06 Aug , 2021 By : Kanchan Joshi
Cipla Ltd reported better-than-expected performance for the June quarter led by strong 68.5% growth in the domestic arena. The company derived almost half of its revenues from the domestic market, benefitting from strong sales of covid-related products. The drugmaker saw strong volume traction in the core therapy portfolio. Acute and respiratory nebulization segments recovered as well.
Not surprisingly, the stock has seen more than 21% gains since its March lows.
The US, which contributed about a fifth of the overall revenues, saw stable growth. The contributions from respiratory inhaler albuterol generics, launched last year, continue driving growth and are seeing market share gains too. The company's $141 million revenue and 5% year-on-year growth were led by continued expansion in the market share of albuterol.
Among others, the African (SAGA) sales marked a 13% year-on-year growth in dollar terms. The geography contributed about 15% to overall sales. The company said that it saw double-digit growth and market share gain in the Antiretroviral and oncology private market. It also moved up three places to third, in systemic anti-infectives private market.
The company’s overall revenue marking a 27% year-on-year growth at Rs5,453 crore was much better than Rs4,606.5 crore as seen in the previous quarter. The Ebitda at Rs1,346 crore also saw significant 28% year-on-year growth and net profit grew 24% year-on-year.
Analysts at Kotak Institutional Equities said that 1QFY22 sales and Ebitda exceeded their estimates by 7% and 9%, respectively led by higher-than-expected domestic sales benefitting from strong traction in the covid portfolio, while the US sales were largely stable.
Moving forward, the extraordinary gains accrued by the covid portfolio may moderate. Nevertheless, the strong chronic portfolio of the company and pick up in acute segment sales bode well for domestic sales growth.
Analysts at Motilal Oswal Financial Services Ltd have raised their EPS estimate by 6%/4% for FY22/FY23, factoring in strong traction in prescription/trade generics in the domestic formulations segment, an extended benefit from cost savings, and lower R&D spend.
Meanwhile, as India sales grow well, the developing respiratory portfolio in the US and regular rollout of products keeps outlook firm.
“We expect the covid portfolio to moderate over the near-term, though continued roll-out of respiratory franchisee in the US and strong execution of One India strategy will help drive earnings growth over FY2023-24," said analysts at Kotak Institutional Equities.
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