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Cipla Q1 preview: India biz may push profit over 50% QoQ; US sales to drag

Cipla Q1 preview: The company's domestic business can grow 15 per cent quarter-on-quarter (QoQ), while US business could contract by up to 4 per cent QoQ to $195 million

Cipla
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Harshita Singh New Delhi

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Drug maker Cipla Ltd is expected to deliver a strong sequential earnings performance for the June quarter (Q1FY24) led by its domestic business, analysts say. 

The company’s domestic business can grow 15 per cent quarter-on-quarter (QoQ) given the March quarter was seasonally weak, as per Kotak Institutional Equities. 

On the other hand, the company’s US business could contract by up to 4 per cent QoQ to $195 million on account of weak Albuterol Sulfate sales, estimates Nirmal Bang. 

As per an average of five brokerage estimates, Cipla’s QoQ profit may jump 57 per cent to Rs 825 crore, while this could be up 20 per cent from last year. SEE ESTIMATES TABLE

Revenue growth could come at 7 per cent QoQ and 14 per cent YoY to Rs 6,146 crore. Margins can see sharp expansion of up to 200 bps QoQ to 22.5 per cent. 

Key Monitorables: Commentary on its Indore facility and the trends in the US business will be closely watched. 

Here’s what brokerages expect: 

Systematix: Cipla could grow in double-digits in its India business, but US sales may witness pressure. We expect the US sales at $ 195 mn. 

Axis Securirites: We expect the firm’s US sales at $200 mn, while there could be healthy growth of 10 per cent in its India business. The US market growth could be driven by gRevlimid, Albuterol & Lenotirade. 

Kotak Institutional Equities: We build US sales at $200 mn, down 2 per cent QoQ, which can be partially compensated by gradual ramp-up of Lanreotide and Leuprolide as well as slightly higher gRevlimid sales expected at $30 mn. 

Overall, Cipla's Q1 sales may grow 13.5 per cent YoY. We bake in R&D as per company guidance at 6.2 per cent of sales. On a favorable base, overall EBITDA could grow 20 per cent YoY to Rs 13.7 billion.

Prabhudas Lilladher: Due to seasonality in India business, Cipla will report QoQ EBITDA growth, along with margin improvement aided by higher domestic sales as Q1 remains a seasonally strong quarter. 

Nirmal Bang: Revenue may grow by 15 per cent YoY, driven by Revlimid in the US. Domestic business may grow 10 per cent YoY. However, US business will be weak due to decline in gBrovana and Albuterol Sulphate sales. Better product mix will lead to margin expansion.

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First Published: Jul 25 2023 | 3:20 PM IST

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