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UBS Investment Research
Cipla Ltd.
Q 1FY12: Modest sales growth, flat PAT
Event: Q1FY12 significantly below UBS-e
Q1 Sales of Rs 15.5bn were significantly below UBS-e of Rs 16.9bn as domestic
sales grew 10% YoY while export grew 8%YoY. EBITDA at Rs 3.7bn (incl. FX
gains of Rs 140mn) was below UBS-e of Rs 4bn as staff cost jumped sharply by
31% QoQ. PAT was Rs 2.5bn vs UBS-e of Rs 3bn as tax rate at 21% was higher
than expected due to expiry of tax benefits at certain EOUs.
Impact: Reduce FY12/13 EPS by 8%/9%, respectively
We reduce our sales growth closer to mgmt. guidance of 10% for FY12 revised
down from 10%-12% previously. We also raise our tax rate from 16% to 20%
inline with mgmt. guidance. Mgmt. still expects margins to expand in FY12 over
FY11 as Indore SEZ ramps up. We therefore reduce our EPS estimates by 8%/9%,
respectively.
Action: Maintain Sell, EPS growth momentum to remain weak
We maintain our Sell rating on the stock. We believe growth is likely to remain
weak. We expect an EPS CAGR of only 12% over FY11-13. We are 8%/11%
below consensus for FY12/13, respectively. We believe the stock is fully valued
trading at 20xFY13 PE.
Valuation: Trading at 20xFY13 PE, Reduce PT to Rs 315 (from Rs 340)
We derive our price target using DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool with a WACC of 11%. At
our PT the stock would trade at 20x FY13 earnings.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Cipla Ltd.
Q 1FY12: Modest sales growth, flat PAT
Event: Q1FY12 significantly below UBS-e
Q1 Sales of Rs 15.5bn were significantly below UBS-e of Rs 16.9bn as domestic
sales grew 10% YoY while export grew 8%YoY. EBITDA at Rs 3.7bn (incl. FX
gains of Rs 140mn) was below UBS-e of Rs 4bn as staff cost jumped sharply by
31% QoQ. PAT was Rs 2.5bn vs UBS-e of Rs 3bn as tax rate at 21% was higher
than expected due to expiry of tax benefits at certain EOUs.
Impact: Reduce FY12/13 EPS by 8%/9%, respectively
We reduce our sales growth closer to mgmt. guidance of 10% for FY12 revised
down from 10%-12% previously. We also raise our tax rate from 16% to 20%
inline with mgmt. guidance. Mgmt. still expects margins to expand in FY12 over
FY11 as Indore SEZ ramps up. We therefore reduce our EPS estimates by 8%/9%,
respectively.
Action: Maintain Sell, EPS growth momentum to remain weak
We maintain our Sell rating on the stock. We believe growth is likely to remain
weak. We expect an EPS CAGR of only 12% over FY11-13. We are 8%/11%
below consensus for FY12/13, respectively. We believe the stock is fully valued
trading at 20xFY13 PE.
Valuation: Trading at 20xFY13 PE, Reduce PT to Rs 315 (from Rs 340)
We derive our price target using DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool with a WACC of 11%. At
our PT the stock would trade at 20x FY13 earnings.
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