Pharmaceutical major, Cipla Limited, is slated to declare its third quarter earnings later in the day.
Experts expect the revenues to grow marginally between 2-3 percent year-on-year as the growth in overseas markets of US, South Africa and Rest of World (RoW) is negated by a year-on-year decline in domestic formulations business. Revenues on a sequential basis are expected to decline between 3-4 percent due to lower contribution from COVID-related drugs.
The brokerages expect PAT (profit after tax) to decline both on yearly and sequential basis by 7-12 percent and 2-8 percent, respectively.
The company had recorded a PAT of Rs 748 crore in the corresponding quarter a year ago on consolidated revenues of Rs 5,169 crore.
The net profit in the preceding quarter was Rs 711 crore and the company had registered revenues of Rs 5,520 crore.
The brokerage firm, Kotak Institutional Equities expects the company to perform better in its overseas markets with revenues from US market improving 14 percent YoY to $161 million. The company had generated revenues of $141 million in the same quarter a year ago and $142 million in the preceding quarter.
Kotak expects strong performance from other overseas markets and sees revenues from South African market to improve 9 percent on-year and RoW to grow 19 percent on yearly basis.
“The revenue from the domestic market is expected to decline 11 percent on year on account of lower contribution from COVID drugs (remdesivir, tocilizumab, budamate) as COVID cases moderated in 3QFY22 till the end”, said the brokerage in its report.
Consolidated revenues are expected to improve by ~3% on-year to Rs 5,310 crore while on a sequential basis, there is a decline of ~4 percent.
EBITDA (earnings before interest, tax, depreciation and amortisation) is expected to decline ~5 percent on both yearly and sequential basis to Rs 1,173 crore but EBITDA margins are estimated to decline 172 bps to 22.1 percent from 23.8 percent on-year and remain flat on a sequential basis.
“We expect EBITDA margin to remain flat QoQ at 22.1% led by contribution of Covid drugs towards the end and higher promotional spend in the quarter”, added Kotak in its report.
A decline of 6.7 percent on-year is projected in net profit at Rs 698 crore, a sequential decline of ~2 percent.
Motilal Oswal sees better traction in non-COVID therapies for the quarter, particularly in Respiratory, led by healthy demand and partly by the low base of the past year. “The decline in COVID cases has led to a slowdown in VMN and Anti-Infectives (associated with COVID)”, the brokerage said in its report.
"We expect marginal decline in sales YoY for CIPLA, largely due to lower COVID related drug sales," the brokerage added.
Unlike Kotak which expects the US sales to improve, Motilal Oswal expects the same to remain flat YoY at $144 million.
On the other hand, it expects a much lower YoY decline of 4 percent in the domestic formulations business due to lower demand for COVID drugs.
Consolidated revenues for the quarter are expected to improve marginally by ~2.2 percent year-on-year to Rs 5,282 crore. Sequentially, there is a decline of ~4 percent.
Motilal Oswal expects EBITDA to fall ~9 percent on both yearly and sequential basis to Rs 1,115 crore with an EBITDA margin of 21.1 percent compared to 23.8 percent a year ago and 22.2 in the previous quarter.
The brokerage firm expects a much steeper decline of 12.3 percent on-year in the net profit at Rs 656 crore.
The stock of Cipla ended the day at Rs 892.1, up Rs 24.65 (+2.84%) at the National Stock Exchange on January 24. The stock has generated returns of 10.4 percent in the past one year. Since the past one month; however, it has been trading flat.
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