Cipla shares jump 9% after Q1 result beats estimates

Shares of Cipla rallied up to 9% on Thursday morning after the pharma major reported better than expected earnings in the June quarter of FY24 amid stellar performance across all markets, especially India, the U.S., and South Africa. The share price of the country’s third-largest drug maker has been rising for the last three sessions and climbed nearly 11% during the same period.

Extending its gaining streak, Cipla shares opened 4% higher at ₹1,112 against the previous closing price of ₹1,068.70 on the BSE. In the first hour of trade so far, the pharma stock surged as much as 8.8% to ₹1,163, driven by strong volume trade. As many as 2.34 lakh shares changed hands over the counter compared to the two-week average volume of 0.35 lakh stocks, while the market capitalisation rose to ₹93,256 crore.

The share price of Cipla has risen 36% in the last four months after hitting a 52-week low of ₹852 on March 22, 2023. The counter touched a 52-week high of ₹1,185.20 on November 11, 2022. The pharma heavyweight has given 19% returns in one year; 11% in six months; 15% in a month; and 9.5% in a week.

On Wednesday, Cipla released its June quarter earnings that topped analysts’ estimate on the back of strong U.S. sales performance. In the earnings call, the management raised its EBITDA margin target for the current fiscal to 23% from 22% estimates in the previous earnings call. 

For April-June quarter of FY24, Cipla reported net profit of ₹996 crore that grew 45.1% year-on-year (YoY) as compared to ₹686 crore in the same period last year.

The total income from operations climbed 17.7% to ₹6,329 crore as against 5,375 crore in Q1FY23. The EBITDA stood at ₹1,494 crore in Q1FY24, up 30.7% from 1,143 crore in the corresponding period last year. The EBITDA margin improved by 2.3 percentage points to 23.6% from 21.3% in the year ago period.

During the quarter under review, the company invested ₹349 crore, or 5.5 % of sales, in R&D, higher by 27% YoY driven by continued progress of clinical trials on key pipeline assets and other developmental efforts.

“We are excited to continue working towards establishing a strong foundation for growth in upcoming quarters, where we look forward to continuing the leadership in Chronic Therapies in Branded Prescription business in India, further expanding our differentiated pipeline in the US and targeting to be the biggest prescription business in South Africa,” says Umang Vohra, MD and Global CEO, Cipla.

Region wise, India business grew 11.6% to ₹2,772 crore from ₹2,483 crore in the same period last fiscal. This was attributed to robust growth across branded prescription, trade generics and consumer health over the last year.

The U.S. business reported highest ever revenue of $222 million and 43% YoY growth driven by robust momentum in differentiated portfolios. “Robust momentum continues in differentiated portfolio leading to unprecedented growth in the U.S. market,” the company says.

Meanwhile, South Africa private market business grew at 13% YoY in local currency terms, backed by double-digit growth in prescription and OTC businesses.

International markets, including emerging markets and Europe, reported revenue growth by 9% (Ex-Covid) in rupee terms, while our Europe business has achieved a YoY growth of around 30% in rupee terms in a challenging macroeconomic environment, the company says in the release.

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