Cipla is a global pharmaceutical company with a focus on agile and sustainable growth. The company is headquartered in India and has a strong presence in South Africa, North America, and other key markets. Cipla’s strengths lie in the respiratory, anti-retroviral, urology, cardiology, anti-infective, and CNS segments. The company has 47 manufacturing sites around the world and produces 50+ dosage forms and 1,500+ products. Cipla is ranked 3rd largest in pharma in India, 2nd largest in the pharma prescription market in South Africa, and 3rd largest by prescription in the U.S. Cipla has a long history of making a difference to patients.
Result Analysis: Cipla Limited
(CMP: Rs. 1068.70)
|Result Update: Q1FY24|
|Market Cap. (Cr.)||86262.45|
|52 Wk. high/low||1185 / 852|
|Book Value (Rs)||290.00|
Cipla’s 1QFY24 revenue rose 17.7% YoY to ₹6,329cr., driven by superior executions in North America (NA) and domestic formulation (DF) segments.
EBITDA margin expanded at a similar rate of 230bps YoY to 23.6%, due to lower raw material costs, superior product mix, and Lower employee costs which were offset by rise in other expenses/R&D in 1QFY24.
PAT of the company increased by 41% YoY to ₹ 997cr., driven by lower depreciation costs that were somewhat offset by a rise in the quarter’s tax rate.
With the help of the ramp-up in gLanreotide and the growth in market share of important launches, the US company generated highest quarterly revenue. In Lanreotide, CIPLA now holds a +18% market share compared to 17% in Q4FY23. According to management, base business helped US sales climb QoQ while gRevlimid had mostly flat QoQ growth. $205-210 million, compared to $190-195 million, is the expected quarterly run rate. 4-5 peptide launches are anticipated in the upcoming 18 months.
Domestic formulation has kept up its market-beating growth, with a largely positive contribution from chronic conditions. added 250 more MRs in Q1, and Q2 is projected to see another 150–200 net additions. CIPLA’s consumer business saw mid-teen margins in the first quarter, while the trade generics sector saw 8% YoY growth.
EBITDA margin forecast for FY24 increased to 23% from 22%. Guidance for US quarterly base sales has been raised from US$190-195mn to an estimated US$210-215mn in FY24.
Commenting on the June quarter results, Umang Vohra, CEO and MD said, “Our One-India business continued the double-digit trajectory growing at 12% during the quarter led by branded prescription with sustained growth across chronic therapies. Our continued focus on differentiated portfolio has strengthened our US business which once again posted highest ever quarterly revenue at $ 222 Mn. South Africa Private Market bounced back from lows of last year to post a double-digit growth. Our core operating profitability continues to be strong at 23.6% expanding by 230 bps over last year. We are excited to continue working towards establishing a strong foundation for growth in upcoming quarters, where we look forward to continuing the leadership in Chronic Therapies in Branded Prescription business in India, further expanding our differentiated pipeline in the US and targeting to be the biggest prescription business in South Africa.”
Cipla showed robust growth in Q1FY24. The US’s highest-ever quarterly revenue was fueled by successful new launch execution, base business growth, and strong portfolio differentiation momentum. Cipla reported a positive forecast for the NA business, which was attributed to less competition and, as a result, less price erosion. Additionally, several changes in buying policies have also contributed to the NA segment’s rise. In addition to the branded generics segment’s (DF/South Africa) better-than-industry performance, the prognosis for NA markets has seen a robust comeback. Any approval of the Indore facility and the introduction of Advair and Abraxane might be positive for the company.
|Particulars (In Rs. Cr.)||Q1FY24||Q4FY23||Q1FY23||QoQ%||YoY%|
|Revenue from Operations||6,329||5,739||5,375||10.3%||17.7%|
|Cost of materials consumed||1,299||1,264||1,523||2.7%||-14.7%|
|Purchase of Stock-in-Trade||980||782||653||25.3%||49.9%|
|Changes in inventories||-42||17||-152||–||–|
|EBITDA Margin (%)||23.6%||20.5%||21.3%||310 bps||230 bps|
|Depreciation & Amortisation expense||239||346||254||-30.9%||-6.0%|
|Profit Before Tax (PBT)||1,375||928||975||48.2%||41.0%|
|Profit After Tax (PAT)||997||523||707||90.5%||41.0%|
|PAT Margin (%)||15.7%||9.1%||13.1%||660 bps||260 bps|
|EPS (in Rs.)||12.34||6.51||8.51||89.6%||45.0%|
Source: Company website, EWL Research
Disclosure in pursuance of Section 19 of SEBI (RA) Regulation 2014
Elite Wealth Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.
For analyst certification and other important disclosures, see the Disclosure Appendix, or go to www.elitewealth.in. Analysts employed by Elite Wealth Limited are registered/qualified as research analysts with SEBI in India.( SEBI Registration No.: INH100002300)
Analyst Certification (For Reports)
Kiran Tahlani, Elite Wealth Limited, email@example.com
The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Elite Wealth Limited.
As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:
(1) all of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and
(2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report.
For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.
This note may include excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please visit www.elitewealth.in.
Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting https://www.elitewealth.in, or e-mailing firstname.lastname@example.org with your request. Elite Wealth Limited may screen companies based on Strategy, Technical, and Quantitative Research. For important disclosures for these companies, please e-mail email@example.com.
Options related research:
If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the risk disclosure documents, please contact your Broker’s Representative or visit the OCC’s website at https://www.elitewealth.in
All research reports made available to clients are simultaneously available on our client websites. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your respective broker’s sales person.
Ownership and material conflicts of interest Disclosure
Elite Wealth Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of Elite Wealth Limited. Analyst as officer or director: Elite Wealth Limited policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.
Country Specific Disclosures
India – For private circulation only, not for sale.
Legal Entities Disclosures
Mr. Ravinder Parkash Seth is the Managing Director of Elite Wealth Ltd (EWL, henceforth), having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, is a SEBI registered Research Analyst and is regulated by Securities and Exchange Board of India. Telephone: 011-43035555, Facsimile: 011-22795783 and Website: www.elitewealth.in
EWL discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:
- a) EWL or his associate or his relative has no financial interest in the subject company and the nature of such financial interest;
(b) EWL or its associates or relatives, have no actual/beneficial ownership of one per cent. or more in the securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance;
(c) EWL or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) EWL or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;
(c) EWL or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(d) EWL or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(e) EWL or its associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
3 In respect of Public Appearances
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) The subject company is not now or never a client during twelve months preceding the date of distribution of the research report and the types of services provided by EWL
Provided that research analyst or research entity shall not be required to make a disclosure as per sub-clauses (c), (d) and (e) of clause (ii) or sub-clauses (a) and (b) of clause (iii) to the extent such disclosure would reveal material non-public information regarding specific potential future investment banking or merchant banking or brokerage services transactions of the subject company.
(4) EWL or its proprietor has never served as an officer, director or employee of the subject company;
(5) EWL has never been engaged in market making activity for the subject company;
(6) EWL shall provide all other disclosures in research report and public appearance as specified by the Board under any other regulation