Cipla Q4 Preview: Profit may rise up to 71% YoY on healthy operations

In the recent third quarter, reported a 32% year-on-year jump in its consolidated at Rs 1,056 crore.

Most analysts expect Cipla to report 10% year-on-year growth in domestic sales in 4QFY24. Margins for the reporting quarter may decline sequentially due to lower gRevlimid sales and higher marketing spend.

Here's what to expect from Cipla's



The brokerage says, "We build US sales of $230 million, flat quarter-on-quarter. We bake in gRevlimid sales of $28 million (a tad higher than $25 million in 3QFY24), along with marginal boost in volumes of Albuterol and Lanreotide.
We expect SA sales to grow 3% year-on-year in 4QFY24, while in Africa and global access, we factor in a 10% quarter-on-quarter decline, due to divestment of Cipla's Ugandan subsidiary, QCIL, effective November 14, 2023. In addition, we bake in 5% year-on-year growth in EU/ROW sales. Overall, we expect Cipla's 4QFY24 sales to grow 10% year-on-year (-5% quarter-on-quarter)."

It further adds, "We expect gross to decline 270 bps quarter-on-quarter to 63.7% and bake in sequentially higher R&D expenses at 6.4% of sales. We expect overall EBITDA to grow 17% year-on-year to Rs 1370 crore, with 470 bps quarter-on-quarter EBITDA margin decline to 21.8% in 4QFY24 on account of seasonal weakness."



Q4 is usually a softer quarter for Cipla owing to weak seasonality in India and US. However, on a year-on-year basis we expect India to post +12% growth with organic growth expected at 9.5% and the rest from the Galvus deal. US to moderate quarter-on-quarter to $223million (-3% quarter-on-quarter) but grow 10% year-on-year largely aided by gRevlimid.

SAGA to grow 5% year-on-year as decline due to QCIL divestment to partly offset by Actor integration. As a result of softer India and US, expect EBITDA margin to be at 21%, resulting in 24% FY24 margin as per guidance



The US sales clock 12% year-on-year growth to $228 million for 4QFY24 led by market share gains of existing products. Expect DF sales to grow 7% year-on-year, driven by improved uptake in respiratory, cardiac, and urology segments as well as gains in the market share.

Watch out for an update on the USFDA remediation measures at Goa and Pithampur facilities. Progress on g-Advair/g-Abraxane and other assets like peptides is a key monitorable.



Sales growth expected due to pick up in the domestic branded market, One plus segment and easing of price erosion in the US market. Margins to decline sequentially due to lower gRevlimid sales and higher marketing spend.

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