International Business
Cipla Ltd. maintains long-standing relationships with non-government organizations and institutions globally. Their international business continues to be a major revenue driver for the company. The overseas sales have consistently grown and represent almost 53% of total income.
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Key Financial & Performance Highlights Q2 FY12-13 vis-a-vis Q2 FY11-12:
Domestic business:
International business:
Company generated significant amount of revenue from International market. Following are the key business highlights:
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Mar-12 | Mar-11 | Mar-10 | Mar-09 | |
Key Ratios | ||||
Debt-Equity Ratio | 0.03 | 0.04 | 0.09 | 0.18 |
Long Term Debt-Equity Ratio | 0 | 0 | 0.01 | 0.01 |
Current Ratio | 2.65 | 2.71 | 2.36 | 1.89 |
Turnover Ratios | ||||
Fixed Assets | 1.72 | 1.88 | 1.94 | 2.06 |
Inventory | 3.82 | 3.77 | 3.72 | 3.99 |
ROCE (%) | 19.77 | 17.94 | 24.18 | 19.93 |
RONW (%) | 15.89 | 15.36 | 21.11 | 19.21 |
The company’s debt to equity ratio has improved as compared to last year which is good sign. By looking at the industry average of D/E ratio which is currently at 0.30, the company has a very strong position. The long term debt to equity has been reduced to zero and enough cash to meet the current obligations if any. The figures very well suggest a strong position for the company financially.
Mar-12 | Mar-11 | Mar-10 | Mar-09 | |
Price Earning (P/E) | 22.28 | 27.92 | 25.65 | 22.77 |
Price to Book Value ( P/BV) | 3.24 | 3.9 | 4.58 | 3.93 |
EV/EBIDTA | 14.11 | 18.5 | 17.79 | 16.26 |
If we look at the key valuation ratios we see that the company’s stock has not performed as compared to last year. The investors’ willingness to pay for a stock has declined from ~28 to ~22.3 this year, as company’s P/E has declined. Also the P/BV has declined as compared historically. If we compare company’s EBITDA with the Enterprise Value we see a steep fall to 14.11x, which is definitely a negative sign on the company’s valuation.
Company’s sales figures has also improved as compared to last year’s 6,398.73 Crore helping the company grow over 20% in Operating Profit.
Outlook
The Indian Pharmaceuticals is expected to come up with another healthy quarter driven by robust growth in the US business and continued good growth from domestic business.
The growth momentum would sustain as most of Indian players have fairly well spread product pipeline till 2014. The availability of First-to-File (FTF) opportunities and launch of niche, limited competitive products will help the Indian companies to place them at a better position on the World Pharmaceutical market.