Cipla Q4 Review: Analysts See Covid-19 Products, U.S. Inhaler Pipeline Key Catalysts
A capsule is arranged for a photograph (Photographer: Kiyoshi Ota/Bloomberg)

Cipla Q4 Review: Analysts See Covid-19 Products, U.S. Inhaler Pipeline Key Catalysts

Cipla Ltd.’s fourth-quarter earnings missed estimates, weighed down by growth across key markets.

While revenue, operating income and net profit missed estimates, one-time items impacted gross margin. While U.S. sales declined, limited competition in generic Albuterol, used for respiratory distress, helped it gain market share.

Key Highlights

  • Cipla clocked in a revenue of Rs 4,606.45 crore compared with the Rs 4,999.3-crore consensus estimate of analysts tracked by Bloomberg.

  • Its Ebitda margin stood at 17.3% against a forecast of 21.84%.

  • Net profit was at Rs 413.38 crore compared with the Rs 621.3-crore estimate. A lower tax depreciation and a reduced tax rate cushioned net profit.

Covid-19 product sales in India are a key near-term catalyst that should help sustain FY21 margins of 22%, Kedar Upadhye, global chief financial officer at Cipla, told BloombergQuint in an interview. He also expects other product categories to contribute to growth in April-September period.

Watch the full interview here:

Cipla stock rose as much as 2.2% to Rs 924 apiece, extending its winning streak to three sessions. The shares have gained over 12% year-to-date compared with the 7% rise in the NSE Nifty index.

Brokerage View

CLSA

  • Reiterates ‘buy’ call; increases 12-month target to Rs 1,080, a potential upside of 17% from current levels.

  • Raises earnings per share estimate for 2022 and 2023 calendar years by 2-3%.

  • While 4QFY21 was disappointing, Cipla’s earnings profile is set to improve with increased capital allocation towards India and South Africa.

  • Monetisation of its respiratory pipeline should accelerate in FY23.

Phillip Capital

  • Maintains ‘buy’ rating.

  • Expects profitable growth on account of strong U.S. growth, robust domestic business aided by its respiratory franchise and contributions from Covid portfolio, and enhanced exports momentum to emerging markets.

  • Values Cipla at 23 times its estimated earnings per share of Rs 1,100 for FY23E; implies a potential upside of 22%.

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