Cipla (CIPLA) Q4 16/17 earnings summary

Executive summary

• FY17 consolidated revenue rose 6% to ₹14,630 crore; excluding FY16’s ~₹1,000 crore Esomeprazole contribution, FY17 revenue grew 15% and bottom-line growth was significantly higher.

• Core markets grew strongly, while one-time impairments and a tough external environment constrained reported results and the top-line growth target.

Financial highlights

• Consolidated EBITDA was ₹2,476 crore, with a 16.9% margin; base-business profitability improved ~300 bps.

• Consolidated PAT was ₹1,006 crore; net profit was affected by ₹270 crore of one-time impairment and asset-loss provisions, net of tax.

• Gross profit grew ~7%; gross margin excluding one-offs rose ~300 bps on product/geography mix and procurement and manufacturing cost discipline.

• Operating cash flow was ₹2,382 crore versus ₹1,741 crore in FY16; free cash flow from operations was ₹1,260 crore.

Outlook and guidance

• FY18 priorities: sustainable, profitable revenue growth, cost consciousness and margin improvement; higher growth expected in H2, with GST and key US launches affecting the year’s trajectory.

• FY18 R&D investment targeted above 8% of revenue; planned US filing cadence is 20–25 ANDAs, with over 20 also targeted in the CEO outlook.

• Capital investment expected to taper; operational efficiencies are intended to support strong cash flows, alongside continued investment in Specialty.