Q1 Results: Cipla’s Profit Rises 10%, Margins Remain Flat

Cipla Ltd.’s profit surpassed analysts’ estimates in the April-June period, even as its operational performance fell short of expectations.

Net profit rose 10 percent year-on-year to Rs 451 crore, the drugmaker said in an exchange filing. That’s higher than Rs 384 crore consensus estimate of analysts tracked by Bloomberg. The bottomline was aided by 12.5 percent increase in other income to Rs 170 crore.

Revenue rose 12 percent to Rs 3,939 crore, missing the consensus estimate of Rs 4,027 crore. “Our first quarter performance demonstrates our strong foothold and continued growth momentum in home markets,” Umang Vohra, the managing director, said in a release accompanying the exchange filing.

On the operational front, earnings before interest, tax, depreciation and amortisation rose 12.3 percent to Rs 726 crore, just shy of the Rs 773-crore forecast. Ebitda margin remained largely unchanged at 18.4 percent, compared to the 19.1 percent estimate.

“Higher contribution from the low margin active pharmaceutical ingredient business dented overall margins,” Shrikant Akolkar, a senior research analyst at IIFL Securities told BloombergQuint. U.S business numbers show that pricing pressure is higher than anticipated, he added.

Geographical Performance

• Cipla’s India sales jumped 22 percent to Rs 1,544 core.
• North America sales rose 4 percent to Rs 670 crore.
• South Africa, Sub-Saharan Africa sales rose 14 percent to Rs 831 crore.
• Europe sales fell 18 percent to Rs 134 crore.

Commenting on the company’s performance in emerging markets, Vohra said business development efforts got a “significant boost” in the quarter, with the partnership with Roche and Eli Lilly in India, and the proposed acquisition of Mirren (Pty) Ltd. in the South African over-the-counter space.

Shares of Cipla rose as much as 2.5 percent to Rs 645 apiece, before paring gains to close 0.5 percent higher.