"The company is fairly valued at current market price. However, if Q4FY18 results are robust then we can expect a target of Rs 650 by FY19 end," says Akash Jain, Vice-president, Equity Research at Ajcon Global Services.
Cipla boasts of 1,500+ products across various therapeutic categories and 50+ dosage forms, and is present in over 80 countries. It has maintained leadership position with strong in-market performance in various emerging markets.
Cipla’s emphasis on access for patients was recognised globally for the pioneering role played in HIV/AIDS treatment as the first pharmaceutical company to provide a triple combination anti-retroviral (ARV) in Africa at less than a dollar a day and thereby treating many millions of patients since 2001. Cipla’s research and development focuses on developing innovative products and drug delivery systems.
Under the leadership of its CEO Umang Vohra, the Company has managed transformation and turnaround of the European business back to profitability
With regards to recent audit by USFDA, the Company is of the view that the USFDA conducted routine current Good Manufacturing Practices (cGMP) audit at its Indore formulations facility from 2nd April 2018 till April 13, 2018. This was in the normal course of business. There were no data integrity and/or repeat observations.
At this stage, the company believes the observations are unlikely to have any material adverse impact. The Company will submit the response in a stipulated time frame.
Recently, Cipla USA, Inc. has launched an authorized generic version of Aloxi in the United States under applicable agreements with Helsinn Healthcare SA, in response to the at-risk launch by Teva. Helsinn Healthcare SA currently manufactures and markets Aloxi in the United States through its licensee Eisai Inc. and its affiliate Helsinn Therapeutics (US) Inc. Aloxi brand had US sales of approximately USD 460 million for the 12-month period ending November 2017, as per IMS Health data.
The company witnessed good Q3FY18 result. The Company registered ~7 percent yoy growth in its Q3FY18 topline due to improvement in the domestic market post GST and better performance of South Africa, Europe and API businesses. India formulation business clocked 15 percent Y-o-Y growth in Q3FY18 owing to re-stocking post GST implementation and launch of new in-licensed products.
On account of pricing pressure and lower contribution from limited competition drug launches during the quarter, US revenues declined by 2 percent Y-o-Y basis.
During the quarter, EBITDA margin improved by 230 bps Y-oY led by gross margin improvement on back of better geography and product mix and cost control measures. The PAT for the quarter came in at Rs 403.45 crore, Y-o-Y increase of 4.8 percent.
Decline in finance cost by 84.6 percent was offset by jump in deprecation expenses by 102.7 percent. US launch trajectory gets a major boost with key limited competition products getting launched - gPulmicort and gDacogen.
Strong momentum continues across key markets including India, South Africa among others; India recorded healthy double digit growth with South Africa delivering its highest ever quarter in terms of sales.
Cipla Q3FY18 results reflect continuously improving quality of earnings backed by strong momentum across key regions. We expect the Company to register a good show in Q4FY18 as well.
The company is fairly valued at current market price. However, if Q4FY18 results are robust then we can expect a target of Rs 650 by FY19 end.Disclaimer: The author is Vice-president, Equity Research at Ajcon Global Services. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.