Cipla is a global pharma company with over 1,500+ products in 65 therapeutic categories, with over 50 dosage forms.
Revenues were better than I-Direct estimates while margins were a miss on back of a one-time write-off of ₹ 200 crore Covid inventory in the quarter.
Cipla’s share price has grown ~1.6x in past three years
Valued at ₹ 1095 i.e. 25x P/E on FY24E EPS of ₹ 42.5 + ₹ 32 NPV for gRevlimid.
Apart from Cipla, in healthcare coverage we like Sun Pharma.
| Particulars (₹ crore) | Amount |
|---|---|
| Market Capitalization | 108,649.1 |
| Debt (FY22) | 824.0 |
| Cash (FY22) | 1,928.0 |
| EV | 72,316.0 |
| 52 week H/L (₹) | 1,519.0/896.3 |
| Equity Capital | 161.4 |
| Face Value (₹) | 2.0 |
| Particulars | FY19 | FY20 | FY21 | FY22 | 5 Year CAGR(FY17-FY22) | FY23E | FY24E | 2 Year CAGR (FY22-FY24E) |
|---|---|---|---|---|---|---|---|---|
| Revenues | 16,362.4 | 17,132.0 | 19,159.6 | 21,763.3 | 8.3 | 23,507.7 | 25,798.7 | 8.9 |
| EBITDA | 3,097.3 | 3,206.0 | 4,252.4 | 4,552.8 | 13.0 | 4,967.9 | 5,675.7 | 11.7 |
| EBITDA margins (%) | 18.9 | 18.7 | 22.2 | 20.9 | - | 21.1 | 22.0 | - |
| Adjusted PAT | 1,496.1 | 1,546.5 | 2,404.9 | 2,650.2 | 21.4 | 2,915.5 | 3,422.8 | 13.6 |
| Adj. EPS (|) | 18.6 | 19.2 | 29.9 | 32.9 | - | 36.2 | 42.5 | - |
| PE (x) | 49.0 | 47.4 | 30.5 | 29.1 | - | 25.1 | 21.4 | - |
| EV to EBITDA (x) | 24.1 | 23.0 | 16.7 | 15.3 | - | 13.6 | 11.4 | - |
| RoNW (%) | 10.0 | 9.8 | 13.1 | 12.7 | - | 12.6 | 13.3 | - |
| RoCE (%) | 10.9 | 12.0 | 16.3 | 16.7 | - | 16.7 | 17.7 | - |
| - | - | - | - | - | - | - | - | - |
Q4FY22 Results: One-offs hit margins, Revenue growth continues
Q4FY22 Earnings Conference Call highlights
| Q4FY22 | Q4FY22E | Q4FY21 | YoY (%) | Q3FY22 | QoQ (%) | Comments | ||
| Revenue | 5,260.3 | 4,966.4 | 4,606.5 | 14.2 | 5,478.9 | -4.0 | YoY growth led by strong growth in India and US | |
| Raw Material Expenses | 2,146.7 | 1,942.9 | 1,822.4 | 17.8 | 2,143.4 | 0.2 | ||
| Gross Profit | 3,113.6 | 3,023.5 | 2,784.0 | 11.8 | 3,335.5 | -6.7 | ||
| Gross Margin (%) | 59.2 | 60.9 | 60.4 | -125 bps | 60.9 | -169 bps | YoY decline due to raw material cost inflation and write-off for Covid inventory | |
| Employee Expenses | 892.4 | 790.8 | 814.7 | 9.5 | 872.4 | 2.3 | ||
| Other Expenditure | 1,471.5 | 1,143.9 | 1,173.1 | 25.4 | 1,232.1 | 19.4 | ||
| Total Operating Expenditure | 4,510.6 | 3,877.6 | 3,810.2 | 18.4 | 4,247.9 | 6.2 | ||
| EBITDA | 749.7 | 1,088.8 | 796.2 | -5.8 | 1,231.0 | -39.1 | ||
| EBITDA (%) | 14.3 | 21.9 | 17.3 | -303 bps | 22.5 | -822 bps | Margins impacted YoY due to, 1) one-time | 200 crore expense for Covid products related write-off, 2) higher R&D expenditure (up 16% YoY, 3) elevated freight cost and 4) seasonality mix in sales. Adjusted for | 200 crore one-off, margins at 18% | |
| Interest | 18.1 | 20.7 | 27.5 | -34.1 | 20.7 | -12.5 | ||
| Depreciation | 290.3 | 247.5 | 285.2 | 1.8 | 247.5 | 17.3 | ||
| Other income | 64.0 | 83.3 | 60.1 | 6.5 | 91.3 | -29.9 | ||
| PBT before EO | 505.3 | 904.0 | 543.7 | -7.1 | 1,054.1 | -52.1 | ||
| Less: Exceptional Items | 57.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | Additional impairement charge for Avenue Therapeutics | |
| PBT | 447.8 | 904.0 | 543.7 | -17.6 | 1,054.1 | -57.5 | ||
| Tax | 71.1 | 253.1 | 128.2 | -44.5 | 295.2 | -75.9 | ||
| Tax Rate (%) | 15.9 | 28.0 | 23.6 | -770 bps | 28.0 | -1212 bps | Deferred tax assets in this quarter amid restructuring of business in South Africa | |
| MI & Share of loss/ (gain) asso. | 8.6 | -3.3 | -1.9 | LP | 28.3 | -69.5 | ||
| Adjusted PAT | 410.4 | 650.1 | 413.4 | -0.7 | 728.6 | -43.7 | Delta vis-à-vis EBITDA mainly due to lower interest expense and lower tax rate due to deferred tax assets in this quarter | |
| Key Metrics | ||||||||
| Domestic | 2183.0 | 1969.6 | 1807.0 | 20.8 | 2518.0 | -13.3 | YoY growth driven by sustained volume traction across core therapies and traction in flagship brands | |
| US | 1209.0 | 1167.3 | 1002.0 | 20.7 | 1124.0 | 7.6 | YoY growth owing to strong traction in respiratory assets as well as contribution from peptide assets | |
| South Africa | 664.0 | 636.3 | 606.0 | 9.6 | 623.0 | 6.6 | South Africa private market growth of 17% YoY in ZAR terms in Q4FY22 and growth was diversified across base and new products | |
| RoW | 1011.0 | 969.2 | 923.0 | 9.5 | 1008.0 | 0.3 | Direct to market growth across geographies offset by forex volatility and muted B2B demand in Europe | |
| API | 137.0 | 168.0 | 224.0 | -38.8 | 150.0 | -8.7 | YoY decline due to higher Q4FY21 base due to stock up by customers and one-time profit share on API supply |
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I/We, , Siddhant Khandekar, Inter CA, Raunak Thakur, PGDM, Kush Mehta, CA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.
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