Cipla

Cipla improved its performance and results were inline with the expectations. The Company net sales grew by 10% to Rs 1731.83 crore for the quarter ended September 2011, on the back of double digit growth in domestic and export formulation businesses. At operating level also margins expanded by 220 basis points to 24.6% on the back of lower consumption cost due to improved realizations, reduction in input costs of certain products coupled with the change in product mix and higher cost efficiencies due to increased utilization levels at Indore SEZ facilities. As a result, there was 19% growth in operating profit to Rs 437.61 crore.

Further, the rise in other income by 46% to Rs 24.31 crore resulted in 21% growth in PBDIT. However, the higher effective tax rate during the quarter on the back of expiry of tax benefits on EOUs restricted the growth in net profit to 17% to Rs 308.97 crore.

During the quarter, Sales from Indore SEZ was Rs 150 crore includes incremental revenues as well as shifting of products from other manufacturing facilities. However, it insisted that Indore SEZ would take a couple of years to reach optimum utilization levels, which could be the key driver for export business. Further, it informed that it might go for US FDA filing for the facility in next year as it has en-half approved capacities.

Quarterly Performance:

Net sales higher by 10% to Rs 1731.83 crore for the quarter ended September 2011. This was due to the 12% growth in domestic business to Rs 847.03 crore as it contributed 48% to the total sales. Further, export business (52% of total sales) grew by 9% to Rs 911.06 crore on the back of strong 13% growth in export formulation business to Rs 751.58 crore for the same period. However, Revenues from Export API formulation business declined by 5% to Rs 159.48 crore.

Also, OPM expanded by 220 basis points to 24.6% on the back of 510 basis points fall in consumption cost as percentage to sales despite the rise in staff cost by 200 basis points and other expenses by 120 basis points as percentage to sales and net of stock adjustments. This led to 19% growth in operating profit to Rs 437.61 crore. Further, Other income grew by 46% to Rs 24.31 crore resulting 21% growth PBDIT to Rs 461.92 crore.

Moreover, with the interest cost Rs 2.38 crore (Rs 0.28 crore in the corresponding previous period) and marginal 3% incline deprecation to Rs 65.62 crore, PBT was higher by 23% to Rs 393.92 crore. However, the rise in effective tax rate by 400 basis points to 21.6% on the back of expiry of tax benefits on EOUs restricted the growth in net profit to 17% to Rs 308.97 crore.

Half-yearly Performance:

Net sales higher by 9% to Rs 3282.16 crore for the half-year ended September 2011. Operating profit margins also improved by 120 basis points to 24% resulting 15% growth in operating profit to Rs 807.15 crore. With interest cost Rs 6.63 crore (Rs 0.39 crore in the corresponding previous period) and 14% increase in depreciation to Rs 135.87 crore there was 13% growth in PBT to Rs 713.81 crore. Further, the 370 basis points rise in effective tax rate to 21.2 % restricted the growth in net profit to 8% to Rs 562.31 crore.

Other Information:

• The scrip is hovering at Rs 305 at BSE, India on 15^th November 2011.
• The Company expects to invest Rs 1200 crore in next two years for the two API facilities including the R&D.
• It has filed 11 products in the EU market in inhalers business. However, it has received 4 approvals and 6 are under various process of filing and further it expects approval for these may come in next couple of years.

Financial Results: Cipla

Segment Results: Cipla