Hold Cipla; target Rs 442: Firstcall Research
Brokerage house Firstcall Research has recommended a hold rating on Cipla with a target price of Rs 442, in its November 19, 2013 research report.
November 25, 2013 / 13:44 IST
Firstcall Research report on Cipla
"During the quarter, the Company includes the relevant results of Cipla Medpro and its subsidiaries posted a growth of over 13 percent in income from operations. Domestic sales grew by over 11 percent and export sales grew by over 15 percent. Operating margins have decreased by about 20 percent and profits after tax have decreased by about 27 percent on a year-on-year basis. Material cost is at 38.4 percent of consolidated net sales in Q2 FY14 as compared to 34.7 percent in Q2 FY13. Material cost has increased by about 4 percent mainly on account of changes in product mix viz. higher proportion of ARVs and lower contribution of Escitalopram. The operating margins have decreased due to increase in material cost and other expenditures. The increase in staff cost is due to increase in manpower, annual increments. Consolidated EBIDTA decreased by 19.6 percent and is at 22.5 percent of income from operations during Q2 FY14. The operating margins have decreased due to increase in material cost and other expenditures. Other expenditure has increased by 13 percent due to increase in sales promotion expenses, professional charges, etc. Tax for the quarter is in line with average tax rate for the previous year.""Domestic revenues grew by 11.6 percent to Rs. 10400 million during Q2 FY14, up from Rs. 9320 million during Q2 FY13. The exports of formulations grew by 14.9 percent to Rs. 12190 million during Q2 FY14, up from Rs. 10610 million during Q2 FY13. Previous year's results include one-time profit share revenues from Escitalopram through its US partner. Exports of APIs grew by 17.7 percent to Rs. 2040 million during Q2 FY14, from Rs. 1740 million during Q2 FY13. Cipla is one of the best defensive bets in the present volatile scenario. Over FY2012- 15E, we expect the company to post a standalone CAGR of 13 percent and 16 percent in its top-line and bottom-line respectively. We recommend 'HOLD' on the stock with a price target of Rs 442," says Firstcall Research Report.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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