Cipla's numbers for Q1FY20 came in below expectations. The consolidated revenue grew by 1.3% yoy to Rs3,989cr against median consensus estimate of Rs4,526cr. EBITDA grew by 24.5% yoy to Rs905cr against median consensus estimates of Rs964cr. EBITDA margin expanded by 424bps yoy to 22.7%, which is ahead of street estimates. Reported PAT grew by 6.0% yoy to Rs478cr against median consensus estimate of Rs494cr.
Gross margins stood at 70% in Q1FY20 vs. 66.3% in Q4FY19 and 63.9% in Q1FY19.
Employee cost and other expenses (as % of sales) grew by 83bps yoy and 109bps yoy respectively, reducing the gross margin benefit.
India (Rx + Gx) business declined by 12% yoy and 10% qoq. Chronic therapies outgrew the market by 14% vs. 12%. Respiratory and Cardiology out grew the market growth by ~400bps each.
North America grew by 67% yoy and declined by 2% qoq. Base business (normalized for Cinacalcet) grew yoy. Gross margins expanded by over 10 percentage points led by contribution from limited competition assets.
South Africa, Sub-Saharan and Cipla Global Access business declined by 17% yoy and 16% qoq. South Africa declined by 7% yoy but grew by 4% qoq. South Africa business grew at more than two times the market at 7.3% in the private market (As per IQVIA (IMS) MAT Jun’19).
Emerging Markets declined by 41% yoy and 31% qoq, while Europe grew by 50% yoy but declined by 15% qoq.
Cipla Ltd is currently trading at Rs. 514.40, up by 14.2 points or 2.84% from its previous closing of Rs. 500.20 on the BSE.
The scrip opened at Rs. 501 and has touched a high and low of Rs. 525.05 and Rs. 501 respectively. So far 47,73,245 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 100 DMA.
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