Multibagger Stock – Cipla Limited

CIPLA LIMITED:

Cipla Limited is an Indian pharmaceutical company, probably best-known outside its home country for pioneering the manufacture of low-cost anti-AIDS drugs for HIV-positive patients in developing countries. It has played a similarly prominent role in expanding access to drugs to fight influenza, respiratory disease and cancer. Founded by nationalist Indian scientist Khwaja Abdul Hamied as The Chemical, Industrial & Pharmaceutical Laboratories in 1935. It’s Head Quarters is at Mumbai.

Cipla has registered sharp numbers for the quarter ending September 2012. The revenue for the September 2012 quarter is pegged at Rs.2191.84 crore; about 23.86% up against Rs.1769.66 crores recorded during the year-ago period; driven by better product mix i.e. lower proportion of anti retrovirals, Lexapro benefits; price hikes and currency benefits. It gained Rs.26 crores on account of foreign exchange gain. Operating profit skyrocketed about 58% at Rs.676.95 crore vis-a-vis Rs.429.25 crores. Material cost at 36.75% of total sales decreased by 3.8% during Q2FY13 as compared to Q2FY12. PAT reported a handsome growth of 61.83% to Rs.500.01 crores from Rs.308.97 crores. Operating profit margins expanded sharply by 663 bps at 30.89% vis-a-vis 24.26% whereas NPM stood at 22.81% as against 17.46% YoY.

Family revenues grew by 13.5% to Rs.962 cr during Q2 FY13, up from Rs. 847 cr during Q2 FY12. The growth in domestic revenues was largely on account of growth in anti-asthma, antibiotics and cardiovascular therapy segments.

Exports of formulations grew by 38.2% to Rs.1039 cr during Q2 FY13, up from Rs.752 cr during Q2 FY12. Exports of APIs grew by 9.0% to Rs.174 cr during Q2FY13, from Rs.159 cr during Q2FY12. The growth in export revenues was primarily due to growth in anti-depressants, anti-ulcerant and anti-asthma segments.

Cipla received 2012 Thomas Reuters India Innovation Award.

Among strong product mix, increasing focus on exports, firm guidance and ramp up of its facilities, Cipla’s revenue visibility looks strong. We believe Cipla Ltd. is trading at an attractive valuation at 21.69x and 18.75x of FY13EPS of Rs.17.97 and FY14EPS of Rs.20.78. We Bet the Stock price to grab at 390 for Target 500. In time Period of 6-9 Months.