Cipla (Q4 FY12)

India Infoline News Service | Mumbai |

EBIDTA margin at 21.4% is slightly below our estimation; led by higher other expenses and lower licensing income

  • Revenues in line with our estimates; up by 12% yoy to Rs18.6bn
  • Domestic market growth momentum maintained; clocked in revenue growth of 15.5% yoy to Rs7.5bn
  • Export business reported muted growth of 11% yoy
  • EBIDTA margin at 21.4% is slightly below our estimation; led by higher other expenses and lower licensing income
  • PAT jumped by 45% yoy primarily on account of improved gross margin
  • Higher contribution from Indore SEZ to lead growth

Result table

(Rs mn)
Q3FY12
Q3FY11
% yoy
Q2FY12
% qoq
Net sales
17,580
15,571
12.9
17,780
(1.1)
(Inc)/dec in stock
(313)
(664)
(52.9)
189
(265.8)
Consumption of Materials
(6,110)
(5,743)
6.4
(5,594)
9.2
Purchase of Traded Goods
(1,355)
(1,879)
(27.9)
(1,334)
1.6
Employees' Cost
(1,875)
(1,351)
38.8
(1,875)
(0.0)
Other Expenditure
(4,638)
(4,080)
13.7
(4,413)
5.1
Operating profit
3,915
3,182
23.0
4,376
(10.5)
OPM (%)
22.3
20.4
183 bps
24.6
(235) bps
Depreciation
(757)
(653)
16.1
(656)
15.4
Net Interest income
(32)
(29)
10.6
(24)
36.1
Other income
302
257
17.4
243
24.1
PBT
3,426
2,757
24.3
3,939
(13.0)
Tax
(727)
(430)
69.1
(850)
(14.4)
Effective tax rate (%)
21.2
15.6
563 bps
21.6
(34) bps
PAT
2,699
2,327
16.0
3,090
(12.6)
PAT margin (%)
15.4
14.9
41 bps
17.4
(202) bps
Ann. EPS (Rs)
13.4
11.6
16.0
15.4
(12.6)

Source: Company, India Infoline Research

 

Q4 Revenues up by 12% yoy at Rs18.6bn; in line with our expectations

Revenue growth of 12% is primarily led by accelerated domestic market growth. Domestic business clocked in revenue growth of 15.5% yoy. The growth was mainly driven by better performance, on account of growth in anti-asthma, antibiotics, expectorants and anti-inflammatory therapy segments. Exports formulations grew by 15.1% yoy to Rs8.6bn, whereas exports APIs de-grew by 1.0% to Rs2.3bn. The growth in export revenues was primarily led by growth in anti-asthma & anti-malarial segments.


EBIDTA margin at 21.4%; slightly below our estimation

Cipla recorded an OPM of 21.4%, slightly lower than our expectation. But, the yoy improvement in margin by 328bps was notable. The margin expansion was led by higher gross margin and cost rationalization along with better business mix. Material cost has decreased by about 7.2% on a yoy basis mainly on account of rationalization of product mix and markets. Management is confident about maintaining margin at current level for the next year. With the restructuring activity now coming to end, we would expect further margin expansion.


Export business continued to report muted growth; trend to reverse

Export formulation grew by 11% yoy to Rs10.6bn. Inspite of rupee depreciation the growth in export business was way below our expectation. Management indicated the slower growth in this segment is attributable to product rationalization. However, we expect the trend to reverse with higher sales from Indore SEZ and increasing supply of Lexapro generic to Teva (has 180 days exclusivity).

 

Sales Break-up

Sales Breakup (Rs mn)
Q4FY12
Q4FY11
% yoy
Domestic
7,536
6,522
15.5
Total Exports
10,850
9,750
11.3
Formulations
15,841
7,428
113.3
APIs & others
2,300
2,322
(0.9)
Other operating income
515
540
(4.6)
Tech knowhow/fees
56
207
(73.0)
Others
459
333
38.0
Total
18,656
16,692
11.8

Source: Company, India Infoline Research

Cost analysis 

As a % of net sales
Q4FY12
Q4FY11
bps yoy
Q3FY12
bps qoq
Raw material
35.1
36.0
(92)
33.0
213
Purchases
6.3
11.9
(559)
7.7
(141)
Personnel Costs
9.8
7.8
192
10.7
(91)
Other Expenditure
27.5
26.2
131
26.4
108
Total costs
78.6
81.9
(328)
77.7
89

Source: Company, India Infoline Research

 

PAT increased by 36% yoy; largely led by better gross margin

 

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