Cipla Q3FY22 Preview: Pharma major likely to report muted earnings, profit may slip up to 12% YoY

The pharmaceutical major Cipla is likely to report muted third quarter earnings for the financial year 2021-22, most of the brokerage houses and analysts predict in their results preview. According to estimates, both top and bottom line along with margins may come marginal/negative growth in Q3.  

According to a domestic brokerage house ShareKhan, net revenues of the company may slightly grow around 2 per cent to Rs 5261.8 crore from Rs 5168.7 crore year-on-year, while its profit may dip by 8.4 per cent to Rs 685.2 crore in Q3FY22 as against Rs 748.2 crore in a year-ago quarter.  

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Amid muted sales and profit, the company’s margins are expected witness pressure by over 200 basis points to 21.8 per cent from 23.8 per cent YoY, the brokerage house said in a preview report. 

On the similar note, the company’s profit for Q3FY22 may decline by over 12 per cent to Rs 656 crore as compared to Rs 748 crore in a year ago quarter, and net revenues to show marginal growth by over 2 per cent to Rs 5282 crore versus Rs 5168 crore in Q3FY21, Motilal Oswal said in its preview. 

Motilal Oswal in its Q3 earnings report sees pressure on margins, as it is estimated to reduce by 270 basis points to 21.1 per cent from 23.8 per cent YoY. 

The company’s US sales to grow 3 per cent YoY to $144 million, Motilal Oswal said expecting DF sales to decline 4 per cent YoY with lower demand for COVID drugs. It added that the outlook on limited competition pipeline in the US. 

The growth of pharmaceutical companies is expected to moderate in Q3FY22 after a series of quarters in the past with a double-digit growth, ShareKhan said in its preview commentary, adding further that the growth is expected to be slowed down by heightened competitive pressures. 

Further, high operating margins’ base in Q3FY21, increased raw material costs, high logistics costs could pressurize margins of pharma companies in Q3FY22, may decline by 1.3 per cent YoY, the brokerage house further added.  

Despite mute results expectations, ShareKhan sees an upside of over 25 per cent to Rs 1150 per share as target, while Motilal Oswal maintains Neutral rating with a marginal growth.