Cipla Limited is an Indian multinational pharmaceutical company, headquartered in Mumbai. Cipla primarily develops medicines to treat respiratory disease, cardiovascular disease, arthritis, diabetes, depression, and many other medical conditions.
Cipla has 47 manufacturing locations across the world and sells its products in 86 countries. It is the third largest drug producer in India and the leader in therapies such as respiratory and urology. It also ranks second in the overall chronic business. It continues to be the third largest player in the South African private market with 7.5% market share that is growing ~4.3% greater than market. It is the second largest Indian exporter in emerging markets.
Quarterly Growth Walkthrough
The company reported record contributions from the US market and a decent performance in India. Although some weakness in the Africa business has drawn down the totals.
Cipla Ltd reported a net profit of ₹808 crore for the third quarter which is up 9.9% Year-on-Year (YoY). Excluding a one-time tax charge due to DTA (deferred tax asset) reversal, the adjusted net profit at ₹876 crore has grown by 20 % YoY and 11% sequentially.
Cipla Ltd.’s revenue growth came at 6% YoY to ₹5810 crore on a reported basis. The Ex covid revenue growth however came at strong 11% YoY ex-covid growth.
The company’s computed EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) was calculated at ₹1,408 Crore that has grown by 13% YoY and 8% sequentially. The margins were at 24% that have increased by 153bps YoY and 11% sequentially.
The previous year had printed enormous gains from covid treatment and management product sales which had led to a higher base.
Geographical performance
The sales from the North American segment were registered at ₹1,600 crore that have spiked by 42% YoY and 11% sequentially. On the dollar basis, the company has reported its highest ever quarterly revenue of $195 million with a 30% YoY growth. This growth has been aided by rigid momentum in the specialized portfolio which consists of market share expansion in key respiratory and peptide injectable products.
The sales from the Indian segment sales which give a contribution which is greater than 40% to the overall revenues has given a decent growth trajectory on a high base of the previous year. The India revenues were registered at ₹2,563 crore which were up by a mere 1.8% YoY. The company said that ex-covid revenue growth was computed at 11% YoY.
The sales from the SAGA (South Africa, Sub-Saharan and Cipla Global Access business) displayed weakness that has made an impact by product adjustments. The SAGA revenues of ₹680 core have declined by 24% YoY and 21% sequentially. South Africa sales at ₹550 Crore have slumped by 12% YoY and 8% sequentially. The company reported that the supply challenges are being addressed.
Cipla stock price has faced correction after hitting its lifetime high of Rs 1185. The stock has broken below the 23.6% retracement level which has been caused due to statement given by the company which states that the USFDA has conducted cGMP inspection at its Pithampur manufacturing facility. The price is expected to remain under pressure until the outcome of the USFDA inspection is out. The 38.2% retracement level seems to be a strong support level as the price had managed to stay above Rs 900 for a long duration in the last year. The price is rapidly approaching the 200-day exponential moving average and the MFI on the weekly chart is at 20 points which makes the stock extremely oversold. Investors may watch the correction and enter at the suitable retracement level for long-term growth.
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