My View On Cipla Limited

About The Company

The most recognized company for its variety and quality product in pharmaceuticals sector. The stock has been fancied in the pharma sector for long time and share holders has been rewarded from time to time in lieu of Bonus , Dividends and appreciation in the stock price.

Cipla has formed two new partnerships in US and Canada. It has two drug launches on anvil – budesonide inhalers in Germany and Portugal and salbutamol MDI in Denmark and Portugal. Cipla has one of the widest product ranges, with a presence in about 65 therapeutic categories.

Currently, like many other Indian pharma companies, Cipla’s consignment too has been caught. Cipla’s export

consignment to Peru was seized at Amsterdam in early Feb 2009. This has been valued at around US$30,000 and the company blames this on the conspiracy of the Big Pharma, to ensure that Cipla’s generics drug does not reach the markets. One does not know the truth behind the allegations but this is a real problem which Cipla and many others are currently facing abroad.

About The Results

The company has posted results for the third quarter ended 31^st Dec 2008, the reduction in operating costs, helped the company post a better performance. During the quarter domestic sales was up 11% and exports were up 37% and this was on account of a 59% rise in sale of formulations. There was not much growth in the API segment due to lower sales of some bulk drugs. During the quarter, Rs 78 crore has come in as income from technology know-how fees.

The reduction in costs was also on account of the depreciating rupee which improved on account of the improved exports. Exports are booked at prevailing rates and hence the company stood to benefit. It has provided MTM of Rs.42 crore due to net loss on revaluation of forward contracts. Tax for the quarter, as a percentage of profit before tax was lower due to tax incentives availed for EOUs, Baddi and Sikkim.

OPM for Q3FY09 was at 23.42% compared to 16.82% in QoQ and 25.94% on a YoY. NPM was up at 16.65% compared to 11.18% on a QoQ and it came down from 19.07% on a YoY.

About The Stock

The stock is not expected to do well as we need to see more consolidation in the entire market. But if any special opportunity is availed , it would not be a bad idea as the long term story remain intact due to proper and standard business model.

Disclaimer : I do not have any personal holding in this stock.