Target: ₹1,050
CMP: ₹922.80
Cipla reported Q4-FY23 result, largely in-line with our estimates. Overall sales grew by 9 per cent YoY and (-1 per cent QoQ) to ₹5,740 crore, led by steady growth in US sales (5 per cent QoQ) on traction in peptides, respiratory products and gRevlimid sales. India sales was up 3 per cent YoY on a reported basis but up 16 per cent adj. for Covid.
Normalised increase in staff cost and other expenses by 8 per cent/4 per cent resulted EBITDA growth of 57 per cent YoY (down by 17 per cent QoQ) to ₹1,170 crore with margin at 20.5 per cent. PAT Adj. for ₹180 crore Goodwill impairment stood at ₹710 crore up 69 per cent YoY.
As gAdvair launch being delayed with regulatory overhang, however, if Pithampur facility is cleared approval can be faster. Further, gAbraxane transferred to partner’s site (approval expected in FY25). Peptide led respiratory assets add visibility to company’s US growth.
With India business continue to post growth ahead (ex. covid), US business expected led by new launches like, gAdvair and gRevlimid traction. Considering increased R&D (5.5- 6 per cent of sales), given key assets in the future pipeline, along with consistent cost optimisation, we expect better earnings trajectory.