Mumbai: India’s largest drug maker by sales, Cipla Ltd, said that net profit rose almost 30% in the quarter ended 31 December as it benefited from reduced material costs and distribution expenses and higher domestic sales.
Cipla’s net profit rose to Rs289.03 crore in the three months, up from Rs223.44 crore in the year-ago period. Sales rose more slowly at 6% to Rs1,357.87 crore, from Rs1,280.41 crore a year earlier. Analysts had expected the company to post strong earnings in the quarter on a robust operating performance, higher technology licensing income and a lower foreign exchange loss.
A Cipla note, along with its earnings statement, said the foreign exchange loss was lower at Rs24 crore from Rs43 crore a year ago. It also reduced interest costs by repaying short-term working capital loans. Technology and know-how licensing fee rose 24.2% to Rs94.34 crore.
Cipla raised about Rs670 crore in September through an issue of preferential shares to institutional investors to repay some of its loans, and also to fund capacity expansion.
To be more cost effective, the company also reduced its exports of medicines used to treat the HIV virus that causes AIDS. Although the move crimped export revenue, it resulted in improving the company’s margins, it said in a statement.
Cipla shares rose 1.8% to close at Rs318.95 on the Bombay Stock Exchange on Thursday. The results were declared after the close of trading.
Cipla’s joint managing director Amar Lulla said in an analysts’ call on Thursday that the company was lowering its revenue growth guidance from a range of 10-12% to 8-10%, adopting a conservative approach to the current quarter and the next fiscal that starts on 1 April.
The cut was caused partly because of the impact on sales caused by a reduction in the export of antiretrovival drugs, used mainly for the treatment of HIV, that contribute about 25% of Cipla’s sales.
The drug maker plans to add new markets for inhalers and anti-asthma products in this fiscal and the next. It will also increase production capacity with an investment of about Rs600 crore in the next two years, Lulla said.