Analysts slam Cipla on weak Q3 show; stock downgraded

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26 Aug, 2025 12:21

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Moneycontrol Bureau

Broking firms Morgan Stanley and CLSA downgraded their ratings on Cipla a day after the Indian drugmaker reported a slower-than-expected rise in its October-December net profit.

Morgan Stanley cut its ratings to "equal-weight" from "overweight", citing slower growth prospects on the back of limited niche drug launches, lower margins and a higher tax rate. The bank also cut its price target to Rs 414 from Rs 437.

CLSA cut its ratings on Cipla to "underperform" from "outperform", citing disappointing margins in the October-December quarter and expectations near-term earnings growth will be slower due a higher base. The bank cut its price target to Rs 415 from Rs 475.

However, Nomura retained its "neutral" rating on Cipla post its disappointing third quarter numbers, and expects the stock to trade at a discount to peers.

"We believe Lexapro did contribute to an extent to the earnings (though significantly less than the previous quarter) and could fall materially going ahead. With expansion in the front-end, the company is guiding towards higher overheads and an EBITDA margin of 22%," the Nomura note said.

"Domestic revenue growth slowed on weak anti-infective season. We expect Cipla to trade at a discount to other front-line peers on weaker growth and ROE (return on equity) profile," the note said.

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