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Company Stocks: Cipla Shares Dip 1% Ahead of Q3 FY25 Results

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Shares of Cipla, India’s leading pharmaceutical company, were under pressure on Tuesday, January 28, falling by 1% to ₹1,381.25 on the NSE in the morning trade, just ahead of the company’s December quarter results announcement. Cipla’s performance for the September quarter FY25 had shown a strong financial trajectory, but analysts are now awaiting the company’s latest earnings update.

For the second quarter, Cipla reported a 17% increase in consolidated net profit to ₹1,303 crore, compared to ₹1,115 crore in Q2 FY24, driven by robust sales across its global markets. Its total income from operations grew to ₹7,051 crore, up from ₹6,490 crore in the same quarter last year. The company’s EBITDA margin reached an all-time high of 26.7% in Q2, attributed to a favorable product mix and operational efficiencies. Despite this, Cipla’s ‘One-India’ business experienced a slowdown due to a shift in seasonal patterns. However, the company’s chronic therapy products continued to grow faster than the market, signaling a resilient core business.

In terms of regional performance, Cipla’s consumer health business grew by 21% YoY, and its US business posted a solid revenue of $237 million. In South Africa, the company saw an impressive 22% YoY growth in local currency terms, primarily driven by the private market. Additionally, Cipla’s Emerging Markets and Europe delivered robust growth of 18%, backed by a deep market focus strategy. Moving forward, Cipla’s focus will be on expanding in key markets, building flagship brands, investing in future pipelines, and addressing regulatory concerns.

Key Developments from Cipla

  1. Mobile App Launch: In early January 2025, Cipla launched a mobile app, CipAir, designed to help in the screening of asthma in India. This app aims to use next-gen technologies to improve asthma diagnostics and management, a significant step given the high burden of asthma in India. According to the Global Burden of Disease report, India has a much higher asthma-related mortality and disability rate compared to the global average. The app will first be available on Android, with plans to launch on iOS later.
  2. Afrezza Inhalation Powder Approval: In December 2024, Cipla received approval from the Central Drugs Standard Control Organisation (CDSCO) to market and distribute Afrezza inhalation powder in India. Afrezza, a rapid-acting insulin inhaler, is designed for adult patients with diabetes mellitus and presents an alternative to traditional insulin injections.
  3. Promoter Stake Sale: Cipla also made headlines in December 2024 when Samina Hamied and Rumana Hamied, members of the promoter family, sold their 1.72% stake in the company for ₹2,111 crore. This sale reduced the combined promoter group’s stake in Cipla to 29.2% from 30.92%. New investors such as the Singapore government, Societe Generale, and BNP Paribas bought into the company, signaling continued investor interest.
  4. GST Fine: In another setback, Cipla was fined ₹1.11 crore by the GST authority in December 2024 over an alleged inadmissible credit claim. The company is facing a penalty under the Central Goods and Services Tax Act, 2017 for availing ineligible TRAN-1 credit, with recovery orders for the fine, interest, and penalty in place.

Despite these mixed developments, Cipla’s shares have gained nearly 4% over the past 12 months, signaling investor confidence in the company’s long-term growth prospects. However, with its Q3 FY25 results around the corner, market participants will be watching closely for updates on Cipla’s profitability and outlook for the next quarter.

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