At Cipla's annual general meeting (AGM), management guided for FY09 revenue growth of 12-15% and PAT growth in line with 1Q (ie 17%), but cautioned on rising costs. The guidance is largely in line with our FY09 forecasts, but strong export API business and the 400bp improvement in EBITDA margin recorded in 1Q, if sustainable, could positively surprise us. However, we highlight that technical knowhow income of Rs370m ytd still has a long way to go to reach the Rs1,534m we expect (our forecast implies a flat FY09) and could have an offsetting negative effect. We maintain our current forecasts. The stock trades at 22.4x for 2009F and appears expensive relative to its peers.
Management’s outlook – no surprises here Cipla’s management has guided for 12-15% FY09 revenue growth, in line with our 15.7% growth estimate. Management has cautioned on rising costs, which might depress operating margins. Our FY09 forecasts already factor in the expected rising costs and therefore our EBITDA margin forecast (excluding technical know-how income) is 18.1%, lower than the 20% reported in 1Q. Management expects 1Q net income growth of 17% to continue, which is marginally lower than our growth expectation of 18.6%.
Management’s outlook – no surprises here Cipla’s management has guided for 12-15% FY09 revenue growth, in line with our 15.7% growth estimate. Management has cautioned on rising costs, which might depress operating margins. Our FY09 forecasts already factor in the expected rising costs and therefore our EBITDA margin forecast (excluding technical know-how income) is 18.1%, lower than the 20% reported in 1Q. Management expects 1Q net income growth of 17% to continue, which is marginally lower than our growth expectation of 18.6%.
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