Cipla Ltd. share price target

Cipla's results for 4QFY2016 have come much below our expectations. Sales came in at Rs3,207cr V/s Rs3,274cr expected, a yoy growth of 7.6%. The sales growth was driven by domestic formulations (Rs1,258cr), as expected, which grew 15.9% yoy, while exports posted a yoy growth of 7.4%. On the operating front, the EBDITA came in at 5.0% V/s ..

ICICI Securities Ltd | Retail Equity Research Revenues grew 5.6% YoY to | 3267 crore, (I-direct estimate: | 3196 crore) on account of 15.8% growth in domestic formulations to |...

8 Gross disappointment in operating performance with 12% miss in revenues and 1160bpsvesurpriseinEBITDAmarginresultingina79%missinPATestimates 8 Oneoffadjustments(pertainingtoinventorywriteback,businessrationalisationin...

Cipla has increased its R&D expenditure as a percentage of sales from six per cent a year before to eight per cent now to focus more on US markets. The company is looking at three to four filings a quarter in the US (20 over the next one year) and expects FY17 to see good traction in the world's largest health care market.

Cipla has posted a lower-than-expected set of numbers for 3QFY2016. Sales came in at Rs3,027cr (V/s `3,367cr expected) V/s Rs2,625cr in 3QFY2015, a yoy growth of 15.3%, mainly led by exports. On the operating front, the OPM came in at 12.0% V/s 19.9% expected and V/s 15.7% in 3QFY2015. According to the Management, the revenues took a 2.5% impact on account of change in distribution policy and an ~0.7% impact on back of currency impact of ZAR. Thus, the Adj. net profit came in at Rs343cr V/s Rs400cr expected and V/s Rs328cr in 3QFY2015, registering a yoy growth of 4.7%. We maintain our Buy on the stock with a price target of Rs605. Results better than expectations on the OPM front: Sales for the quarter came in at Rs3,027cr (V/s Rs3,367cr expected) V/s Rs2,625cr in 3QFY2015, a yoy growth of 15.3%, mainly led by exports. Domestic sales (Rs1,194cr) posted a dip of 0.4%, while exports (Rs1,833cr) posted a yoy growth of 28.5%. On the operating front, the OPM came in at 12.0% V/s 19.9% expected and V/s 15.7% in 3QFY2015. The lower OPM yoy is owing to decline in the GPM which came in at 58.9% V/s 63.9% expected and...

Ciplas 3QFY16 numbers took a hit owing to several factors, including (1) One-time impact of change in distribution policy in the domestic business, (2) Earlier-than-expected erosion in Nexium, (3) Increase in R&D; spend, (4) Currency devaluation in South Africa, (5) Decline in API sales and (6) Increased spending on consumer and biologics business.

9 Broad base growth in US, South Africa, Europe and other emerging markets led to robust43%yoyjumpinformulationexports Key highlights: Revenues were 3% below our estimates due to onetime impact of...

Consolidation of Invagen, launch of a host of high- value products in the US (including respiratory, oncology and complex oral solids) and operating leverage are the key earnings growth drivers for Cipla over the next two years. We believe these will help the company deliver ~25% EPS CAGR over FY16-18E. Our earnings estimates for FY16E/17E/FY18E are reset to Rs 24.2/30.5/38.6. We assume coverage on Cipla with a BUY rating. Our TP is Rs 760 (22x 1-year forward rolling EPS).

For 2QFY2016, Cipla posted numbers more or less in line with our expectations on the sales and net profit front while beating our estimates on the OPM front. The company posted sales of Rs3,362cr V/s Rs3,343cr expected and V/s Rs2,630cr in 2QFY2015, a yoy growth of 27.8%. On the operating front, the OPM came in at 20.8% V/s 16.0% in 2QFY2015 and V/s an expected 19.7%, driven by gross margin expansion and higher sales growth. Thus, the Net Profit came in at Rs432cr V/s an expected Rs458cr and V/s Rs299cr in 2QFY2015, a yoy growth of 44.4%. The Management reiterated its guidance of sales growth of 22% in FY2016 and EBDITA margin improvement of 100-150bp. We currently have a Neutral rating on the stock. Results better than expectations on the OPM front: The company posted sales of Rs3,362cr V/s Rs3,343cr expected and V/s Rs2,630cr in 2QFY2015, a yoy growth of 27.8%. The growth on the top-line came through a 52.3% yoy growth in exports driven by formulation exports (on back of generic Nexium). Export API, on the other hand posted a 61.4% yoy growth during the quarter. Domestic formulation (Rs1,262cr) posted a flat growth of 0.9% yoy. On the operating...