Drug-maker reported strong numbers due to the depreciating rupee and higher exports.
The September 2008 quarter was the fifth consecutive quarter of good revenue growth for pharma major Cipla, helped to an extent by the depreciating rupee. The company registered a 23 per cent net sales growth at Rs 1,355 crore in the September quarter. And though it is lower than the nearly 34 per cent growth in the June quarter, that’s because the Q1 result was on a low base.
Exports for the company grew at 33 per cent y-o-y to Rs 726 crore with formulations growing at 48.4 per cent. However, the API export business declined by 12 per cent to Rs 124 crore on account of no exclusivity period for any drug, which typically boosts sales.
Analysts believe that Cipla needs to sharply increase the proportion of high value products like inhalers to regulated markets to sustain the 20-25 per cent growth in the formulation export business in the future. At present, Cipla is the second largest inhaler manufacturer globally and its expansion in inhaler production is indicative of the growth potential of this segment. Revenues in the home market too grew by a reasonable 16 per cent y-o-y to Rs 591 crore.
In the September 2008 quarter, the operating profit adjusted for the Rs 104.5 crore forex loss grew by 41 per cent y-o-y to Rs 315 crore. The operating profit margins were also up 290 basis points to 23.3 per cent. The margin improvement is partly due to the weaker rupee.
The rupee depreciated against the dollar by about 8 per cent during the quarter. However, its net profit was depressed at Rs 151 crore, a decline of 21 per cent y-o-y because of forex losses on receivables and loans due to the rupee depreciation. If one adjusts for this loss, net profit should have been up around 35 per cent y-o-y.
The Cipla stock has done well on the bourses as pharma is a defensive sector. Since the start of January the Cipla stock has outperformed the Sensex declining by about 24 per cent compared to a fall of 58 per cent in the Sensex.