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Last Updated : Feb 06, 2019 10:34 AM IST | Source:

Cipla Q3 preview: Brokerages say firm facing global challenges; muted performance likely

EBITDA margin is likely to contract by 325 bps YoY to 17.7% due to high material cost and muted sales growth in domestic business, Reliance Securities said

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Brokerages believe that a subdued performance is on cards for Cipla in December quarter. They believe that challenges in South Africa and other emerging markets could weigh.

Here is a gist of what brokerages feel about the upcoming results.

Brokerage: Edelweiss | Profit: Rs 385.3 crore


The brokerage house sees US revenue (USD 115 million) growing 6% QoQ on launch of gAlbenza and gToprol XL. India business is expected to grow 10% YoY, while SAGA will likely grow 10% YoY on 7% YoY ZAR appreciation.

“Key thing to watch out is how Cipla fares in new tenders of ARV and other products in South Africa. Iran and Yemen business will be hit by US sanctions this quarter. EBITDA margins will likely remain in the 17-18% range,” analysts at the firm wrote.

Brokerage: Reliance Securities | Profit: Rs 345.2 crore

The research firm expects muted performance in 3QFY19 led by business challenges in South Africa and other emerging markets. Its US business is seen at $ 105 million versus $ 100 million in 3QFY18 led by ramp-up in recent niche launches. Domestic business is expected to grow by 1.2% YoY on high YoY base.

EBITDA margin is likely to contract by 325 bps YoY to 17.7% due to high material cost and muted sales growth in domestic business.

Factors to watch out:

Update on combination inhaler launch in the UK; outlook on US/India business

Brokerage: Motilal Oswal | Profit: Rs 400 crore

It expects Cipla’s revenue to grow 9% YoY to Rs 4250 crore in 3QFY19.

Absolute EBITDA is expected to decline marginally by ~4% YoY to INR7.9b.

“We remain positive on the company’s improved traction in the US business through own front-end (unclear), and outperformance in the domestic business. However, we maintain

Key issues to watch out for

Outlook on traction in complex ANDAs launched in the US market

Outlook on institutional business

Number of product launches in domestic formulation segmen

Brokerage: Emkay | Profit: Rs 337.5 crore

Expect a lackluster quarter for Cipla, due to the headwinds in sub-Saharan Africa and the Global Access business.

We assume overall revenues and EBITDA to stand at Rs38.7bn and Rs7.0bn, respectively. We project US revenues of USD115mn, up ~15% yoy (up 6% qoq) on new launches like gToprol XL, gAlbenza and gLotrel.

Exports business could benefit from the appreciation in the USD/EUR vs. INR. The key thing to watch for will be the outlook on the tender business and performance in other geographies

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First Published on Feb 6, 2019 10:34 am
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