Cipla expected to post good performance in March quarter

Mumbai-based drug major Cipla is expected to post good performance in the quarter to March aided by a strong show in its exports business.

The company’s revenues are likely to increase 27 per cent to Rs 2425 crore. The company’s export business that earns almost half of its total revenues, is expected to grow at 40 per cent. The growth in its domestic business is expected to range between 12 and 15 per cent.

However, the high growth in revenues is not going to result in a significant expansion in operating margins. High staff cost (16 per cent of revenues) and other expenses (28 per cent of revenues) are likely to limit the operating margin to 22 per cent against the year ago level of 21.5 per cent.

The stock closed 0.5 per cent higher a day prior to the announcement of the results. It remains to be seen whether a good quarterly show triggers a positive movement in the stock, which has dropped 6.5 per cent in the last one month as the Street shifted its focus from defensive sectors to cyclicals.