What to expect from Cipla Q1 numbers due on Friday

NEW DELHI: Cipla Ltd is slated to come out with earnings for the quarter ended June 30.

The pharma major is expected to report 15 per cent YoY drop in its net profit number for the first quarter of the financial year 2014 to Rs 340 crore weighed down by higher input costs and weak domestic growth, according to an ET Now Poll.

Cipla reported a net profit of Rs 401 crore in the same period of the last year.

Shares of Cipla rallied over 5 per cent ahead of its results on Thursday. The stock closed 5.09 per cent higher at Rs 410.70 on the Bombay Stock Exchange.

Although, Cipla has remained flat so far in the year 2013, analysts feel that the stock has the potential to move higher in the coming quarters.

"Cipla is a leading player in the domestic market. The pharma major has the potential of a strong growth in generic export marketwith exposure to emerging markets," ICICI Securities said in a report.

"Improving product pipelines like inhalers should lead to improvement in margins," the report added.

Total revenues for the pharma major are likely to grow by 9 per cent YoY to Rs 2,130 crore for the quarter ended June 30, from Rs 1,958 crore reported in the year ago period supported by weak rupee.

According to ET NOW, domestic growth is likely to pick-up by 5-7 per cent as compared to last year. The export growth too should grow by 15-17 per cent over last year.

EBITDA is seen at Rs 490 crore, or 8 per cent YoY drop in the first quarter of financial year 2014, compared to Rs 540 crore reported in the year ago period. EBITDA margins are likely to contract to 23.1 per cent from Rs 27.60 per cent in the year ago period.

Factors to watch

1. Lack of Lexapro supplies to Teva will impact exports, margins

2. Inventory de-stocking will impact domestic growth trajectory

3 .Domestic growth likely to be weak on new pricing policy

4. Margins to be impacted due to higher R&D spends

5. Higher overheads and manpower costs to dent margins