Cipla beats expectations for profit and revenue growth in Q2

Cipla Ltd came up with better-than-expected revenue as well as earnings growth for the three months ended September, allaying analyst concerns that the receding impact of Covid-19 will reduce sales of associated medicines and affect its financial performance.

Cipla, one of the top drugmakers in the country, reported a net profit of Rs 711 crore for the second quarter. This is 6.9% more than the same quarter last year and just marginally lower than Rs 715 crore in the quarter ended June 30. Analysts had expected a profit of around Rs 700.

EBITDA climbed to Rs 1,226 crore from Rs 1,177 crore in the year-ago period but declined from Rs 1,346 crore in the first quarter. This was also higher than the market expectations of around Rs 1,150 crore.

Cipla posted 9.5% growth in revenue to Rs 5,520 crore from Rs 5,038 crore in the year-ago period and a sequential rise of 0.3% over the first quarter. While some brokerage houses had put an estimate of Rs 5,510 crore, most expected the company to come up with revenues in the region of around Rs 5,200 crore for the quarter.

The Mumbai drugmaker’s share price, which has corrected by around 10% since last month, closed at Rs 907.3 apiece, up 0.6% on Tuesday. The company declared its results after trading stopped for the day.

Cipla Q2: Other highlights

1) India business grew 16% YoY on high FY21 base led by sustained volume traction across core therapies.

2) Covid-19 portfolio contribution normalised in-line with expectations; on a sequential basis, it declined 11%.

3) US business reported $142 million in revenue, which is a multi-quarter high.

4) Steady momentum in core products offsets price erosion in rest of the portfolio.

5) Africa business grew 8% YoY in US dollar terms.

6) Sub-Saharan Africa growth was affected by delays in order confirmation from select clients

7) South Africa private business posted strong growth especially in central nervous system, respiratory and anti-infectives therapies.

Cipla management commentary

Umang Vohra, MD and Global CEO at Cipla, said the company recorded strong momentum in core therapies across its branded markets and sustained cost control. This led to 10% revenue growth and 22.2% EBITDA margin for the quarter, offsetting price erosion and normalising Covid-19 contribution.

“In India, we continue to drive strong performance led by sustained volume traction despite a high FY21 base. Our collaboration with Eli Lily for their diabetes products helps us further strengthen our endeavour of creating access to innovative medicines in-line with the One-India strategy,” Vohra said.

He also said that the US business witnessed a healthy run rate, driven by its core portfolio and traction in respiratory franchise across Albuterol and Arformoterol medications. “International markets rebounded in-line with expectations despite continuing geopolitical challenges,” he added.