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CIPLA LTD
Analyst Report
Group 3
WHO IS CIPLA & WHAT DO
THEY DO?

WHO
- The Chemical, Industrial & Pharmaceutical Laboratories;
- Founded by Khwaja Abdul Hamied in the year 1935; and
- On August 17, 1935, Cipla was registered as a public limited company.

WHAT
- Today, Cipla is a leading player in anti-infective and anti-asthmatic
formulations;
- Specializes in the manufacturing of steroids and hormones; and
- Cipla has time and again earned the distinction of coming out with
pioneering and life saving drugs.
HOLD

Why we recommend so?
KEY RATIOS
A FEW MORE REASONS
750
4000
Prices
3000
500
2000
250
1000
0
4/ 1/ 2005
0
8/ 1/ 2005
12/ 1/ 2005
Cipla vs. S&P Nifty
(1 Year)
Date
-

-
-
Cipla has followed the market trend for the last 1 year; and
In December 2005, Cipla somewhere breached the market line crossing it to
end at approx Rs. 600.
What’s in it for the investor?
HOLD on to your stock to benefit from its “Capital Appreciation”;
The “Estimations” showcase the company to be a healthy company with
positive and healthy FCFF;
As of 9 December 2006 Cipla stands at Rs. 247. The price is Rs. 292.
PEER COMPARISON

Cipla has outperformed the Industry average consistently!
A CHECK ON FUNDAMENTALS

The company is trading at 33.7x 2006
earnings and 26.9x 2007 earnings.

At the present level of activities we
maintain that the company is a
‘Market Performer’ and recommend
a ‘HOLD’ on the stock..

Strong product pipeline: Filed 658 DMFs and 71 ANDAs. The company
has also secured 170 marketing authorizations in Europe, 4,000 product
registrations globally and 7000 pending approvals; and

Exports: API drives growth: Exports grew by 37%; Accounts for 50% of
total sales; API exports grew by 120%.

EBT would be increasing at the rate of 15% over the next five years; CAPEX
by Rs.2000 crores every year for the next 3 years & then for the next 2 years it
is expected to grow at Rs.1500 crores.

R & D on the rise:
R & D has enabled Cipla to register high realizations and maintain an edge
above competition;

Low-risk business model:
Robust partnership model - has entered into global tie-ups with various
generic players (like Watson, Mylan, Barr and Ivax) for supplying its generic
products. This strategy enables Cipla to leverage local market knowledge of
its partners and utilize its own R&D, product development, and
manufacturing skills;

GDR issue to fund acquisitions:
Recently, Cipla raised Rs7.6bn through a $170mn GDR issue of 11.05mn
shares, priced at Rs 695 per share.
SWOT ANALYSIS
STRENGTHS
Ranks #2 in the retail prescription market in India;
18 brands that feature among the top-300 brands;
Large basket of 1,500 formulations; and
Partnered 8 leading generics companies in the US for nearly 125 projects.
WEAKNESSES
Impact of IPR regime.
OPPORTUNITIES
Biotherapeutics – A new and promising area;
Agreement with Avesthagen; and
Venturing towards areas of cardiology and anti-cancer.
THREATS
Partnership related; and
Potential de-rating.
STRATEGIC TIE-UPS

Subsidiary in Dubai: Cipla has set up a wholly owned subsidiary, Cipla FZE
situated at Jebel Ai Free Zone in Dubai, United Arab Emirates. This is the
part of strategy to explore the growing markets in middle east countries
through exports.

It has a research alliance with a Bangalore-based biotech company
Avesthagen, to develop biotherapeutic products;

Cipla entered agreement with Pentech Pharma of USA for marketing a
range of generic products for American market;

The first phase of the new formulation plant at Baddi, Himachal Pradesh,
for the manufacture of tablets and capsules commenced commercial
production in April 2005; and

Presence in Africa and Europe.
THANK YOU