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.
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.
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.
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%.