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Elara Capital
Cipla (Accumulate)
CMP: ₹503.3
Target: ₹590
Cipla posted an EBITDA of ₹910 crore, 8 per cent below our estimate of ₹990 crore, led by multiple one-offs related to the domestic business and deferral of despatch. Revenue was up by a mere 1 per cent y-o-y to ₹4,000 crore versus estimate of ₹4,600 crore. The domestic business declined by 13 per cent y-o-y to ₹1,360 crore vs our estimate of ₹1,700 crore, due to the realignment of distributors in its trade generics business and deferral of sales of ₹600mn in prescription business. Exports grew by 11.6 per cent y-o-y to ₹2,450 crore vs our estimates of ₹2,620 crore, lower on account of a decline in (SAGA) and EM sales. US sales reported growth of 61 per cent y-o-y to $161 million, vs estimates of ₹15.5 crore, led by gSensipar. Gross margin expanded by 410 bps q-o-q to 69.3 per cent, aided by gSensipar and favorable revenue mix in the domestic business. Further, other expenses were lower aided by lower R&D cost, down 6 per cent y-o-y. PAT grew 6 per cent y-o-y to ₹480 crore vs our estimates of ₹510 crore.
Valuation: We cut our FY20E EPS by 5 per cent and FY21E EPS by 4 per cent.
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