Cipla Ltd - Q2FY21 Result Update - ICICI Direct

Q2 revenues grew 14.6% YoY to Rs. 5038 crore due to 19.8% YoY growth in domestic formulations to Rs. 2090 crore. US revenues grew 10.1% YoY to Rs. 1049 crore. RoW markets grew 28.2% YoY to Rs. 828 crore. EU grew 30.0% YoY to Rs. 247 crore. API segment grew 20.4% YoY to Rs. 189 crore. EBITDA margins improved 266 bps YoY to 23.4% on account of a sharp drop in other expenditure amid Covid, partly offset by lower gross margins due to change in product mix. Subsequently, EBITDA grew 29.4% YoY to Rs. 1177 crore. PAT grew 43.2% YoY to Rs. 665 crore in line with operational performance.

Valuation & Outlook

Q2 revenues were in-line with I-direct estimates while profitability was better due to significantly lower other expenditure amid pandemic. 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 first generic approval by USFDA for 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 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. Our revised target price is Rs. 925 based on 26x FY23E EPS Rs. 35.5.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Cipla_Q2FY21.pdf

Shares of CIPLA LTD. was last trading in BSE at Rs.746.25 as compared to the previous close of Rs. 744.5. The total number of shares traded during the day was 51582 in over 1584 trades.

The stock hit an intraday high of Rs. 750 and intraday low of 743.9. The net turnover during the day was Rs. 38525490.

Source : Equity Bulls

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