Cipla Q2 net profit seen rising 25% YoY; US sales may drop QoQ to $215 mn

As per an average of six brokerage estimates, the drug maker may report 11 per cent yearly (YoY) growth in revenue to Rs 6,469 crore. Profit after tax could rise 25 per cent YoY to Rs 985 crore. See Table

On a sequential basis (QoQ), Cipla’s net profit is seen declining 1.1 per cent, while revenue may grow 2.2 per cent. 

Brokerages said that Cipla maintained momentum in its key US drugs–Revlimid and lanreotide– despite competition in Albuterol in Q2FY24. 

Domestic sales may be soft on a QoQ basis for the quarter due to seasonality, said analysts. Moreover, considering the potential promoter exit, investors may use Q2 earnings to book profit, as per Phillip Capital. 

Here’s what brokerages predict: 

HSBC: We expect the India segment sales (43 per cent of total revenues) to grow 8 per cent YoY in 2Q. For the US segment, we expect sales of $215 million (mn) (27 per cent of total revenues), marginally lower than $222 mn in Q1 due to moderation in Revlimid sales at $20 mn. 

Kotak Institutional Equities: Cipla may report 8 per cent YoY growth in domestic sales with US sales pegged at $214 mn, down 4 per cent QoQ. We expect US sales to be driven by lower Revlimid sales ($26 mn), being partially compensated by the gradual ramp-up of Lanreotide and Leuprolide, market share gains in Albuterol and Diclofenac gel. 

Overall EBITDA may grow 15 per cent YoY to Rs 14.9 billion, with a 30 bps QoQ EBITDA margin decline to 23.3 per cent. 

PhillipCapital:  We expect US sales at $220 mn, helped by ramp up in its Revlimid sales to $70 mn and firm Lanriotide sales. Domestic formulation segment will grow 10 per cent YoY. Margins may jump 230 bps YoY to 23.6 per cent. We may see 31 per cent growth in EBITDA.  

Nuvama Institutional Equities: Cipla’s India sales may grow 11 per cent YoY while US sales is seen at $215 mn (-3 per cent QoQ / +20 per cent YoY growth) aided by Revlimid. Albuterol market share was likely flat QoQ at 12 per cent, lanreotide’s share reached 20 per cent.

Gross margin will remain stable at 64 per cent as the benefit of price increase, input and freight cost normalisation starts flowing. EBITDA margin at 23.6 per cent will be aided by strong branded contribution, well within the guided range.

Axis Securities: Cipla may record US sales of $214 mn with a healthy 5 per cent growth in the Indian business but the US business is likely to witness pressure on account of lower Albuterol Sulphate sales.

Prabhudas Lilladher: Cipla may report a healthy 20 per cent YoY EBITDA growth aided by higher US sales, which will also aid profitability on YoY basis. Margins will likely remain healthy at 24 per cent. Domestic formulation business may see some impact given a weak acute season.