Cipla 1QFY14 results were higher than expectations with net sales growth of 20%+ as both exports formulations (28% YoY) and domestic (17%) performed well. Notwithstanding sharp rise in staff costs (29% QoQ), Ebitda margins recovered 390bps QoQ but down YoY due to high margin product in the base.
Milestone payment from partner Meda boosted other income resulting in substantial beat to our profit estimates. We have raised our estimates by 3-5% due to operational beat as well as inclusion of Medpro acquisition. With valuations at median level, we upgrade to O-PF. Target Rs 470 from Rs 400
