Neutral Cipla; target of Rs 900: Motilal Oswal

Motilal Oswal's research report on Cipla

CIPLA delivered an operationally in line performance in 3QFY21. Superior execution in Domestic Formulations (DF), EU segment, and reduced opex led almost to the doubling of earnings YoY. The management is seeing good progress in the building of a pipeline in the Complex Inhaler space. It is gaining market share in the commercialized Inhaler (Albuterol Sulfate). n We have raised our FY21E/FY22E/FY23E EPS estimate by 7%/8%/10% to factor in: a) manufacturing constraints of one of its peers in Albuterol Sulfate, b) superior execution in DF across Prescription, Trade Generics, and consumer Healthcare segments, and c) gradual increase in operational cost in the Branded Generics space. We roll our price target to INR900, based on 22x 12 months forward earnings. We maintain Neutral due to limited upside from current levels.

Outlook

We continue to value CIPLA at 22x 12 months forward earnings to arrive at our TP of INR900. We maintain Neutral on limited upside from current levels