Cipla disappoints with negative growth in profits

Pharma giant Cipla has posted its Q4FY16 on May 24, after market hours. Company has shown marginally positive growth in its revenues but has failed to post a growth in net profits in the wake of higher direct costs; majorly, inventory charges and higher interest payment QoQ brought about a decline in the profits.

Cipla is looking forward to exiting some emerging markets due to complexities. Moreover, it is also planning to change its European business from B-to-C (Business-to-consumer) to B-to-B (Business-to-business).

Company’s consolidated revenues for Q4FY16 have come in at Rs 3206.66 crore as against Rs 3027.26 in the previous quarter, recording an increase of 5.9 per cent. EBITDA has decreased by 51.7 per cent from Rs 453.71 crore to Rs 218.96 crore owing to increased direct costs. Net profits have come in at Rs 80.87 crore as compared to Rs 343.2 crore, a decrease of 76.4 per cent.

Year on year revenues for the company have grown at 7.6 per cent from Rs 2980.69 crore. EBITDA has declined by 56.9 per cent from Rs 507.65 crore. YoY net profits for the same quarter last year stood at Rs 259.66 crore.

Yearly results are quite positive where Cipla’s revenues for the year ended March 2016 have posted a rise of 121.2 per cent to Rs 11735.18 as against Rs 9683.29 crore for the year ended March 2015. EBITDA has risen 4.7 per cent to Rs 2053.73 crore from Rs 1961.31. Net profits have risen 18.4 per cent to Rs 1398.03 crore.

Cipla's business units include Active Pharmaceutical Ingredients (APIs), Respiratory and Cipla Global Access. The Company offers APIs, formulations and veterinary products. The Company deals in over 1,000 products across approximately 120 countries.

Today Cipla's stock opened on a negative note and is the top loser in Nifty50. The stock is down by 6.5 per cent at Rs 462.