Neutral Cipla; target of Rs 1530: Motilal Oswal

Motilal Oswal's research report on Cipla

CIPLA delivered better-than-expected 3QFY25 earnings. While revenue was in line, EBITDA/adj. PAT beat our estimates, aided by a better product mix and lower R&D spending. Among the segments, CIPLA continued to improve chronic share in prescription (Rx) business and scale up trade generics (Gx) business. US sales were flat YoY/QoQ due to certain product-specific issues. We raise our FY25 EPS estimate by 14% to factor in healthy traction in the domestic formulation (DF) business and controlled opex. We largely maintain our estimates for FY26/FY27. We value CIPLA at 23x 12M forward earnings to arrive at a TP of INR1,530. We expect CIPLA to deliver 18% YoY earnings growth in FY25 after posting strong 39% YoY growth in FY24. However, considering the delay in niche approvals/launches, we expect earnings growth to moderate to 5% over FY25-27. We maintain Neutral, given limited upside from current levels.

Outlook

We raise our FY25 EPS estimate by 14% to factor in healthy traction in DF business and controlled opex. We largely maintain our estimates for FY26/FY27. We value Cipla at 23x 12M forward earnings to arrive at a TP of INR1,530.