Though this QIPO will result in dilution in earnings to the extent of 3-4% we believe the net impact will be positive for the company as it can generate better returns from the incremental capex. The company has plans of capex of around Rs 500-600 cr per annum. Company expects to generate ROA of 1.5-1.8 times thus it can improve its return ratios. Cipla has debt of around Rs 900 cr at the end of FY09 Pre dilution our EPS estimates for Cipla are Rs 12.9 for FY10 & Rs 15.2 for FY11. At the CMP the stock is trading at 17x FY11 EPS.
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