Cipla shares slumped nearly 4 per cent to hit their 52-week low of Rs 518 on Thursday after the drugmaker missed Q3 profit estimates by a wide margin. Cipla was the top Nifty loser in the morning trade.
Cipla – India’s fifth-largest drugmaker – posted a net profit of Rs 343 crore in the December quarter; analysts polled by Reuters had expected the company’s profit at Rs 428 crore. The company said its quarterly profit was hit by a one-off charge related to changes in the way it distributes drugs in its home market.
Q3 sales were down 10 per cent sequentially to Rs 3,100 crore. According to Religare, Cipla could not book sales worth Rs 140 crore in the current quarter due to the change in the distribution policy.
“Cipla reported EBITDA of Rs 450 crore…40 per cent below our estimate, with lowest-ever EBITDA margin in the near past at 14.6 per cent which was below our estimate of 22.2 per cent,” said Nirmal Bang Securities. The brokerage put its rating on Cipla under review.
Analysts, however, say that the loss in sales is temporary and may not hurt the company in the current March quarter.
Cipla, which is less exposed than domestic rivals to the United States, said it will file up to four products for US marketing approval each year as it sharpens its focus in the world’s largest healthcare market. The region makes up 8 per cent of its total sales.
Cipla’s US push comes at a time when rivals face slowing growth in that market, partly due to sanctions and warnings by the US Food and Drug Administration on their India factories due to poor quality control practices.
Religare maintained its “hold” call in Cipla, though it cut the target price on the stock from Rs 755 to Rs 615.
As of 10.20 a.m., Cipla traded 2.16 per cent lower at Rs 527.20 as compared to 0.7 per cent fall in the broader Nifty