Hold Cipla, recommends Ventura

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26 Aug, 2025 12:21

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Ventura`s research report on Cipla“During the 1st quarter in FY15, Cipla reported a growth of 13.6% YoY in net sales to Rs 2647 crore on the back of strong contribution from nontender mix. The company benefitted from strong growth in domestic formulations and export formulations in the nonUS market. This has resulted in favourable product mix in Q1FY15 and helped in 460 bps increase in EBITDA margin to adjusted EBITDA margin of 17.7% in Q1FY15. Strong flow of technology income and export incentive of Rs 72.8 crore helped in 18% QoQ growth in adjusted PAT of Rs 294 crore in Q1FY15.” “During the con-call, management guided about launches of 50 products in US (Majority of these products fall in therapies such as anti-infectives, oncology injections and respiratory products) over next 2-3 years and combination inhalers in EU in H2FY15. Moreover, Meda (CL partner for Dymista) has highlighted increasing market share in the US and EU. Hence there can be higher milestone payments from Meda in the coming quarters.  Over the same period, exports constitute around ~52% of total sales. The company exports both APIs and formulations to more than 170-180 countries including advanced regions such as the US and Europe. The company derives 34% of its export revenues from North and Latin America followed by 33% from Africa, 14% from Europe, 13% from Australasia and 6% from the Middle East.  It has filed seven ANDAs with the USFDA taking total filings to 171 ANDAs and received approval for two ANDAs taking total approved ANDAs to 90. Of these 90 approved, the company has currently commercialized only 40 products through partners. It is looking to re-launch the returned products from partners in Q4FY15 under its own brand name.  The company has bagged tenders worth ZAR 300mn in South Africa in the areas of respiratory, CVS, and women's health. It has launched Ipratropium MDI inhaler (market size USD 15 mn) in UK market and Mometasone nasal spray in the Netherlands during Q1FY15. The company expects to launch some combination inhalers including Symbicort in the EU market by the end of FY15. Management expects sales growth in mid-teens coupled with EBIDTA margins of 20-21% in FY15 on the back of global launches, steady growth in domestic formulations and eventbased opportunities in US generics. Capex will be at Rs 500 crore and R&D expenses are expected to be in the range of 5-6% in FY15. Baraclude API will be an important product for Cipla and it could be launched this year, while Xopenex will be launched fairly soon.” “The company seems to be more confident and assured in-spite of the fact that it has witnessed lowest margin in the last many quarters as the so-called investment cycle reaches the halfway mark process. At the CMP of Rs 498, the stock is currently trading at 26.7x and 21.0x its FY15E and FY16E earnings. We recommend a HOLD on the stock,” says Ventura research report.

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