Cipla's shares experienced a notable drop of 3.55% on the Bombay Stock Exchange (BSE), trading at ₹1,450 per share during Tuesday's intraday session. This decline comes just ahead of the pharma giant's highly anticipated second-quarter earnings report for the financial year 2024-25 (Q2FY25), set to be released on October 29, 2024.
As investors navigate the share market investment landscape, the forthcoming results are critical to understanding Cipla's performance trajectory.
Analysts' expectations
Analysts are predicting modest growth for Cipla, with expectations of a low single-digit increase in both top-line and bottom-line figures. The anticipated average net profit stands at ₹1,174 crore, reflecting a year-on-year (Y-o-Y) rise of 1.55% from ₹1,156 crore in Q2FY24. However, quarter-on-quarter comparisons indicate that profits may remain flat or even decrease by 0.17% from ₹1,176 crore reported in the preceding June quarter.
The company's revenue projections appear slightly more optimistic, with an expected 4.1% Y-o-Y increase to ₹6,957 crore, compared to ₹6,678 crore in the same quarter last year. Sequentially, this represents a growth of 3.92% from the ₹6,694 crore registered in Q1FY25. Despite these figures, the share market investment outlook remains cautious, considering the potential impacts of modest sales in both the US and domestic formulations.
Domestic and US sales outlook
Cipla is anticipated to see a 10% Y-o-Y growth in domestic sales for Q2FY25, buoyed by an 8% increase in its organic business alongside contributions from Sanofi's central nervous system (CNS) portfolio. However, analysts caution that the transition in the trade generics model may have a negative effect over the coming months.
In the US market, Cipla's sales are projected at $239 million, down 4% from the previous quarter. This decline is attributed to challenges in maintaining a stable market share in Albuterol despite an expected stable contribution from Brovana. Analysts note that while Cipla is gradually increasing its market share in Lanreotide injections, stable sales of $238 million in the US market hinge on performance across key products like Albuterol, Lanreotide, Revlimid, and Brovana.
Key takeaways
Navigating the share market investment in Cipla amid these fluctuating indicators will require keen attention to the results released today, which will significantly influence investor sentiment and market positioning.
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