MOSL: CIPLA (Neutral)-Weak 4Q-Margin improvement is key
​Cipla: Weak 4Q; Margin improvement is key
(CIPLA IN, Mkt Cap USD6.2b, CMP INR504, TP INR500, 1% Downside, Neutral)
- 4QFY17 revenue grew 10% YoY to INR35.8b (~6% miss). EBITDA came in at INR5.1b, with the margin at 14.1% (+60bp YoY, -440bp QoQ). The weak margin performance is attributed to subdued growth in India (-10% YoY) and high R&D spend (8.8% of sales; +~170bp v/s 9MFY17). Adj. PAT of INR2.01b was ~44.5% below our estimate due to muted sales and weak margins.
- FY18 guidance – double-digit revenue growth, margin improvement: In FY17, CIPLA grew revenue by 10%, with EBITDA margin at 16.9% (had guided for 16-18%). For FY18, the company has guided for double-digit growth in revenue with margin improvement (our est. of 15%) on the back of strong ramp-up in US sales and double-digit growth in the domestic business.
- Strong growth outlook for US; domestic business to be impacted by GST: US business grew 65% YoY in 4Q. CIPLA expects key approvals in FY18, with at least one limited-competition product per quarter starting 2Q (incl. Sevelamer, Nano-paclitaxel and Albuterol MDI), which should help drive US sales. Domestic business declined 10% YoY due to destocking at the channel. GST will impact domestic business growth for at least one quarter in FY18.
Cipla is a global pharmaceutical company based in India. Co. manufactures over 1,000 pharmaceutical products for therapeutic areas such as cardiovascular, children's health, dermatology and cosmetology, diabetes, human immunodeficiency virus/acquired immuno deficiency syndrome (HIV/AIDS), infectious diseases and others. Co.'s operations are organized along four business units: Active Pharmaceutical Ingredients (API - 200 generic and complex APIs); Respiratory (inhalation therapy); Cipla Global Access (HIV/AIDS, malaria, multi drug-resistant tuberculosis, and reproductive health); and Veterinary. Co.'s products are sold in India, Africa, Middle East, Europe, Americas, Asia and Australia.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.