Cipla demonstrates fast growth
05-06-2014 • About Cipla (
$CIPLA) • By InTwits
Cipla is a growth stock in Pharmaceuticals industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Cipla showed fast growth in the last financial year. The company's revenue surged on 21.5% in FY2014. Together with revenue growth Cipla also managed to keep EBITDA growth. EBITDA grew -2.95% for the same period.
In the last 3 years Cipla showed fast revenue growth of 17.2% from FY2011 to FY2014 annually. EBITDA surged on 15.9% from FY2011 to FY2014 annually.
Cipla ($CIPLA) financials for the last 5 years
| mln. INR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 145,887 | 61,114 | 68,477 | 80,868 | 98,258 |
|---|
| Revenue growth, % | | -58.1% | 12.0% | 18.1% | 21.5% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 14,160 | 13,692 | 16,589 | 21,979 | 21,331 |
|---|
| EBITDA growth, % | | -3.3% | 21.2% | 32.5% | -2.9% |
|---|
| EBITDA margin, % | 9.71% | 22.4% | 24.2% | 27.2% | 21.7% |
|---|
| Net Income | 10,826 | 9,896 | 11,442 | 15,449 | 13,884 |
|---|
| Net Income margin, % | 7.42% | 16.2% | 16.7% | 19.1% | 14.1% |
|---|
| |
| CAPEX | 5,293 | 7,105 | 5,611 | 7,567 | 5,696 |
|---|
| CAPEX/Revenue, % | 3.63% | 11.6% | 8.19% | 9.36% | 5.80% |
|---|
| Debt | 51 | 5,719 | 292 | 9,671 | 12,479 |
|---|
| Cash | 621 | 828 | 756 | 773 | 1,426 |
|---|
| Net Debt/EBITDA | -0.0x | 0.4x | -0.0x | 0.4x | 0.5x |
|---|
| |
| ROIC, % | 21.0% | 16.0% | 17.3% | 20.3% | 16.0% |
|---|
| ROE, % | 21.1% | 15.7% | 16.0% | 18.5% | 14.6% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. In the last 3 years the company's EBITDA margin decreased slightly on 0.700 pp from 22.4% in FY2011 to 21.7% in FY2014.
We call Cipla an attractive growth stock as together with the growth it delivers high ROIC at 16.0%. During the last three years it showed almost no change - it was 16.0% in FY2011. It's average ROIC for the last three years was 17.9%.
Net Income margin dropped on 5 pp from 19.1% to 14.1% in FY2014. If we look for the longer period Cipla showed big decline in Net Income margin of 2.10 pp from 16.2% in FY2011 to 14.1% in FY2014.
Cipla operates at ROE of 14.6%. For the last three years the average ROE was 16.4%.
Capital expenditures (CAPEX)
To fuel this fast growth Cipla had to invest in CAPEX.The company's CAPEX/Revenue was 5.80% in FY2014. CAPEX/Revenue dropped on 5.83 pp from 11.6% in FY2011 to 5.80% in FY2014. Average CAPEX/Revenue for the last three years was 7.78%.
Leverage (Debt)
Having such a fast growth profile Cipla keeps low debt level at 0.5x Net Debt/EBITDA. In the last 3 years leverage surged on 0.16x from 0.36x in FY2011 to 0.52x in FY2014.
Peers in Pharmaceuticals
Below you can find Cipla benchmarking vs. other companies in Pharmaceuticals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Granules India ($GRANULES) | | -68.4% | 37.6% | 16.9% | 43.4% |
| Marksans Pharma ($MARKSANS) | | -66.6% | 16.7% | 23.3% | 43.3% |
| Sun Pharmaceutical Industries ($SUNPHARMA) | | -87.8% | 39.9% | 40.4% | 42.4% |
| Torrent Pharmaceuticals ($TORNTPHARM) | | -63.5% | 22.7% | 17.7% | 32.2% |
| Abbott India ($ABBOTINDIA) | | -46.4% | 8.2% | 8.7% | 27.3% |
| |
|---|
| Median (29 companies) | | -47.7% | 15.3% | 16.3% | 12.6% |
|---|
| Cipla ($CIPLA) | | -58.1% | 12.0% | 18.1% | 21.5% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 51.7% | | | 52.1% | 57.4% |
| Omega Laboratories ($OMEGALAB) | | | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (2 companies) | 55.5% | | 46.9% | 26.1% | 28.7% |
|---|
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Sun Pharmaceutical Industries ($SUNPHARMA) | 2.9% | 34.3% | 40.8% | 44.3% | 44.9% |
| Divi'S Laboratories ($DIVISLAB) | 11.2% | 38.1% | 37.2% | 38.2% | 40.2% |
| Dr.Reddy'S Laboratories ($DRREDDY) | 3.0% | 21.7% | 25.8% | 22.9% | 25.1% |
| Natco Pharma ($NATCOPHARM) | 10.2% | 21.3% | 21.5% | 23.2% | 24.9% |
| Ipca Laboratories ($IPCALAB) | 8.8% | 20.0% | 22.3% | 22.6% | 24.8% |
| |
|---|
| Median (28 companies) | 7.1% | 16.9% | 13.5% | 13.5% | 15.6% |
|---|
| Cipla ($CIPLA) | 9.7% | 22.4% | 24.2% | 27.2% | 21.7% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Granules India ($GRANULES) | 0.9% | 5.3% | 8.8% | 15.2% | 24.3% |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 16.3% | 24.3% | 8.4% | 10.9% | 21.6% |
| Natco Pharma ($NATCOPHARM) | 3.9% | 20.0% | 24.4% | 16.3% | 14.4% |
| Ipca Laboratories ($IPCALAB) | 3.5% | 10.3% | 11.2% | 8.3% | 11.6% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 2.6% | 12.5% | 6.6% | 9.6% | 9.9% |
| |
|---|
| Median (23 companies) | 2.8% | 6.7% | 6.6% | 6.5% | 5.8% |
|---|
| Cipla ($CIPLA) | 3.6% | 11.6% | 8.2% | 9.4% | 5.8% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | | | 27.5% | 29.1% | 41.5% |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 15.6% | 18.9% | 24.8% | 31.1% | 35.0% |
| Marksans Pharma ($MARKSANS) | 1.5% | -25.8% | -142.4% | 34.9% | 33.8% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 26.5% | 22.3% | 26.4% | 30.5% | 33.2% |
| Divi'S Laboratories ($DIVISLAB) | 24.9% | 25.6% | 30.6% | 30.4% | 32.3% |
| |
|---|
| Median (43 companies) | 14.8% | 14.6% | 12.3% | 15.4% | 15.7% |
|---|
| Cipla ($CIPLA) | 21.0% | 16.0% | 17.3% | 20.3% | 16.0% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Ind-Swift Laboratories ($INDSWFTLAB) | 3.9x | 4.6x | 5.5x | 16.1x | 19.5x |
| Jubilant Life Sciences Limited ($JUBILANT) | 4.0x | 5.3x | 4.0x | 3.5x | 3.5x |
| Kopran ($KOPRAN) | 6.6x | 6.0x | 4.5x | 3.0x | 3.0x |
| Granules India ($GRANULES) | 2.3x | 2.0x | 2.2x | 2.4x | 2.7x |
| Neuland Laboratories ($NEULANDLAB) | 7.9x | 4.9x | 4.2x | 3.5x | 2.6x |
| |
|---|
| Median (38 companies) | 1.6x | 1.5x | 1.4x | 1.2x | 0.3x |
|---|
| Cipla ($CIPLA) | -0.0x | 0.4x | -0.0x | 0.4x | 0.5x |
