Hold Cipla; target Rs 350: Emkay
Emkay Global Financial Services has recommended hold rating on Cipla with a target price of Rs 350, in its November 5, 2012 research report.
November 07, 2012 / 12:27 IST
Emkay Global Financial Services has recommended hold rating on Cipla with a target price of Rs 350, in its November 5, 2012 research report.
“Cipla’s Q2FY13 results – a) Revenues up 24% to Rs21.5bn b) EBITDA up 55% to Rs6.8bn and c) RPAT up 62% to Rs5bn. 24% revenue growth is on back of 33% growth in exports, which is further led by $35mn lexapro sales, profit sharing on Lexapro by Teva and ~$5mn income from Meda for Dymista. Domestic formulations grew 14% YoY. Adjusting for these one-off’s, EBITDA margins were at 22%. APAT was at Rs 3.1bn and EPS was Rs3.9. Going forward such one-off’s will not be there & EBITDA margins will come back to 22-23% in H2FY13. All upsides priced-in.Going forward such one-off’s will not be there & EBITDA margins will come back to 22-23% in H2FY13 and FY14. In the domestic business, the company plans to launch 25-30 new products every year and is expected to grow by 14-15% for FY13 & FY14. Cipla has started Dymista dispatches to Meda for distribution in the US market this quarter. While Cipla is the manufacturing partner, Meda is involved in the development and marketing of the drug. This product is expected to get generate peak revenues of US$25-30mn in US as per the company.We expect Cipla to report 14% revenue growth in FY13 and 16% in FY14. We expect company’s EBITDA margins to improve from 23.6% in FY12 to 24% in FY13 and remain at this level in FY14. Maintain Hold with a target price of Rs 350 (20xFY14 EPS of Rs 17.6). At CMP, the stock is trading at 25x FY13E and 22xFY14E EPS," says Emkay Global Financial Services research report.Institutional holding more than 40% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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