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Cipla Q2 Results Preview: Topline likely to increase 4%, bottomline 6%, say experts

Investors would look at the outlook for limited competition pipeline in the US, decision on Avenue Therapeutics and update on inhaler products for the US

October 26, 2021 / 07:15 AM IST
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As pharma major Cipla Limited gets ready to declare its numbers for the second quarter today, experts estimate a 3-4 percent growth in the topline over the last year because.

Brisk business in the domestic and US formulations space for the company is likely to be capped by a comparative decline in other parts of the world. Revenues on a sequential basis are expected to decline due to lower contribution from COVID-related drugs.

The experts look for a moderate growth of about 5-6 percent in net profit over the corresponding period last year  basis mainly an increase in other expenses and reduced opportunities for COVID drugs. On a quarter-on-quarter basis, PAT is expected to see a de-growth of about 7-8 percent.

"We expect domestic revenues to grow 14 percent YoY given recovery in acute segment, but decline in QoQ on account of lower contribution from COVID drugs (remdesivir, tocilizumab, budamate) as Covid cases moderated in 2QFY22,” said a report from Kotak Institutional Securities.

It further said that US sales will remain largely steady at $142 million in the absence of meaningful launches, South Africa to grow by 13 percent, Global Access business to decline 40 percent YoY led by moderation in tender business off-take and added that the Rest of World (ROW) will remain flat on a YoY basis.


Kotak’s revenue estimate is at Rs 5,510 crore at a YoY growth of 9.4 percent, which is much higher than other expert expectations.

Motilal Oswal, on the other hand, expects a much moderate YoY growth of 4.2 percent in revenues to Rs 5,249 crore. It expects the US sales to grow 7 percent over the last year's level. Domestic formulations are also expected to grow 7 percent.

Edelweiss expects a 2.6 percent on-year growth in revenues to Rs 5,168 crore. “Adjusted for covid portfolio, expect sales to grow in mid-teens. US revenue ($145 million) is expected to increase 3 percent QoQ,” it said.

Phillip Capital expects the sales to remain flat given moderation in COVID contribution, despite sequential improvement in some formulations in the US. Its revenue target is Rs 5,062 crore, which is less than 1 percent of growth from Rs 5,038 crore reported last year.

EBITDA and net margins are expected to witness a contraction of 1.5 percent each.

“Margins to see 110bps correction YoY on the back of pricing pressure in the US currency impacting expenses and lower COVID contribution. EBITDA to see de- growth of 4 percent,” estimated Phillip Capital. It expects an EBITDA of Rs 1,129 crore and a PAT of Rs 676 crore for this quarter. Cipla  had reported an EBITDA of Rs 1,176 crore and a PAT of Rs 665 crore in the same quarter last year.

Edelweiss estimate EBITDA margin to decline 100bps YoY to 22.5 percent to Rs 1,157 crore in this quarter.

Kotak’s report expect the EBITDA margin to decline 130 bps QoQ to 23.1 percent led by lower contribution of Covid drugs and higher promotional spend in the quarter. EBITDA is expected to be Rs 1,275 crore and a PAT of Rs 778 crore.

Motilal Oswal expects similar 100 bps decline in EBITDA margins and estimates an EBITDA of Rs 1,165 crore. It expects higher Other Income to provide some cushion and witness a YoY growth of 5.3 percent in PAT to Rs 701 crore for the quarter.

Investors would be looking at the company’s outlook for limited competition pipeline in the US, decision on Avenue Therapeutics’ acquisition and update on inhaler products under development for the US markets.

The stock closed at Rs 901.85 on Monday, up Rs 5.50 from its previous close. It has generated a return of 19 percent over the last year, 10 percent in this financial year, and -4.8 percent / -6.8 percent over the past three -month / one-month period.
Gaurav Sharma
first published: Oct 26, 2021 07:15 am

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