KR Choksey is bullish on Cipla has recommended buy rating on the stock with a target price of Rs 714 in its research report dated February 08, 2018.
KR Choksey's research report on Cipla
Cipla reported net sales of INR 39,138 Mn which was up by 8.01% y-o-y and down 3.85% q-o-q. The decline in revenues was due to muted sales from the domestic business. The company has registered healthy growth of 13% Q-o-Q in European market. The US business has performed well in the quarter due to strong uptake in gPulmicort and gDacogen with sales at INR 65 bn registering growth of 5.18 % Q-o-Q.
We believe in Cipla’s growth story led by its unique offerings of specialty drugs and inhalers. We expect Cipla to deliver robust growth on the back of its exclusive products and complex generics which are limited competition products. Along with the US, the domestic business and RoW will also grow strongly. Going ahead, we believe the topline to deliver a Y-o-Y growth of 6.68% with sales at INR 156,079 mn in FY18 and EBITDA at INR 30,282 with margins at 19.4%. At CMP of INR 600 the stock is trading at PE of 30.9x at FY19 with EPS of INR 19.4 We recommend “BUY” rating on the stock and value the stock at 30x FY20E EPS of INR 23.8 with a target price of INR 714 indicating 19.1% upside from CMP.
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