Dear All, We revise our rating on Cipla Ltd (CIPLA) to BUY with a target price of Rs.513 per share. · In the latest quarterly results, Cipla Ltd has reported a growth of 25.5% in total sales at Rs.24,63925.5 mn as against 19,628 mn. The domestic growth grew by 16.7% at Rs.11,320mn, while exports business grew by 20.6%. The EBITDA margins for the company stood at 27.4% in Q1-FY14 as against 27.6% in Q1-FY13, while PAT (profit after tax) margins stood at 19.3% as against 20.4% for the same quarter previous year. · The company’s Indore SEZ facility has achieved 50-60% utilization rate and has contributed Rs.1900 mn sales for the current quarter, which is around 18% of its export formulation. Last year this facility has contributed around Rs.6,000mn. · Cipla with its parter Meda, launched its nasal spray Dymista in the U.S. in autumn 2012 and in the Europe in 2013. Cipla recorded $6 mn sales from Dymista in Jun’13 quarter. Dymista has achieved a market share in excess of 5% in the U.S. branded allergy nasal spray category. It has also recorded $10 million as sales in the first three months of its launch in European markets. The company has received the milestone payment from Meda in Jun’13 quarter. Meda is planning a launch of Dymista in other key markets. · In U.S., Cipla is in the initial stages of building portfolio of products and has not filed any ANDAs for current financial year. At present, it has 76 product filings in the U.S., of which 47 are already commercialized through various partners.The company has reverted back 20 products from its partners to market on its own portfolio. · Cipla has currently 10 inhaler products for the European markets, of which five mono therapies based have got approvals, two are pending for approvals under various regulatory agencies and three combo therapy based are under various stages of development. The major products like Advair, Salmeterol, Fluticasone could take about 2 years to get commercialized in Europe. · On new pricing policy (NPPA) we believe that market is awaiting for the actual impact of the same on Cipla’s financials. We expect that the impact would be near the lower end of company’s guidance of 2-3% of domestic sales. · In the long term, shifting focus to high margin products in developed markets is likely to better the performance of Cipla. Considering current current cheap valuations, we revise our rating on Cipla from ACCUMULATE to BUY with a target price of Rs.513 per share.
Posted on: Thu, 26 Sep 2013 15:45:08 +0000
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