Cipla Q4 Results Review - Strong U.S. Business Drives Growth: Nirmal Bang

Nirmal Bang Report

Cipla Ltd.’s Q4 FY23 results were in-line with our estimates on both revenue as well as profitability front, although margins came in higher-than-expected.

Revenue grew by 9.1% YoY (14% ex-Covid) to Rs 57.4 billion (our estimate: Rs 57.6 billion) mainly on the back of strong growth in the U.S., which was partially offset by a decline in SAGA and active pharma ingredient sales. U.S. revenue grew by 27.5% YoY, mainly driven by Lanreotide 505b2 and Revlimid.

On QoQ basis, U.S. revenue grew by 4.6% despite a high base of seasonality benefit. Domestic revenue grew by 3.5% YoY while excluding Covid sales, the same grew by 16% YoY.

Ebitda margin came in at 20.5%, higher than our estimate of 19.3% mainly on the back of lower other expenditure. Adjusted net profit grew by 59.3% YoY to Rs 6.5 billion (our estimate Rs 6.5 billion), mainly driven by a strong operational performance and higher other income, which was partially offset by higher tax rate.

Cipla has already filed Advair, Paclitaxel and other critical products from other own/partner sites and going forward it will file all critical products from dual sites to de-risk approval.

Adverse observations at its Indore plant and likely delay in the launch of Advair remain an overhang in the near term. However, we remain positive on Cipla mainly due to high branded business contribution, robust India franchise, healthy U.S. pipeline, decent margins and improving return ratios.

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