CIPLA - Q1 FY21 (Unaudited – Cons.)
CMP: 728
Total income from operations 4,346 Cr
3,989 Cr (8.91%) YoY | 4,376 Cr (-0.68%) QoQ
Year ending revenue: 17,476 Cr Vs. 16,362 Cr (6.80%)
Net Profit of 566 Cr
447 Cr (26.61%) YoY 239 Cr (136.83%) QoQ
Year ending Net profit: 1,547 Cr Vs. 1,528 Cr (1.24%)
EPS (in Rs.) 7.16
5.93 YoY | 3.05 QoQ
Year ending EPS: 19.16 Vs. 18.96
View: Result is overall good and improved. YoY revenue up and profit also up. Profit also increased in QoQ. EBITDA and margin also improved in this quarter.
Business Updates & Highlights
Q1FY21 EBITDA is around INR 1,049 Cr Vs. 905 Cr in Q1FY20 Vs. 652 Cr in Q4FY20 therefore up by 24% in YoY and 61% in QoQ. EBITDA margin in Q1FY21 was 24.1% Vs. 22.7% in Q1FY20 Vs. 14.9% in QoQ. The EBITDA margin is improved in 145 bps in YoY and 923 bps in QoQ.
Company is primarily operating into five main geographical segments which are as under:
North America
Cipla North America sales for Q1 FY2021 were INR 1,021 Cr Vs. 1,119 Cr in Q1FY20 VS. 856 Cr in Q4FY20 therefore declined by 9% in YoY and up by 19% in QoQ. North America contributed 23% of total sales.
India
India sales (Rx+Gx+CHL) for Q1 FY2021 was INR 1,608 Cr Vs. 1,388 Cr in Q1FY20 Vs. 1,730 Cr in Q4FY20 therefore up by 16% in YoY and declined by 7% in QoQ. India contributed 37% of total sales.
SAGA* (including South Africa Animal health) in Q1FY21 was INR 763 Cr Vs. 691 Cr in Q1FY20 Vs. 825 Cr in Q4FY20 therefore up by 10% in YoY and declined by 8% in QoQ. SAGA contributed 18% of total sales.
Global API
Cipla API sales for Q1 FY2021 was INR 184 Cr Vs. 182 Cr in Q1FY20 Vs. 247 Cr in Q4FY20 therefore up by 1% in YoY and declined by 25% in QoQ. API contributed nearly 4% of total sales.
Emerging Markets
Cipla emerging market sales for Q1FY21 was around INR 457 Cr Vs. 279 Cr in Q1FY20 Vs. 415 Cr in Q4FY20 therefore up by 64% in YoY and 10% in QoQ.
Europe
Europe contributed sales in Q1FY21 was around INR 240 Cr Vs. 201 Cr in Q1FY20 Vs. 232 Cr in Q4FY20 therefore up by 19% in YoY and 3% in QoQ.
Other expenditure declined by 17% in YoY and 27% in QoQ.
The Rx business grew 9% YoY led by strong traction in chronic therapies despite lockdown challenges; continued servicing of patients with COVID portfolio
Pipeline Update
Launched dihydroergotamine mesylate nasal spray with 180 day of CGT exclusivity.
Launch of Icatibant injectable pre-filled syringe
US SpecialtyCNS Out-licensing: Actively exploring partnerships for the other CNS asset.
Working with USFDA for IV Tramadol NDA goal date
Total ANDA portfolio applied as of June 2020 was 262 out of which 175 already approved, 21 was tentatively approved and balance 66 is under approval ANDAs.
R&D investments stand at INR 200 crores or 4.6 % of revenue
Financial
ROE and ROCE is around 10% and 12% respectively and book value per share is around INR 196 and share is currently trading at 3.7x of its book value. Company is currently trading at annualized PE of around 33 which is good as per Industry benchmark. Promoter holding in the company is around 36.7% which is low but stable. FIIs, mutual fund and insurance cos hold around 18.6%, 16,3% and 4.6% respectively. Total debt as of June 2020 was around INR 3,206 Cr Vs. 2,816 Cr in March 2020. Cash & cash equivalent as of June 2020 was around 3,256 Cr VS. 2,009 Cr in March 2020.
Position: Share strong support price is INR 690. Long term investor should continue with the company and any correction will give good opportunity to enter in SIP basis in long term.
Share View: Share price high 740 (52 week) and now 728. Cipla is a global pharmaceutical company focused on agile and sustainable growth, complex generics, and deepening portfolio in home markets of India, South Africa, North America, and key regulated and emerging markets.
Opportunities
Cipla enjoy 2nd rank overall in Chronic segment with 7.4% market share and growth 7% in YoY. Respiratory therapy 1st rank overall with 25.7% market share with 5% growth. Inhalation therapy 1st rank overall with 68.9% market share with
6% growth. Urology therapy 1st rank overall with 16.3% market share with 5% growth. Cardiology 1st rank overall with 5.5% market with 10% growth. Outperformed the market in Respiratory, Inhalation and Urology while Cardiology reported strong double-digit growth. Significant net cash addition through focus on cash conservation and liquidity management. Accelerated launch of the largest Covid-19 portfolio in the country ▪️ Cipremi® (Remdesivir) ▪️ Actemra® (Tocilizumab) ▪️ Ciplenza® (Favipiravir) ▪️ Ciphands® (Hand Sanitizer) received good response also. India Rx 4th consecutive quarter of market-beating growth. Strong product portfolio and enjoy the brand image and reputation.
Risk
Observations received in one of major plant in Goa location. Very low Return on equity (ROE) and in past 10 year average it was around 11% and further sales and profit growth was also single digit.
We had covered this stock as a Cipla medium-term investment in May 2020 and again covered it as a Cipla short term investment here in July 2020 here and get the best intraday trading strategy here.
