4Q miss on decrease India gross sales and sure one-off prices: 4Q income of Rs 46.1 bn declined 10.9% qoq (+5.3% yoy) on decrease gross sales in the important thing markets of India, the US and Ro. India gross sales at Rs 18.1 bn declined 19% qoq in 4Q, which is among the seasonally weakest quarters. EBITDA margins at 17.3% declined 653 bps qoq on low gross margins and better different working prices. PAT at Rs 4.1 bn declined 44.7% qoq (+68.1% yoy on a low base).
US on a gradual development path; sizeable launches lined up in FY23: Cipla continues to see robust traction for its gProventil (albuterol inhaler) launch within the US the place it has garnered 13.2% quantity share. 4Q US gross sales at $138 m declined 2% qoq on lack of significant launches. In our view, its US gross sales stays on a gradual development path with enhancing margins on: a) continued scale-up in respiratory gross sales (~24% of US gross sales in FY21); b) seen key launches in FY22/23 (e.g. lanthanum carbonate and sumatriptan nasal spray in FY22; gRevlimid, gAbraxane and doubtlessly gAdvair in FY23); and c) enhancing attain in institutional channels.
Keep ‘purchase’ on robust enterprise outlook: Regardless of the 4Q miss, we preserve our optimistic view on Cipla for its robust outlook in focus segments like India and the US. ‘One India’ initiative led portfolio synergies ought to maintain outperformance of its India gross sales versus the market. The outlook stays regular for different key markets just like the US and South Africa. Cipla is seeing rising demand for COVID-19 associated merchandise (e.g. remdesivir) and the impression ought to be mirrored in 1QFY22.
Increase TP to Rs 1,065 (from Rs 1,055): We add NPV per share of Rs 25 for the inhalers pipeline and Rs 20 for gRevlimid (decrease than earlier worth of Rs 25 on increased competitors) to the bottom enterprise worth to reach at our truthful worth goal value of Rs 1,065 (from Rs 1,055). We take away NPV of Rs 7/share for IV tramadol in view of uncertainty round its approval within the US.