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Q4 Results: Cipla Expects Margin To Improve In FY20

Confident of seeing a double-digit growth in Cipla’s business in India, its MD and global CEO Umang Vohra said.

A technician inspects vaccine vials for defects at a pharmaceutical plant in Pune. (Photographer: Sanjit Das/Bloomberg)
A technician inspects vaccine vials for defects at a pharmaceutical plant in Pune. (Photographer: Sanjit Das/Bloomberg)

Cipla Ltd. is confident of improving its margin in financial year 2019-20 as the drugmaker eyes timely launch of its drugs in the U.S.

“The margin expansion would be driven by a changing mix in Cipla’s India business and a timely launch of its limited competition drugs in the U.S.,” its Managing Director and global Chief Executive Officer Umang Vohra told BloombergQuint, adding that the company would have one limited competition launch per quarter through the year.

Vohra also expects double-digit growth in Cipla’s business in India.

Cipla Tops Street

The drugmaker’s profit more than doubled to Rs 367 crore in the fourth-quarter, it said in a regulatory filing. That compares with the Rs 305-crore consensus estimate of the analysts tracked by Bloomberg.

Revenue rose 19 percent year-on-year to Rs 4,404 crore, edging past analyst estimates for the first time in 14 quarters. Analysts had forecast a revenue of Rs 3,983 crore.

Cipla’s U.S. business grew 53 percent year-on-year and 38 percent sequentially for the third straight quarter, led by product launches.

“The financial year 2019 ended on a strong note for Cipla. While India and South Africa continued to lead the way, the U.S. business, too, established a robust base growth from differentiated direct-to-market launches,” Vohra had said in a release. “We are well-poised for FY20.”

Operating income, or earnings before interest, tax, depreciation, and amortisation, jumped 72 percent on a yearly basis to Rs 961 crore—the consensus estimate was Rs 691 crore. Operating margin expanded to 21.8 percent from 15.1 percent in the preceding year—440 basis points above analysts’ expectations.

The Mumbai-based company also recommended a dividend of Rs 3 per equity share with face value of Rs 2 apiece for the year ended March.

“At a time most pharmaceutical companies have disappointed, Cipla’s fourth-quarter performance is an outlier,” research firm Emkay Global said in a note.

Shares of Cipla were trading marginally up at Rs 566.25 apiece on Friday, compared with a 0.65 percent advance in the Nifty Pharma Index.

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