Dear All,
Forwarding you the Result Update on Cipla for 4QFY2011 with a Buy recommendation and a Target Price of `377 (12 months).
For 4QFY2011, Cipla reported mixed numbers with top-line growth beating our estimates but margin and bottom-line performance coming in below our expectations. The Indore SEZ (`900cr invested) is expected to contribute ~10% to Cipla’s total revenue in FY2012, which would boost its overall growth as well as margins. We recommend Buy on the stock with a target price of `377, valuing the stock at 20.0x FY2013E earnings.
Results impacted by change in product mix: For 4QFY2011, Cipla reported net sales of `1,615cr (`1,317cr), growth of 22.6% yoy and above our estimates of `1,478cr. Gross margin reported a dip of 310bp yoy to 50.5% (53.6%). Raw-material costs increased during the quarter due to change in product mix, which had higher proportion of anti-retrovirals in formulation exports. OPM came in at 15.4% (15.2%), led by increased manpower cost and negative contribution of Indore SEZ, as it is in the optimisation phase. Overall, other operating income reported a drop of 5.6% yoy to `54cr (`57cr) in 4QFY2011. Furthermore, adjusted net profit came in at `214cr (`181cr), growth of 18.5% yoy, lower than our estimates due to increased depreciation and interest costs during the quarter.
Outlook and valuation: We have revised our estimates and expect net sales to post a 16.6% CAGR to `8,322cr and EPS to record a 25.2% CAGR to `18.9 over FY2011–13E. The stock is trading at 19.9x and 16.1x FY2012E and FY2013E earnings, respectively. We recommend Buy on the stock with a revised target price of `377.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600 Ext: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,5th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600, Ext: 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
No comments:
Post a Comment