Angel Broking is neutral on Cipla

Angels Brokings's research report on CiplaFor 2QFY2016, Cipla posted numbers more or less in line with our expectations on the sales and net profit front while beating our estimates on the OPM front. The company posted sales of `3,362cr V/s `3,343cr expected and V/s `2,630cr in 2QFY2015, a yoy growth of 27.8%. On the operating front, the OPM came in at 20.8% V/s 16.0% in 2QFY2015 and V/s an expected 19.7%, driven by gross margin expansion and higher sales growth. Thus, the Net Profit came in at `432cr V/s an expected `458cr and V/s `299cr in 2QFY2015, a yoy growth of 44.4%. The Management reiterated its guidance of sales growth of 22% in FY2016 and EBDITA margin improvement of 100-150bp. We currently have a Neutral rating on the stock.We expect the company to post a 19.2% CAGR in net sales to `16,611cr and EPS to record a 21.4% CAGR to `28.9 over FY2015– 17E. The growth in the top-line would be driven by domestic formulation sales and exports. We maintain our Neutral stance on the stock.

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