Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cipla
Margin expansion to continue
The key positive 1QFY12 takeaway is qoq EBITDA margin expansion of 580bp,
which we believe is sustainable. While revenue growth was muted, we think
growth momentum can accelerate and surpass management's conservative
guidance. We maintain our Buy rating and fine tune our TP to Rs365.
1Q12 top line was muted; we expect growth momentum to accelerate
1Q12 revenue growth was muted at 9% yoy at Rs15.5bn driven by 10% growth in domestic
formulations (47% of 1Q12 revenues), 5% growth in export formulations (42%) and 22%
growth in Active Pharma Ingredients (APIs, 11%). We expect growth momentum to
accelerate as: 1) Contribution from Indore SEZ is ramping up (revenues of Rs1.48bn in
1QFY12 vs. Rs1.1bn in FY11) coupled with management increasing the guidance of Indore
SEZ’s share of revenue contribution to export formulations from 8-10% to 12-15%; 2) 60% of
the Cipla’s domestic product portfolio is focused in the relatively faster growing chronic
segment; and 3) olanzapine API supplies to drive API business growth.
EBITDA margin expansion, sustainable in our view, is the key positive takeaway
The key positive takeaway from the results was the 580bp qoq increase in core EBITDA
margin (ie, ex-technical know-how income) to 21.2%, ahead of our 18.1% estimate. This was
led by 1) better product mix (lower exposure to low-margin anti-retrovirals (ARVs)); 2)
improved utilization of its Indore SEZ facility; and 3) increased contribution from API
business. We expect margin improvement to continue as Cipla guides for increased
contribution from Indore SEZ coupled with our expectation of further improvement in API
sales. PAT at Rs2.5bn (-2% yoy) was affected by a higher tax rate due to expiry of tax
benefits on Export Units (EOUs).
We continue to believe Cipla could exceed its FY12 guidance; maintain Buy
We continue to believe Cipla could exceed its FY12 revenue guidance of 10-12% (we
estimate 14.9%) and EBITDA margin of 18-20% (21.4%) given: 1) Indore SEZ utilization
increasing; 2) strong API sales; and 3) traction in inhalers for Europe and EMs. We roll
forward our valuation to FY13 and fine tune our TP to Rs365, a 21.4x FY13F PE multiple (a
10% premium to the FY13F sector multiple) versus an earlier target price of Rs371.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cipla
Margin expansion to continue
The key positive 1QFY12 takeaway is qoq EBITDA margin expansion of 580bp,
which we believe is sustainable. While revenue growth was muted, we think
growth momentum can accelerate and surpass management's conservative
guidance. We maintain our Buy rating and fine tune our TP to Rs365.
1Q12 top line was muted; we expect growth momentum to accelerate
1Q12 revenue growth was muted at 9% yoy at Rs15.5bn driven by 10% growth in domestic
formulations (47% of 1Q12 revenues), 5% growth in export formulations (42%) and 22%
growth in Active Pharma Ingredients (APIs, 11%). We expect growth momentum to
accelerate as: 1) Contribution from Indore SEZ is ramping up (revenues of Rs1.48bn in
1QFY12 vs. Rs1.1bn in FY11) coupled with management increasing the guidance of Indore
SEZ’s share of revenue contribution to export formulations from 8-10% to 12-15%; 2) 60% of
the Cipla’s domestic product portfolio is focused in the relatively faster growing chronic
segment; and 3) olanzapine API supplies to drive API business growth.
EBITDA margin expansion, sustainable in our view, is the key positive takeaway
The key positive takeaway from the results was the 580bp qoq increase in core EBITDA
margin (ie, ex-technical know-how income) to 21.2%, ahead of our 18.1% estimate. This was
led by 1) better product mix (lower exposure to low-margin anti-retrovirals (ARVs)); 2)
improved utilization of its Indore SEZ facility; and 3) increased contribution from API
business. We expect margin improvement to continue as Cipla guides for increased
contribution from Indore SEZ coupled with our expectation of further improvement in API
sales. PAT at Rs2.5bn (-2% yoy) was affected by a higher tax rate due to expiry of tax
benefits on Export Units (EOUs).
We continue to believe Cipla could exceed its FY12 guidance; maintain Buy
We continue to believe Cipla could exceed its FY12 revenue guidance of 10-12% (we
estimate 14.9%) and EBITDA margin of 18-20% (21.4%) given: 1) Indore SEZ utilization
increasing; 2) strong API sales; and 3) traction in inhalers for Europe and EMs. We roll
forward our valuation to FY13 and fine tune our TP to Rs365, a 21.4x FY13F PE multiple (a
10% premium to the FY13F sector multiple) versus an earlier target price of Rs371.
No comments:
Post a Comment