JM Financial's research report on Cipla
Cipla disappointed in 4QFY18, in-line with previous years�� trend, with Revenues/EBITDA/PAT being 6%/28%/50% below our estimates, mainly due to negative operating leverage on account of lower sales as well as one-time costs related to sales and distribution (INR 450- 500mn), employee recruitment, disposal of Yemen subsidiary (FX loss of INR 512mn) and provisions (INR 775mn) towards ongoing DPCO overcharging litigation.
Outlook
Cipla��s targets crossing USD 1bn of domestic sales in FY19, implying an ambitious low-teen growth rate which could be difficult to achieve organically. We cut our FY19/20 EPS estimates by 12%/11% to incorporate lower revenues and slower margin expansion going forward and arrive at a Mar��19 TP of INR 600. Maintain BUY.
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