Cipla Ltd's Q1FY19 consolidated net profit rises 10.38% yoy to Rs451.25cr: Beats Estimates

The company’s consolidated revenue in the period stood at Rs3,938.99cr, up 11.74% yoy and 6.52% qoq.

Aug 08, 2018 10:08 IST India Infoline Research Team

Cipla Ltd Q1FY19

Consolidated Results Q1FY19: (in Rs cr)

Q1FY19 YoY (%)
Revenue 3,938.99 11.7
EBITDA 726.37 12.4
EBITDA Margin (%) 18.4 10
Net Profit (adjusted) 451.25 10.4
***EBITDA margin change is bps

Cipla’s revenue in Q1FY19 grew 11.7% yoy to Rs3,939cr. EBITDA grew 12.4% yoy to Rs726.4cr in Q1FY19 vs. Rs646.5cr in Q1FY18. EBITDA margins were at 18.4% in Q1FY19 vs. 15.1% in Q4FY18 and 18.3% in Q1FY18. PAT grew by 10.4% yoy to Rs451.3cr in Q1FY19 vs. 408.8cr in Q1FY18.
  • Overall revenue and EBITDA were close to our estimates; however, PAT was ahead of our estimates and consensus estimates.
  • Gross margins declined 277bps yoy to 63.9% in Q1FY19 vs. 64% in Q4FY18 and 66.6% in Q1FY18.
  • Employee cost grew 6.1% yoy to Rs714cr in Q1FY19. The percentage-of-sales employee cost was at 18.1% in Q1FY18 vs. 18.9% in Q4FY18 and 19.1% in Q1FY18.
  • Other expenses grew by 4.4% yoy to Rs1,074cr in Q1FY19. The percentage-of-sales other expenses stood at 27.3% in Q1FY19 vs. 30.1% in Q4FY18 and 29.2% in Q1FY18.
  • Other income during the quarter was Rs170.1cr, which includes payment of Rs84.72cr on divestment of stake in Chase Pharmaceuticals Corporation, USA, in FY17.
Concall highlights
  • US pricing environment has not improved but discounts have come down.
  • US business was impacted due to 10% price erosion and continued supply disruptions. US impact of supply challenges and product rationalization was ~$10mn in the quarter.
  • gDacogen sales were slower in Q1FY19 and ramp-up of this drug depends upon the contracts which will open up sometime in the remainder of the year. Company has guided Toprol XL launch in FY19E.
  • In the US business, focus will remain to grow direct to market products, which are 65% of its sales.
  • Company expects 12-14% growth in India business and expects Q2 to be subdued due to the high base in Q2FY18.
  • API business expected to grow 5-10% yoy in FY19E.
  • Its global access continues to remain under pressure due to the pressure on the global funding agencies.
  • Company has signed deals for Trastuzumab in Australia Malaysia and Columbia.
  • Company has said that it will focus on setting biosimilar business in emerging markets from FY20E onwards.
  • Mirren PTY, the OTC business acquired recently in Africa, is growing at 20% rate, 3% above the market growth.
  • Management has guided that its gross margins will stay in the current range going ahead.
  • Cipla has received total Rs245cr from the divestment of one of its US businesses.
  • R&D expenses in Q1FY19 is 7% of net sales and it expects to ramp-up R&D due to gAdvair trials as well as due to filling of 20+ products in FY19E.
  • Goa and Indore plants have received EIR.
  • Forex gain Rs35-40cr in Q1FY19.





Technical View:

Cipla Ltd ended at Rs633.40, up Rs4.7, or 0.75%, from its previous close of Rs628.70 on the BSE.
The scrip opened at Rs630.15 and has touched a high and low of Rs645 and Rs623.80, respectively. A total of 44,53,170 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 50 DMA.


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