Q1 Results: Strong Demand In North America Lifts Cipla’s Profit
Cipla Ltd.'s profit rose in the quarter ended June on robust demand in North America and Europe.
Net profit increased 6 percent year-on-year to Rs 478.2 crore in the April-June period, according to the drugmaker's exchange filing. That's in line with the Rs 485-crore consensus estimate of analysts tracked by Bloomberg.
Revenue rose 1.3 percent over the last year to Rs 3,989 crore, missing the Rs 4,469-crore forecast. Cipla's India sales declined 12 percent year-on-year during the quarter as growth of India's pharmaceutical market fell to its lowest in five years. The company's North America business grew at 67 percent to Rs 1,119 crore during the period.
Cipla's operating income, or earnings before interest, tax, depreciation, and amortisation, jumped 24.5 percent on a yearly basis to Rs 904.6 crore, while its operating margin expanded 430 basis points to 22.7 percent. Analysts had expected operating income to come at Rs 932 crore and margin at 20.8 percent.
“We witnessed a muted first quarter owing to a combination of external volatility and some conscious business decisions taken with long-term sustainability in mind,” Umang Vohra, managing director and global chief executive officer of Cipla, said in a media release.
TS Harihar, founder and chief executive officer of HRBV Client Solutions Pvt. Ltd., said Cipla has embarked on “very interesting” cost control measures over the last two years and that is showing up in the reported margin. “Cipla has been a very under-priced stock within the pharmaceutical space,” he told BloombergQuint during an interaction.
In a separate regulatory filing, the drugmaker said it agreed to acquire the minority stake of Eight Roads Mauritius II Ltd. in Cipla Health Ltd., making it a wholly-owned subsidiary of Cipla. Cipla Health's portfolio includes consumer-facing products including smoking cessation brand, Nicotex, and Cofsils, used to treat sore throat.
Shares of Cipla closed 3.8 percent higher after the earnings announcement, compared with a 0.78 percent advance in the Nifty Pharma Index.
(Corrects an earlier version that misstated the name of the subsidiary in which Cipla acquired minority stake from an investor)
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