Buy Cipla; target of Rs 1,600: Sharekhan

Sharekhan is bullish on Cipla has recommended buy rating on the stock with a target price of Rs 1,600 in its research report dated May 10, 2024.

Broker Research

May 16, 2024 / 11:49 IST

Buy

26 Aug, 2025 12:21

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Sharekhan's research report on Cipla

For Q4FY2024, Cipla reported a mixed set of numbers. The company’s revenue increased by 7.3% y-o-y (-6.5% q-o-q) to Rs. 6,082 crore. Revenue growth can be attributed to 1) market-leading growth in their core markets, 2) focus on growing larger brands and 3) Industry-beating growth in South Africa. Geographically, India (39% of sales) grew by 7% y-o-y to Rs. 2417 crore led by the shift in the mix to the chronic segment which contributed 60% of sales growing by 10% y-o-y and strong growth in the One India portfolio. North America (30% of sales) grew by 12% y-o-y to Rs 1875 crore driven by gRevlimid and increased market share in key products like Albeutrol and Lanreotide and 8.5% y-o-y growth in the South Africa market (12% of sales) to Rs 760 crore driven by ,strong traction in OTC and prescription market.

Outlook

Cipla has posted mixed set of earnings in seasonally weaker quarterly driven, however witnessed healthy FY24 earnings driven by 1) Meaningful Revlimid contribution, increase in market share in the key products like Albuterol and Lanreotide followed by easing of price erosion to 4-6% resulting into sustaining quarterly sales run rate of $220 million, 2) Higher chronic-based growth in the domestic region and 3) OTC led growth in the South Africa region. The stock is trading at an attractive P/E valuation of 22x/20x its FY2025E/FY2026E EPS of Rs. 62.1 and Rs. 68.2 per share. Respectively, hence we maintain a Buy rating with similar price target (PT) of Rs. 1600 ascribing a PE of 24x on FY26E.

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