margin were in line with our and consensus estimates. However, net profit exceeded our expectations. Cipla's revenues grew 12% YoY, margin improved 10bps to 18.4% and net profit grew by 5%YoY to Rs4.46bn from Rs4.25bn. The domestic business (39% of revenues) grew 22% YoY on a lower base in Q1FY18 due to GST uncertainties. Steady growth in the domestic market, with leadership position in respiratory,...

Maintain NEUTRAL with a TP of Rs 565 (20x FY20E). Ciplas top line grew only 3%YoY to Rs 36.9bn, with India and the US business growing 13.3% and 4.5% YoY respectively. EBITDA was Rs 5.6bn, up 10% YoY. The margin was 15.1%, up ~93bps YoY/down 586QoQ, led by unfavorable business mix and weak acute season in India market. PAT came in at 1.8bn v/s Rs 618mn loss in 4QFY17. Adjusted for the one time provisioning for DPCO overcharging, PAT was at Rs 2.6bn, still 23% below our estimates.

Revenues grew a mere 3.2% YoY to | 3698 crore (I-direct estimate: | 3878 crore), as 13% YoY growth in India at | 1353 crore (I-direct estimate: | 1341 crore) was largely offset by 17% YoY decline in RoW to | 676 crore (I-direct estimate: | 797 crore) and 24.9% YoY decline in EU to | 135 crore (I-direct estimate: | 176 crore) EBITDA margins improved 94 bps YoY to 15.1% but came in lower than I-direct estimate of 18.5% mainly due one-offs Adjusted net profit was at | 238 crore (I-direct estimate: | 482 crore)...

ff US Biz (18% of Sales): US business grew by a muted 4.5% YoY to US$105mn due to supply constraints led by manufacturing changes and product recalls, which the Management expects to be resolved in the near-term. On the back of launch of one limited-competition product per quarter, the Management expects the US business to clock double-digit growth in FY19. Cipla expects to file >20 products in FY19E (filed 24 ANDAs in FY18 and 32 in FY17). Cumulatively, 104 ANDAs are pending for approvals including 26 tentative approvals. The...

For the quarter ended March 31, the company reported revenues of Rs 3,698crores, growing 5% y-o-y. The R&D; investments in the quarter ramped up to 7.6% of revenues. The company reported full year revenues of Rs 15,219 crores, growing 6% y-o-y. EBITDA margins, before exceptional items, increased by over 160bps to 18.6%. Key markets including India and South...

Cipla disappointed in 4QFY18, in-line with previous years' trend, with Revenues/EBITDA/PAT being 6%/28%/50% below our estimates, mainly due to negative operating leverage on account of lower sales as well as one-time costs related to sales and distribution (INR 450500mn), employee recruitment, disposal of Yemen subsidiary (FX loss of INR 512mn) and provisions (INR 775mn) towards ongoing DPCO overcharging litigation. Net sales remained flat YoY to INR 36,980mn as strong growth in domestic formulations sales (+21% YoY; adj. for GST) and South Africa (+18% in USD terms) was offset by the sharp decline in Global Access markets and Europe. While gross margin was broadly in-line with est. at 64%...

During the quarter US business grew by ~5% YoY (+4% QoQ) on back of new product launches like gDacogena dn gPulmicort, although sales would have been higher by USD5-7m (impacted by supply constrains). CIPLA expects healthy growth in the US market in the coming fiscal on back of ramp-up in sales of gDacogen, gPulmicort and gAloxi and limited competition products. In domestic market, CIPLA expects ~15% growth in FY19 on back of in-licensing deals, increase in field force productivity and other initiatives. Unlike other large cap peers, Cipla is well poised to deliver robust growth in US due to lower base coupled with significant pick- up in filling quality and rate. Exports form Exports API Raw material Staff cost Other expenses Tax Rate EBITDA Margins EBIT Margins PAT margins Unlike other large cap peers, Cipla is well poised to deliver robust growth in US due to lower base coupled with significant pick-up in filling quality and rate.