Axis Securities's research report on CiplaCipla’s Q3 PAT was atRs3.4bn(27%belowour expectation)on lower domestic sales (flat YoY) due to change in distribution policy (pertaining to timing of supplies). While domestic growth was 11% on adjusted basis, export formulations grew 29% YoY/flat QoQ despite currency volatility (ZAR down 16% YoY) and significant decline in gNexium sales in US. Thus, while EBITDA margin was at 14.6%, adjusted EBITDA margin were at 17-18% despite higher R&D exp. (8% vs 6% in FY15). We reduce our FY16/FY17 EPS by 7%/5% led by weak domestic formulation sales, integration of Invagen/Exelan FY17onwards (vs Q4FY16 earlier) and further weakness in ZAR (down 8% post Q3FY16). We maintain our BUY rating with revised TP of Rs640 (22x FY17 EPS vs 24x earlier) as we expect scale up in US to drive rerating.For all recommendations, click here 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.
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