Buy Cipla; target of Rs 1800: ICICI Securities

ICICI Securities's research report on Cipla

Cipla reported an in-line Q1FY26 result led by growth across the US and South Africa. Despite price erosion in gRevlimid, it posted a 156bps YoY (+133bps QoQ) surge in gross margin to 68.8%. US sales at USD 226mn were better than anticipated led by higher volumes for gRevlimid and launch of Abraxane and Nilotinib in Q1. India biz growth was slow at 6% YoY due to overall slowdown in acute (~58% of Cipla India biz) market. As gRevlimid sales start tapering in the next few months, key respiratory assets like gAbraxane, gAdvair (H2FY26 launch), peptides (FY26) and gSymbicort (FY27) could offset the impact and help Cipla’s US sales touch the USD 1bn mark in FY27. Management maintains EBITDA margin guidance of 23.5-24.5% for FY26. Retain BUY with an unchanged TP of INR 1,800 based on 26x FY27E EPS.

Outlook

We maintain BUY with an unchanged target price of INR 1,800, valuing the company at 26x (unchanged) FY27E EPS. Key risks: Incremental competition in niche products, delay in regulatory clearance of Pithampur plant.