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Cipla is a powerful growth stock

31-05-2016 • About Cipla ($CIPLA) • By InTwits

Pay attention to Cipla as a growth stock. 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. Cipla's revenue surged on 22.9% in FY2016. In addition to revenue Cipla also keeps delivering EBITDA growth. It was 15.7% in FY2016

In the last 3 years the company showed fast revenue growth of 18.3% from FY2013 to FY2016 annually. EBITDA surged on 4.40% from FY2013 to FY2016 annually.

Cipla ($CIPLA) financials for the last 5 years

mln. INR FY2012 FY2013 FY2014 FY2015 FY2016
Revenue68,47780,86898,258108,824133,725
Revenue growth, %18.1%21.5%10.8%22.9%
SG&A, %
EBITDA16,58921,97921,33121,61725,011
EBITDA growth, %32.5%-2.9%1.3%15.7%
EBITDA margin, %24.2%27.2%21.7%19.9%18.7%
Net Income11,44215,44913,88411,80815,059
Net Income margin, % 16.7%19.1%14.1%10.9%11.3%
 
CAPEX5,6117,5675,6966,46210,769
CAPEX/Revenue, %8.19%9.36%5.80%5.94%8.05%
Debt2929,67112,47917,03352,019
Cash7567731,4264,8407,505
Net Debt/EBITDA-0.0x0.4x0.5x0.6x1.8x
 
ROIC, %17.3%20.3%16.0%13.3%12.6%
ROE, %16.0%18.5%14.6%11.3%13.3%

Profitability and return on investment


There was no change in EBITDA margin in FY2016, it stayed constant at 27.1%. In the last 3 years Cipla's EBITDA margin dropped on 8.50 pp from 27.2% in FY2013 to 18.7% in FY2016.

We call Cipla an attractive growth stock as together with the growth it delivers high ROIC at 12.6%. Three years ago it was higher at 20.3%. Average ROIC for the last three years was 14.0%.

Cipla showed small growth in Net Income margin of 0.400 pp from 10.9% to 11.3% in FY2016. In the last 3 years Net Income margin dropped on 7.80 pp from 19.1% in FY2013 to 11.3% in FY2016.

Cipla operates at ROE of 13.3%. Average ROE for the last three years was 13.1%.

Capital expenditures (CAPEX)


To fuel this fast growth the company had to invest in CAPEX.In FY2016 the company had CAPEX/Revenue of 8.05%. Cipla's CAPEX/Revenue dropped on 1.30 pp from 9.36% in FY2013 to 8.05% in FY2016. It's average CAPEX/Revenue for the last three years was 6.60%.

Leverage (Debt)


Having such a fast growth profile the company keeps medium debt level at 1.8x Net Debt/EBITDA. In the longer period leverage surged on 1.37x from 0.40x in FY2013 to 1.78x in FY2016.

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, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Mangalam Drugs & Organics ($MANGALAM)-18.2%-2.1%79.8%33.7%
Sun Pharmaceutical Industries ($SUNPHARMA)39.9%40.4%42.4%70.2%
Lyka Labs ($LYKALABS)41.9%-25.7%-22.6%68.7%
Marksans Pharma ($MARKSANS)16.7%23.3%43.3%26.8%
Torrent Cables ($TORRCABS)27.5%17.4%-42.9%26.5%
 
Median (41 companies)19.8%14.7%12.6%8.6%12.8%
Cipla ($CIPLA)18.1%21.5%10.8%22.9%


Top companies by Gross margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top
Dr.Reddy'S Laboratories ($DRREDDY)52.1%57.4%57.6%59.6%
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%0.0%0.0%
 
Median (2 companies)46.9%26.1%28.7%28.8%29.8%


Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Divi'S Laboratories ($DIVISLAB)37.2%38.2%40.2%37.4%
Hester Biosciences ($HESTERBIO)32.9%
Sun Pharmaceutical Industries ($SUNPHARMA)40.8%44.3%44.9%29.2%
Natco Pharma ($NATCOPHARM)21.5%23.2%24.9%26.2%
Dr.Reddy'S Laboratories ($DRREDDY)25.8%22.9%25.1%23.2%25.8%
 
Median (53 companies)12.7%12.8%14.3%12.0%19.1%
Cipla ($CIPLA)24.2%27.2%21.7%19.9%18.7%


Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Claris Lifesciences ($CLARIS)58.1%42.9%103.1%15.8%
Wintac ($WINTAC)22.8%
Hester Biosciences ($HESTERBIO)21.5%
Ipca Laboratories ($IPCALAB)11.2%8.3%11.6%17.8%
Natco Pharma ($NATCOPHARM)24.4%16.3%14.4%14.1%
 
Median (31 companies)7.7%7.5%5.7%6.2%9.3%
Cipla ($CIPLA)8.2%9.4%5.8%5.9%8.1%


Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Marksans Pharma ($MARKSANS)-142.4%34.9%33.8%41.2%
Alembic Pharmaceuticals ($APLLTD)27.5%29.1%41.5%35.7%62.1%
Jenburkt Pharmaceuticals ($JENBURPH)34.1%29.0%32.4%35.3%
Abbott India ($ABBOTINDIA)29.6%26.9%30.5%34.2%
Divi'S Laboratories ($DIVISLAB)30.6%30.4%32.3%30.5%
 
Median (63 companies)13.7%13.2%14.4%13.0%14.5%
Cipla ($CIPLA)17.3%20.3%16.0%13.3%12.6%


Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Jubilant Life Sciences Limited ($JUBILANT)4.0x3.5x3.5x6.4x3.2x
Shasun Pharmaceuticals ($SHASUNPHAR)2.8x4.5x6.0x6.2x
Claris Lifesciences ($CLARIS)1.9x1.1x1.8x3.2x2.9x
Dishman Pharmaceuticals & Chemicals ($DISHMAN)3.6x2.6x2.3x2.9x2.1x
Neuland Laboratories ($NEULANDLAB)4.2x3.5x2.6x2.6x2.0x
 
Median (48 companies)1.6x1.4x0.3x0.0x0.8x
Cipla ($CIPLA)-0.0x0.4x0.5x0.6x1.8x


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