A 20.7% growth in the topline for Cipla has led to an identical growth in the bottomline. While the result is quite creditable the fact remains that the operating margins are under pressure having come down by 1.7%.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (m) (eoy)
Diluted no. of shares (m)
Diluted Earnings per share*
The growth in the profits has been maintained by other income which is almost 20% of the pre–tax profits as against 15% in the previous year and by a lower effective tax rate of 25.8% as against 28.7% in the first quarter of last year.
What is critical to sustain Cipla's growth in the future is omeprazole exports to the USA which are dependent on whether Astra Zeneca which holds the patent for 'Prilosec' gets a patent extension due to 'Nexia' its new generation anti–ulcer drug.
Also the fate of exports of its anti–AIDS formulation to South Africa still hangs in the balance as compulsory licensing is unlikely to be introduced since international patent holders such as Glaxo and Boehringer Mannheim are planning to offer discounts on their patented treatments.
The stock quotes at Rs 712 which implies an earning multiple of 27.5 times of the FY2001 annualised earnings.
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