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Higher depreciation hurts bottomline - Views on News from Equitymaster
 
 
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  • Jan 19, 2000

    Higher depreciation hurts bottomline

    Cipla’s third quarter results are satisfactory but not inspiring. The company has reported a net profit of Rs.348 million, a growth of hardly 4%. And this despite a 14.8% increase in the topline.

    (Rs m) 3QFY2000 3QFY1999 Change
    Net Sales 1,871.5 1,630.0 14.8%
    Other Income 72.2 87.0 -17.0%
    Expenditure 1,435.0 1,244.4 15.3%
    Interest 3.0 4.0 -25.0%
    Depreciation 37.5 28.0 33.9%
    Profit before Tax 468.2 440.6 6.3%
    Tax 120.0 110.0 9.1%
    Profit after Tax 348.2 330.6 5.3%
    Net profit margin 18.6% 20.3%  

    This is primarily due to the company’s dependence on antibiotics. Over 40% of the company’s turnover accrues from Antibiotics. Most of these – ciprofloxacin (Ciplox), norfloxacin (Norflox), amoxycillin (Novamox) have seen poor sales growth in the last quarter. The fact that many of its brands are on the DPCO list (almost 55% of its turnover come from products under price control) is a drawback, as price hikes to pass on escalating cards are possible only when approved by the government.

    The company is targeting an annual turnover of Rs 7.25 bn and a bottomline of 1.28 bn (EPS: Rs.21.5) for FY2000. It plans to launch three anti–asthma products in the current quarter including a salmeterol–fluticasone dry powder dry powder inhaler and buticort (budesonide) inhaler free from choloroflurocarbons. Besides, biological studies are on for a novel drug discovery system of the anti–ulcerant omeprazole which is likely to be licensed out to a multinational generics player.

     

     

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