Cipla Q2 Results: Profit Rises 45%, Beats Estimates

Cipla Ltd.'s second-quarter profit increased, beating analysts' estimates.

The drugmaker's profit rose 45% year-on-year to Rs 1,155 crore in the quarter ended September, according to an exchange filing on Friday. That compares with the Rs 982 crore consensus estimate of analysts tracked by Bloomberg. Sequentially, the profit grew 14%.

• Revenue increased 15% to Rs 6,678 crore (Bloomberg estimate: Rs 6,491 crore).

• Ebitda up 33% to Rs 1,734 crore (Bloomberg estimate: Rs 1,518 crore).

• Ebitda margin at 26% versus 22.3% (Bloomberg estimate: 23.4%).

"We reported our highest-ever quarterly revenue with Ebitda margins scaling up to 26%," Umang Vohra, global chief executive officer at Cipla, said in the filing.

• The company's One-India business grew 10%.

• This was led by branded prescription market surpassing growth of 11%, which was driven by key therapies in chronic portfolio. Trade generics business reported double-digit growth despite weak seasonality, due to on-ground commercial execution and declining raw material costs aiding margin. Quarterly performance of consumer health portfolio was "impacted by inconsistent weather patterns but core portfolio remains strong".

• The U.S. business grew 28% in absolute terms to $229 million, or Rs 1,887 crore. Vohra said that this was driven by strong traction across core products, with share expansion in differentiated assets.

• South Africa, or the SAGA region, business grew 12% in ZAR terms, driven by traction in prescription business and over-the-counter segment. It "outpaced overall market by growing at 10% versus market growth at 4%". In rupee terms, it rose 15%.

• Business in other international markets, including emerging markets and Europe, fell 4% in INR terms.

• Bulk drugs fell 4% year-on-year.

The company's investment in research and development stood at Rs 379 crore or 5.7% of sales. It was 13% higher year-on-year. The company has a net cash position of Rs 5,850 crore as on Sept. 30.

Vohra told BQ Prime that the 26% Ebidta margin in the quarter was due to:

• Certain U.S. products seeing growth and market share expansion. While gRevlimid growth has been insignificant as against the previous quarter, the company witnessed a 100 basis points market share expansion in Albuterol and some growth in Lanreotide injection.

• No anti-infective season in India led to lower offtake of such products (low-margin), which in turn resulted in better India margin.

• Benefit of price revisions allowed from April 1—price hikes allowed to pharma companies each year, in line with the wholesale price index—saw effect from the second quarter.

In terms of whether this 26% margin will be sustainable for the year, Vohra said that the company maintains 23-24% guidance for FY24, "leaning more towards the higher end of the range".

With regards to the launch pipeline and the recent 'official action indicated' status of the Pithampur facility, he said that the pipeline will see a delay of six months. The company is still in the process of shifting assets (potential products) to other facilities, which has been happening for the last five to six months, Vohra said.

In keeping with this:

• Expected date of gAdvair, which was originally filed from the Pithampur facility, is in the second half of FY25.

• For certain other inhaler products from the Goa facility, the launch could be in the first half of FY25, around mid-year.

• gAbraxane, which has been moved to a partner facility, and other peptide injectables could also see a launch around middle of next year.

The company has a strong focus on acquisitions for the next few years, Vohra said in a press call.

With regards to the promoter stake sale, he maintained that the news is speculative.

Shares of Cipla were trading 3.75% higher at Rs 1,193.25 apiece at 2:02 p.m., as compared with a 1.03% rise in the benchmark Sensex.