Cipla Q1FY26 preview: Margin pressure likely despite double-digit India growth

Analyst estimates for Cipla’s Q1FY26 suggest a modest improvement over the previous quarter, with revenue expected to grow 5 to 6 percent sequentially from Rs 6,725 crore in Q4FY25 to an average of Rs 7,145 crore this quarter.

Net profit, however, is likely to remain flat to marginally lower, with the average estimate at Rs 1,208 crore compared to Rs 1,210 crore in the March quarter.

While EBITDA margins are seen expanding sequentially — from 22.8 percent in Q4FY25 to around 25 percent in Q1FY26 — analysts expect pressure from the US business and a strong year-ago base to cap overall profitability gains.

Growth drivers

According to BNP Paribas, Cipla’s India business is expected to post double-digit growth, aided by favourable seasonality and sustained strength in respiratory and chronic therapies. Prescription tracker data indicates steady gains in key segments, while analysts at Emkay expect branded prescription sales to grow around 8% on a low base.

However, the US market — which typically accounts for over 20% of Cipla’s top line — is expected to remain flat sequentially at $220 to 230 million, as higher contributions from Lanreotide and gRevlimid may be offset by price erosion in Albuterol and other inhalers.

“Cipla may face challenges in maintaining stable market share in Albuterol and Advair,” noted Axis Securities. They expect around $35 million in gRevlimid sales to contribute to Q1, alongside gradual gains in Lanreotide.

Despite topline growth, EBITDA margins are likely to contract by 90–130 basis points year-on-year, as per estimates from BNPP, Axis, and Emkay. This is due to lower gross margin contributions from the US business and some normalisation after a strong margin base last year.

Geographical distribution 

India 
Cipla’s India business is expected to grow 10.5% YoY, backed by seasonality, favourable demand in chronic segments, and strong price realisation. BNPP and DRChoksey both highlight that cardiac and respiratory therapies outperformed in Q1, with overall IPM growth estimated at 7.2–8.6% YoY.

US 
BNPP expects US sales at $230 million, while Axis and Emkay peg it closer to $220 to 221 million, citing weak volumes in Albuterol and flattish demand in respiratory drugs. Lanreotide’s gradual ramp-up and a $35 million boost from gRevlimid may partly cushion the impact.

South Africa & Emerging Markets
Axis and Emkay highlight strong 15 percent YoY growth in Cipla’s South Africa operations, along with stable performance in emerging markets like the Philippines and Brazil. Analysts see these regions contributing positively to the revenue mix in Q1.

Margin Compression
BNPP expects Cipla’s Q1FY26 EBITDA margin to decline by ~100bps YoY to 24.6 percent, though sequentially it should improve from Q4’s 22.8 percent. Emkay and Axis estimate margins at 24.3 to 24.7 percent, citing pressure from weak US pricing, lower Albuterol volumes, and the normalising benefit base from FY25.

Factors to watch for 

1. Cipla’s US respiratory portfolio trajectory, particularly Albuterol and Advair

2. Sustainability of gRevlimid and Lanreotide market share

3. Commentary on domestic growth outlook in IPM given the fading base benefit from FY25

4. The margin outlook, guidance for US new launches, and visibility on South Africa growth will be important triggers.

As Nirmal Bang noted, investors should also track input cost commentary and guidance on niche product ramp-ups in the complex generics pipeline.

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