Sharekhan`s research report on Cipla“Cipla reported a weaker performance in Q1FY2015, as reflected in a moderate 8% growth in net sales, a 754-BPS decline in the OPM and a 39% drop in the adjusted PAT. On a Y-o-Y basis the Q1 performance was weaker mainly because of a high base and the rationalisation process that is being implemented in different regions. Excluding the one-offs, the underlying sales growth stood near 15% during the quarter. The company also witnessed a stronger traction on a Q-o-Q basis, as reflected in an 8% growth in sales, a 370-BPS expansion in the margin and a 13% growth in the net profit.” “A healthy 17% growth in the Indian formulation market, winning of a new tender in South Africa, cutting of the working capital cycle by 20 days and the launch of two key products in Europe were a few positives of the quarter. The management has maintained its growth guidance of “mid-teen” sales growth and over 20% OPM for FY2015 which indicates H2FY2015 shall be stronger. We maintain our estimates but raise the price target by 5% to Rs495 (20x FY206E EPS). However, owing to a limited upside from the current levels, we downgrade our rating on the stock to Hold,” says Sharekhan research report.
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