Cipla: 1QFY2018 Result Update - Angel Broking

Cipla posted poor set of numbers for 1QFY2018. Sales came in at Rs. 3,432cr (Rs. 3,789cr expected) v/s. Rs. 3,566cr in 1QFY2017, a yoy de-growth of 3.5%, mainly driven by the dip in Indian formulation sales. Indian formulation sales registered (Rs. 1,271cr) a yoy dip of 12.9%, mainly on the back of GST implementation. On operating front, the EBITDA margins came in at 16.1% (15.5% expected) v/s. 14.8% in 1QFY2017. Thus, the PAT came in at Rs. 409cr (Rs. 346cr expected) v/s. Rs. 339cr in 1QFY2017, a yoy growth of 20.6%. We maintain our SELL.

Results lower than our expectations, driven mainly by other income: Sales came in at Rs. 3,432cr (Rs. 3,789cr expected) v/s. Rs. 3,566cr in 1QFY2017, a yoy de-growth of 3.5%. Indian formulation sales posted (Rs. 1,271cr) a yoy dip of 12.9%, mainly on the back of GST implementation. Its other market USA (US$100mn), posted 2.0% yoy growth. South Africa (ZAR 998mn), posted a 10.0% yoy growth. On operating front, the EBITDA margins came in at 16.1% (15.5% expected) v/s. 14.8% in 1QFY2017, mainly on the back of lower than expected sales during the quarter and 11.2% rise in the other expenses. Thus, the PAT came in at Rs. 409cr (Rs. 346cr expected) v/s. Rs. 339cr in 1QFY2017, a yoy growth of 20.6%.

Outlook and valuation: We expect the company to post a 16.7% CAGR in net sales to Rs. 19,437cr and EPS to record a 38.7% CAGR to Rs. 24.1 over FY2017-19E. We re-iterate our SELL stance on the stock.

Shares of CIPLA LTD. was last trading in BSE at Rs.560.75 as compared to the previous close of Rs. 565.7. The total number of shares traded during the day was 114542 in over 1980 trades.

The stock hit an intraday high of Rs. 569.9 and intraday low of 555.7. The net turnover during the day was Rs. 64164040.

Source : Equity Bulls

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