Buy Cipla; target of Rs 369: Angel Broking

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Buy Cipla; target of Rs 369: Angel Broking

Angel Broking is bullish on Cipla and has recommended buy rating on the stock with a target of Rs 369 in its August 05, 2011 research report.

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Angel Broking is bullish on Cipla and has recommended buy rating on the stock with a target of Rs 369 in its August 05, 2011 research report.

"Cipla's numbers came in below our expectations on the top-line and bottom-line fronts for 1QFY2012, despite better-than-expected performance on the gross operating profit front. For FY2012, management has guided for 10-12% top-line growth. For 1QFY2012, Cipla reported net sales of Rs 1,550cr (Rs 1,427cr), 8.6% yoy growth and below our estimates of Rs 1,649cr. Gross margin expanded by 390bp yoy to 56.9% (53.0%). This was mainly on account of better product mix, which had lower proportion of anti-retrovirals in formulation exports. However, despite such gross margin expansion, OPM was flat at 21.2% (20.8%), led by increased manpower cost and negative contribution of Indore SEZ, as it is in the optimisation phase. Overall, other operating income reported a drop of 21.6% yoy to Rs 41.4cr (Rs 52.4cr) in 1QFY2012. Furthermore, adjusted net profit came in at Rs 253.4cr (Rs 257.4cr), a dip of 1.6% yoy, lower than our estimates due to higher interest costs during the quarter."

"We have revised our estimates and expect net sales to post a 15.5% CAGR to Rs 8,164cr and EPS to record a 23.8% CAGR to Rs 18.4 over FY2011-13E. The stock is trading at 20.7x and 16.7x FY2012E and FY2013E earnings, respectively. We recommend Buy on the stock with a revised target price of Rs 369," says Angel Broking research report.

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