Axis Direct's research report on Cipla IndiaCipla’s Q1 EBITDA was 11% below our estimate given weak performance in exports and India business but PAT was largely in line (due to lower amortization; expected to start from Q3).EBITDA margin normalized to 17% (vs. 5.3% in Q4). While it was 1,050 bps lower YoY due to one-offs (gNexium) in Q1FY16, it improved 200 bps YoY if we exclude gNexium in Q1FY16 and Invagen in Q1FY17. We expect growth to pickup in India from Q2 (led by respiratory and antiinfectives) and US growth from Q3 led by key launches. We cut FY17/18 EPS by 5/1%, but maintain BUYrating with revised TP of Rs 600 (22x FY18 EPS) vs.Rs 550 (20x) earlier givenincreasing US scale-up,restructuring largely over, change in top management, improving transparency, and higher focus on R&D.
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