Result Analysis: Cipla Ltd. (CMP: Rs.1,034) Result Update: Q3FY23

Cipla Limited is a leading pharmaceutical company from India with presence across the world. It is the 3rd largest pharmaceutical player in India and leader in therapies such as respiratory and urology and also ranked second in the overall chronic business. The company has a vast product portfolio with more than 1,500 products in various therapeutic categories. The company’s business is divided into three strategic units – APIs, Respiratory and Cipla Global Access. Its largest market is India, followed by North America and Africa.


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    Stock Details
    Market Cap. (Cr.) 83491
    Equity (Cr.) 161.43
    Face Value 2
    52 Wk. high/low 1185 / 880
    BSE Code 500087
    NSE Code CIPLA
    Book Value (Rs) 271.13
    Sector Pharmaceuticals


    Key Ratios
    Debt-equity: 0.08
    ROCE (%): 16.83
    ROE (%): 13.07
    TTM EPS: 32.14
    P/BV: 3.8
    TTM P/E: 33.03

    Result Highlights:

    • Cipla has reported below market estimates results in the December’22 quarter. Consolidated Revenue of the company increased by 6.04% YoY to Rs.5,810 cr. and Net profit increased by 6.44% YoY to Rs.808 cr.

    • EBITDA has increased by 14.33% on YoY basis to Rs.1,408cr. EBITDA margin of the company stood at 24.2%, improved sequentially as well as on YoY basis by 188bps and 176bps respectively.

    • Net profits of the company has shown muted growth due to the significant increase in the Finance cost (~25% QoQ and ~54% YoY) and Total tax expenditure (~35% QoQ and ~39% YoY) in the quarter.

    • Company’s R&D expenditure increased 39% YoY due to the on-going clinical trials on respiratory segment and development in the biosimilar and the expenditure stands at Rs.363 cr. (6.2% of the total Revenue).

    • Consolidated capex for the quarter stood at Rs.391 cr. compared to Rs.400 cr. in the previous year same quarter.

    • India business reported 1.8% YoY revenue growth and remained flat on QoQ basis. It experienced growth in the respiratory, cardiac and anti-diabetic therapy areas. Consumer health business grew 16% YoY.

    • North America business grew strongly by 42% YoY and 11.7% QoQ on the back of expansion in the respiratory market share and peptide injectable products.

    • SAGA* business reported notable decline of 24% YoY and 22% QoQ due to the supply chain challenges faced by the company.

    • International market business has shown 3.3% YoY and -0.1% QoQ revenue growth due to the currency fluctuations.

    • API business has reported the revenue decline of 2% YoY and 4% QoQ.

    Financial  Performance:

    Shareholding Pattern:

    Particulars %
    Promoters & Promoter Group 33.41
    FIIs 29.70
    DIIs 21.00
    Public 15.36
    Others 0.53

       Management Commentary:

    Commenting on the December results, Umang Vohra, MD and Global CEO, said, Our Q3FY23 performance reflects sustained momentum in core One-India and US businesses driving our overall revenue growth of 6% reported and 11% on ex-covid basis. We achieved the highest ever quarterly revenue for the North America region of $195 Mn driven by the contribution of differentiated products and market share expansion in flagship respiratory and peptide franchises. Our reported operating profitability of 24.2% reflects our focused efforts on navigating external headwinds and continued higher R&D spends stemming from ongoing respiratory trials and initiation of biosimilar programs.”


    Cipla has reported overall muted performance in the December’22 quarter with stagnated growth of 6% in Revenue and 6.4% growth in the Net Profit compared to December’21 quarter on the back of lagging in the South Africa and International market business. However India and US business has remained strong reflecting market expansion and new launches in the regions. The management expects US FDA nod for gAdvair within a quarter and gAbraxane in the second half of FY24 and has maintained their EBITDA Margin guidance in the range of 21-22% for FY23. For the nine months of FY23 Cipla has reported the earnings of Rs.28.21 and we expect the company to close the FY23 at the eEPS of Rs.37.6. Based on the estimated earnings the company is available at PEx of 27.5 at the current market price.


    Particulars (In Rs. Cr.) Q3FY23 Q2FY23 Q3FY22 QoQ% YoY% 9MFY23 9MFY22 FY22
    Revenue from Operations 5,810 5,829 5,479 -0.32% 6.04% 17,014 16,503 21,763
    Other Income 114 123 91 -6.92% 25.36% 341 217 281
    Total Income 5,925 5,951 5,570 -0.45% 6.36% 17,355 16,720 22,044
    Cost of materials consumed 1,299 1,433 1,525 -9.35% -14.80% 4,255 4,321 5,533
    Purchase of stock-in trade 712 682 717 4.31% -0.69% 2,047 2,940 3,687
    Changes in inventories 6 45 98 -85.94% -93.55% 113 912 725
    Employee expense 949 961 872 -1.26% 8.74% 2,865 2,638 3,530
    Other Expense 1,450 1,405 1,232 3.15% 17.65% 4,106 3,714 5,185
    EBITDA 1,408 1,302 1,231 8.08% 14.33% 3,853 3,803 4,553
    EBITDA Margin (%) 24.2% 22.3% 22.5% 188 bps 176 bps 22.6% 23.0% 20.9%
    Finance Cost 32 26 21 24.54% 53.87% 75 88 106
    Depreciation & Amortisation expense 272 299 247 -9.11% 9.96% 826 762 1052
    Exceptional Items -125 -182
    Profit Before Tax 1,218 1,100 1,054 10.70% 15.53% 3,293 3045 3493
    Tax 410 303 295 35.50% 38.91% 981 862 934
    Profit After Tax 808 798 759 1.29% 6.44% 2312 2183 2559
    PAT Margin (%) 13.9% 13.7% 13.9% 22 bps 5 bps 13.6% 13.2% 11.8%
    EPS (in Rs.) 9.92 9.78 9.03 1.43% 9.86% 28.21 26.71 31.2
    Segment Revenue (In Rs. Cr.) Q3FY23 Revenue% Q2FY23 QoQ% Q3FY22 YoY%
    Pharmaceuticals 5,589 96.2% 5,654 -1.1% 5,377 3.9%
    New Ventures 312 5.4% 315 -0.9% 127 145.7%
    Less: Inter Segment Revenue 91 140 26
    Total 5,810 5,829 5,479
    Business-wise Sales Performance Q3FY23 Revenue% Q2FY23 Q3FY22 QoQ%
    India 2563 44.1% 2563 2518 0.0%
    North America 1600 27.5% 1432 1124 11.7%
    SAGA* 680 11.7% 867 892 -21.6%
    International Markets* 762 13.1% 763.0 738 -0.1%
    API 147 2.5% 153.0 150 -3.9%
    Others 58 1.0% 51.0 56 13.7%
    Total 5,810 100.0% 5,829 5,478 -0.3%
    *SAGA: South Africa, Sub – Saharan and Cipla Global Access
    * International markets: Emerging markets and Europe
    Source: Company website, EWL Research

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