Angel Broking is bullish on Cipla and has recommended buy rating on the stock with a target price of Rs 369 in its November 16, 2011 research report.
"Cipla's numbers (for 2QFY2012) came well above our expectations on the top-line and bottom-line fronts, mainly on the back of better-than-expected performance on the gross operating profit front. Improvement in the operating front came on the back of strong growth in the domestic formulation business. For 2QFY2012, Cipla reported net sales of Rs 1,731cr, posting 9.6% yoy growth and above our estimate of Rs 1,649cr. Gross margin expanded by 628bp yoy to 58.9%. This was mainly on account of better product mix, which had lower proportion of anti-retroviral in formulation exports and domestic formulation sales. However, despite such gross margin expansion, OPM was flat at 22.6%, led by increased manpower cost and negative contribution of Indore SEZ, as it is in the optimization phase. Furthermore, net profit came in at Rs 308cr, posting 17.2% yoy growth, higher than our estimate due to operating profit growth."
"We expect the company's net sales to post a 15.5% CAGR to Rs 8,164cr and EPS to record a 23.8% CAGR to Rs 18.4 over FY2011-13E. The stock is trading at 20.8x and 16.8x FY2012E and FY2013E earnings, respectively. We recommend Buy on the stock with a revised target price of Rs 369," says Angel Broking research report.
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