CMP: 728
3,989 Cr (8.91%) YoY | 4,376 Cr (-0.68%) QoQ
Year ending revenue: 17,476 Cr Vs. 16,362 Cr (6.80%)
Net Profit of 566 Cr
447 Cr (26.61%) YoY 239 Cr (136.83%) QoQ
Year ending Net profit: 1,547 Cr Vs. 1,528 Cr (1.24%)
EPS (in Rs.) 7.16
5.93 YoY | 3.05 QoQ
Year ending EPS: 19.16 Vs. 18.96
View: Result is overall good and improved. YoY revenue up and profit also up. Profit also increased in QoQ. EBITDA and margin also improved in this quarter.
Business Updates & Highlights
Q1FY21 EBITDA is around INR 1,049 Cr Vs. 905 Cr in Q1FY20 Vs. 652 Cr in Q4FY20 therefore up by 24% in YoY and 61% in QoQ. EBITDA margin in Q1FY21 was 24.1% Vs. 22.7% in Q1FY20 Vs. 14.9% in QoQ. The EBITDA margin is improved in 145 bps in YoY and 923 bps in QoQ.
Company is primarily operating into five main geographical segments which are as under:
North America
Cipla North America sales for Q1 FY2021 were INR 1,021 Cr Vs. 1,119 Cr in Q1FY20 VS. 856 Cr in Q4FY20 therefore declined by 9% in YoY and up by 19% in QoQ. North America contributed 23% of total sales.
India
India sales (Rx+Gx+CHL) for Q1 FY2021 was INR 1,608 Cr Vs. 1,388 Cr in Q1FY20 Vs. 1,730 Cr in Q4FY20 therefore up by 16% in YoY and declined by 7% in QoQ. India contributed 37% of total sales.
SAGA* (including South Africa Animal health) in Q1FY21 was INR 763 Cr Vs. 691 Cr in Q1FY20 Vs. 825 Cr in Q4FY20 therefore up by 10% in YoY and declined by 8% in QoQ. SAGA contributed 18% of total sales.
Global API
Cipla API sales for Q1 FY2021 was INR 184 Cr Vs. 182 Cr in Q1FY20 Vs. 247 Cr in Q4FY20 therefore up by 1% in YoY and declined by 25% in QoQ. API contributed nearly 4% of total sales.
Emerging Markets
Cipla emerging market sales for Q1FY21 was around INR 457 Cr Vs. 279 Cr in Q1FY20 Vs. 415 Cr in Q4FY20 therefore up by 64% in YoY and 10% in QoQ.
Europe
Europe contributed sales in Q1FY21 was around INR 240 Cr Vs. 201 Cr in Q1FY20 Vs. 232 Cr in Q4FY20 therefore up by 19% in YoY and 3% in QoQ.
Other expenditure declined by 17% in YoY and 27% in QoQ.
The Rx business grew 9% YoY led by strong traction in chronic therapies despite lockdown challenges; continued servicing of patients with COVID portfolio
Pipeline Update
Launched dihydroergotamine mesylate nasal spray with 180 day of CGT exclusivity.
Launch of Icatibant injectable pre-filled syringe
US SpecialtyCNS Out-licensing: Actively exploring partnerships for the other CNS asset.
Working with USFDA for IV Tramadol NDA goal date
Total ANDA portfolio applied as of June 2020 was 262 out of which 175 already approved, 21 was tentatively approved and balance 66 is under approval ANDAs.
R&D investments stand at INR 200 crores or 4.6 % of revenue
Financial
ROE and ROCE is around 10% and 12% respectively and book value per share is around INR 196 and share is currently trading at 3.7x of its book value. Company is currently trading at annualized PE of around 33 which is good as per Industry benchmark. Promoter holding in the company is around 36.7% which is low but stable. FIIs, mutual fund and insurance cos hold around 18.6%, 16,3% and 4.6% respectively. Total debt as of June 2020 was around INR 3,206 Cr Vs. 2,816 Cr in March 2020. Cash & cash equivalent as of June 2020 was around 3,256 Cr VS. 2,009 Cr in March 2020.
Position: Share strong support price is INR 690. Long term investor should continue with the company and any correction will give good opportunity to enter in SIP basis in long term.
Share View: Share price high 740 (52 week) and now 728. Cipla is a global pharmaceutical company focused on agile and sustainable growth, complex generics, and deepening portfolio in home markets of India, South Africa, North America, and key regulated and emerging markets.
Opportunities
Cipla enjoy 2nd rank overall in Chronic segment with 7.4% market share and growth 7% in YoY. Respiratory therapy 1st rank overall with 25.7% market share with 5% growth. Inhalation therapy 1st rank overall with 68.9% market share with
6% growth. Urology therapy 1st rank overall with 16.3% market share with 5% growth. Cardiology 1st rank overall with 5.5% market with 10% growth. Outperformed the market in Respiratory, Inhalation and Urology while Cardiology reported strong double-digit growth. Significant net cash addition through focus on cash conservation and liquidity management. Accelerated launch of the largest Covid-19 portfolio in the country ▪️ Cipremi® (Remdesivir) ▪️ Actemra® (Tocilizumab) ▪️ Ciplenza® (Favipiravir) ▪️ Ciphands® (Hand Sanitizer) received good response also. India Rx 4th consecutive quarter of market-beating growth. Strong product portfolio and enjoy the brand image and reputation.
Risk
Observations received in one of major plant in Goa location. Very low Return on equity (ROE) and in past 10 year average it was around 11% and further sales and profit growth was also single digit.
We had covered this stock as a Cipla medium-term investment in May 2020 and again covered it as a Cipla short term investment here in July 2020 here and get the best intraday trading strategy here.
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