Cipla spikes 4% after it reports 10% rise in net profit to Rs 451 crore; Macquarie maintains outperform rating

The company's total income grew 12 percent year on year to Rs 4,109.10 crore in the quarter under review.

The EBITDA margin expanded 330 basis points to 18.4 in Q1FY19.

An average of estimates of analysts polled by Reuters pegged the company's net profit for the quarter at Rs 390.4 crore and its revenue at Rs 4,057.4 crore.

India business that constitutes around 39 percent of Cipla's revenues grew 22 percent to Rs 1,544 crore on YoY. On quarter-on-quarter, revenues rose 14 percent.

The YoY India business growth was aided by low base in Q1FY18, as business was impacted to GST rollout, in addition to strong performance in Respiratory, Urology, Cardiology, and CNS segments.

Brokerage: Macquarie | Rating: Outperform | Target: Rs 685

The global research firm believes sustained recovery from Q1 level is important for further margin expansion. It expects upcoming approvals like gToprol Xl, gWelchol to lead to ramp-up in US. It also raised EPS by 3-4 percent on higher domestic growth and lower depreciation.

Brokerage: Axis Cap | Rating: Buy | Target: Rs 700

The brokerage house said that June quarter’s revenue growth at 12% YoY was in-line led by India & South Africa. Pivotal trials for generic of Advair are done & patient recruitment has begun, the company observed. The operating margin could also improve on ramp up in limited competition products in US.

Brokerage: CLSA | Rating: Buy | Target: Rs 760

CLSA said that US ramp-up was weak but should pick up in H2FY19. It observed that profits were ahead of estimates due to higher other income.

At 10:35 hrs Cipla was quoting at Rs 642.75, up Rs 9.35, or 1.48 percent.