Earnings Outlook
Weak US sales to weigh on Cipla's March quarter results
This story was originally published at 15:20 IST on 6 May 2025
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By Narayana Krishna
HYDERABAD - Weak US sales of Lanreotide injection because of continued supply constraints are likely to weigh on Cipla Ltd.'s March quarter earnings, though the contribution from generic Revlimid and robust domestic sales are expected to partially offset the impact, according to analysts. The company is expected to report a consolidated net profit of INR 10.4 billion for the March quarter, up 10% on year but down 34% sequentially, according to an average of estimates from 15 broking firms.
Analyst estimates for Cipla's March quarter net profit range from a low of INR 8.4 billion by Prabhudas Lilladher Pvt. Ltd. to a high of INR 13.4 billion by Choice Equity Broking Ltd. Cipla's revenue for the quarter gone by is seen up 10% on year but down 4% sequentially at INR 67.7 billion, according to the estimates. Revenue projections range from a low of INR 65.5 billion by Centrum Broking Ltd. to a high of INR 73.1 billion by Choice Equity.
The sequential fall in net profit and revenue is mainly on account of a higher base and seasonal weakness in some product segments in India, according to analysts. "Sequential decline (will occur) owing to lower domestic business led by seasonality, while US business will inch up with Lanreotide seeing partial normalization," Equirus Securities Pvt. Ltd. said in its pre-earnings note. "4Q (Jan-Mar) is usually weak for Cipla and shall show up during this year as well."
India accounts for nearly 43% of Cipla's consolidated revenue, while the contribution from North America is around 30%. South Africa, Asia, and emerging markets, together classified as the SAGA region, account for nearly 12% of total sales, while other markets account for around 15%. Cipla sells its pharmaceutical products in 80 countries. The company is scheduled to announce its Jan-Mar earnings on May 13.
US SHOW
Lanreotide, which has annual sales of around $900 million in the US, is used to treat tumours. Cipla has faced supply challenges because of regulatory issues at its partner sites and lost significant sales since it got approval for the drug from the US Food and Drug Administration in May 2024. During the December quarter earnings call, the company's management said the issues at the partner sites had been more or less resolved, and supplies were picking up gradually.
However, most analysts have said the supplies in the March quarter were low, and affected Cipla's US sales and margins. Their estimates for Cipla's March quarter US sales ranged from $218 million to $235 million. Motilal Oswal Financial Services Ltd., Nomura Equity Research, Nirmal Bang Equities Pvt. Ltd., and Nuvama Wealth Management Ltd. projected 3–5% on-year growth in US sales, while all others saw a fall of 3–5% on year. Analysts' estimates for the contribution of generic Revlimid to US sales for the quarter are in the range of $39 million to $90 million.
DOMESTIC GROWTH
Most analysts project Cipla to report healthy growth numbers for the March quarter in its domestic business led by Sanofi's portfolio and a low base last year. Kotak Institutional Equities expects Cipla to report 9% on-year growth in domestic sales in the current quarter, led by 7% on-year growth in its base business and contribution from Sanofi's central nervous system portfolio.
Nomura said the company's India sales growth on year was likely to have been supported by the distribution deal with Sanofi for its central nervous system products. Sales from this deal are estimated to have added 1.5% to the company's domestic growth for the quarter, Nomura said. Excluding this, domestic sales growth for the quarter would have been about 6.6% on year, the brokerage said. A fall in inhalation products in the respiratory segment may affect overall sales growth in India, Nomura added.
According to Nomura, Cipla's sales in South Africa may see 14% on-year growth, aided by the acquisition of Actor Pharma and a recovery in tender sales, mainly in vaccines. Nuvama Wealth and Kotak Institutional Equities expect the SAGA segment sales for the quarter to grow 20% on year. Kotak expects 9% on-year growth in sales in Europe and the rest of the world.
EBITDA MARGINS
Cipla's March quarter earnings before interest, tax, depreciation, and amortisation are expected to grow 13% on year but decline 25% sequentially to INR 14.9 billion, Kotak Equities said. The sequential fall is due to weak US sales and seasonality, the brokerage said.
Choice Broking has projected Cipla's March quarter EBITDA to surge 55.7% on year and expects its EBITDA margin to expand by 669 basis points to 28%, aided by specialty and respiratory products. Analysts' estimates for Cipla's March quarter EBITDA margin range from 22.7% to 28.0%.
The average of estimates from 15 brokerages for Cipla's current quarter EBITDA is pegged at INR 16.4 billion. Most analysts are keen on the company's commentary on the status of supply and market share in the US for Lanreotide as well as Revlimid. Analysts are also keen on timelines for the launches of some key products such as Abraxane, Advair, and Nilotinib, besides the outlook on India and other markets.
At 1516 IST, shares of Cipla were down over 2% at INR 1,511.00 on the National Stock Exchange. Cipla's stock price has gained 6.7% in the last 30 days but has lost 1.3% in 2025. The stock has risen nearly 6% since the company released its December quarter results Jan. 28.
Following are the Jan-Mar earnings estimates for Cipla Ltd. based on reports from 15 broking firms, in descending order of net profit:
|
Brokerage |
Net Sales |
Net Profit |
EBITDA |
|
|
--in million rupees-- |
||
|
Choice Equity Broking Pvt. Ltd. |
73,072.00 |
13,390.00 |
20,490.00 |
|
Nirmal Bang Equities Pvt. Ltd. |
68,371.00 |
12,086.00 |
17,936.00 |
|
Motilal Oswal Financial Services Ltd. |
69,100.00 |
11,800.00 |
17,600.00 |
|
Equirus Securities Pvt Ltd. |
68,144.00 |
11,326.00 |
17,339.00 |
|
PhillipCapital (India) Pvt. Ltd. |
67,263.00 |
10,759.00 |
15,972.00 |
|
Nuvama Wealth Management Ltd. |
67,697.00 |
10,579.00 |
16,344.00 |
|
Nomura Equity Research |
68,232.00 |
10,486.00 |
15,991.00 |
|
Systematix Shares and Stocks (India) Ltd. |
67,437.00 |
10,382.00 |
16,769.00 |
|
ICICI Securities Ltd. |
65,839.00 |
10,044.00 |
15,143.00 |
|
Kotak Institutional Equities |
65,686.00 |
9,772.00 |
14,920.00 |
|
JM Financial Institutional Securities Pvt. Ltd. |
68,043.00 |
9,669.00 |
15,214.00 |
|
Ashika Stock Broking Ltd. |
67,161.00 |
9,516.00 |
15,685.00 |
|
Centrum Broking Ltd. |
65,507.00 |
8,950.00 |
16,076.00 |
|
Elara Securities (India) Pvt. Ltd. |
67,903.00 |
8,478.00 |
15,496.00 |
|
Prabhudas Lilladher Pvt. Ltd. |
66,435.00 |
8,405.00 |
14,709.00 |
|
Average |
67,726.00 |
10,376.13 |
16,378.93 |
End
US$1 = INR 84.44
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Rajeev Pai
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