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India, US launches boost strong Q2 numbers (ex-Covid) – Cipla Q2 Review

ICICIdirect Research 07 Nov 2022 DISCLAIMER

What's Buzzing 

Cipla reported a strong set of numbers, which were in line with I-direct estimates driven by strong performance in India branded portfolio (ex-Covid) and launch of gRevlimid in US besides continued momentum from earlier launches from respiratory and other complex segments. 


Revenues grew 5.6% YoY to Rs 5828.5 crore. However, adjusting for Covid sales from the base, the like-to-like growth was 12%. US business grew ~35.1% YoY to Rs 1432 crore. The growth was driven by the launch of gRevlimid and continued traction from respiratory drug Albutrol besides market share expansion in Lanreotide 505b2. India business witnessed YoY growth of 6.1% to Rs 2563 crore driven by double digit growth across all therapies. However, after adjusting Covid base, growth was at 15%. Gross margins increased ~165 bps over the previous year to 62.9%. EBITDA margins increased 12 bps YoY to 22.3%, due to lower logistic costs and effective management Adjusted PAT increased 10.5% YoY to Rs 786 crore. Adjusted for one-time Covid inventory adjustments, EBITDA margins were at ~24%. 

Our Perspective

We believe Cipla's One India portfolio will continue to gain strong traction across its flagship brands across multiple therapies. Cipla's better execution and distribution synergies to drive prescription, trade generics, consumer health for India Business. In the US, we expect significant momentum from H2FY23 onward on the back of possible approvals/launches of gAdvair, gAbraxane and other complex generics launches including peptides, traction from existing respiratory portfolio and gRevlimid. We value the company at Rs 1350 i.e. 26x FY24E EPS of Rs 50.6 + Rs 31 NPV for gRevlimid.

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