Cipla down 5% on poor Q2, tough guidance ahead; Citi, HSBC downgrade ratings

The revenue fell marginally to Rs 4,012 crore from Rs 4,082.41 crore during the corresponding quarter of last year.

The earnings before interest, taxes, depreciation and amortization (EBITDA) fell 13 percent year on year at Rs 702 crore from Rs 804 crore during the same quarter of last year.

The operating margin was reported at 17.5 percent against 19.7 percent last year.

Brokerage: Macquarie | Rating: Outperform | Target: Cut to Rs 658

The brokerage highlighted that the company has guided for a challenging second half of this fiscal. The challenges are a combination of sanctions and uncertainty in emerging markets. Further, it said that the progress in the direct-to-market (dtm) business is promising.

Brokerage: HSBC | Rating: Downgrade to Hold | Target: Cut to Rs 610 from Rs 730

The global research firm said that there were muted q2 results on impact of supply issues across markets. There are multiple challenges in the near term and execution will be critical. It has reduced sales estimates by 5-6% for FY19-21 on lower tender sales. It also has cut EPS estimates by 21.6%/19.9%/14.6% For FY19/20/21.

Brokerage: Credit Suisse | Rating: Downgrade to neutral | Target: Cut to Rs 570 from Rs 637

Credit Suisse said that the results were a negative surprise from capacity balancing. The medium term story remains strong, but there are weak near term earnings. However, it still likes the company over the medium term.

Brokerage: Citi | Rating: Downgrade to Equalweight | Target: Cut to Rs 548 from Rs 716

The brokerage house said that Q2 was a miss and business pressure is likely to continue. Further, FY20 is likely to be a return of ‘business as usual’.