Is it good to invest in Cipla Stock?
Cipla Ltd. is a leading pharmaceutical company with a strong presence in India as well as worldwide. As per the March 2018 report from IQVIA, Cipla is the third largest company in pharma in India. Founded in 1935, Cipla specialises in cardiology, respiratory, anti-retrovirals, urology, and CNS segments. The company has 44 manufacturing sites around the world that produce more than 50 dosage forms and over 1,500 products using. The company supplies its medicines to more than 80 countries. Cipla has a presence in Australia, North America, Europe, South Africa as well as India. The company focuses on R&D to improve the drug-delivery systems, new drug formulations, and API (Active Pharmaceutical Ingredients).
As on 22 October 2018, the market capitalisation of the company stood at Rs.50,789 crore. The equity shares of Cipla are available for trading in the National Stock Exchange of India (NSE) and the Bombay Stock Exchange of India (BSE)
When you invest in a stock, you actually invest in the company. Therefore, it is important that you understand the company fundamentals like its revenue, profit and other financial aspects. Let’s take a look at the company’s performance and see if it is worth investing in its stock.
Cipla Company Financial Performance
In the Q1 of FY 2018-19, ended on 30 June 2018, Cipla recorded a 12% YoY increase in income from operations that stood at Rs.3,938.9 crore. The company attributed the growth to the improvement in company’s businesses in India, South Africa, and Sub-Saharan region. The EBITDA (Earnings before interest, taxes, depreciation, and amortization) for the quarter was also up 12% and stood at Rs.726 crore. Cipla’s profit after tax (PAT) recorded an increase of 10% and stood at Rs.451 crore. North America business posted 4% growth. The company appointed R. Ananthanarayanan as the global chief operating officer to oversee its businesses in North America, Europe and emerging markets.
In the Q1 Cipla’s India sales jumped 22% to Rs.1,544 core. The growth was attributed to a strong performance in Respiratory, Urology, Cardiology, and CNS sectors. Cipla announced a partnership with Eli Lilly to market and distribute insulin glargine injection (Basaglar) in the country. The company strengthened its oncology portfolio with the launch of Bevacizumab, Trastuzumab, Rituximab in partnership with Roche. In February 2017, Cipla launched a Hepatitis B vaccine in India while in April 2017, Cipla USA Inc. signed a worldwide licensing agreement (except for East Asia) with MEDRx Company Limited (MEDRx) to develop and commercialize MRX-4TZT, a Tizanidine 1 patch for the management of Spasticity.
For the full FY 2017-18, the company recorded a 6% YoY increase in the revenue that stood at Rs.15,219 crore. The profit after tax for the entire year was up 40% and stood at Rs.1,411 crore. EBITDA margins of the company for the year was up by over 160bps to 18.6%. Cipla’s total debt for FY 2018 was Rs.4.098 crore as against Rs.4,113 crore for FY 2017. The company’s cash and cash equivalent stood at Rs.2,068 crore as compared to Rs.1,432 crore.
Cipla Stock Trends 2018
The opening price of the Cipla stock at the beginning of January 2018 was Rs.608 on NSE. The scrip declined by few points till March and was pretty stable. It picked up a little pace in April and was back in the Rs.600 range till the month of June. The price of the stock increased in July by around 45 points and ended the month at Rs.636. In the month of August, the scrip increased further and reached Rs.665 by September. The Cipla stock reached its 52-week high at Rs.678 on 9 September 2018. In October the scrip fell by a few points. As on 22 October, the stock price of Cipla stood at Rs.635. Since January 2018, the Cipla stock price has not recorded an exponential increase. However, it must be noted that the share price has also not witnessed any unusual fluctuations and increased steadily.
Is it good to invest in Cipla Stock?
Cipla has been a pioneer in the pharma business for the past 80 years. The company has been expanding its business across the globe and is focusing on launching affordable medicines and vaccinations in India. The company’s price to equity ratio (P/E) ratio stood at 31.89 while the company’s Free Cash Flow for the last 5 years has recorded a significant increase. However, the company’s growth rate of both EPS (Earnings Per Share) and ROE (Return on Equity) are not in a great position. You can look for other companies to invest on a long-term basis. However, it is important that you conduct a thorough research before investing your money in stocks. You can refer to websites like BankBazaar.com that offers a detailed analysis of Cipla stock.
The contents of this post/blog does not constitute financial or other professional advice nor does it imply in any manner a principal-agent relationship, and is not a professional advice on a specific financial matter.