Chirag Talati bullish on Cipla

Chirag Talati, Pharma Analyst at Espirito Santo Securities is bullish on Cipla.

Talati told CNBC-TV18, "At this point in time, we are pretty bullish on Cipla. That is a stock that we have liked for sometime. We think there is a lot of embedded optionality within this stock in the form of its inhaler’s franchise, which we expect will be rolled out in the European Union from next year onwards. But, more than that we think the imminent catalyst for Cipla is likely to emerge as the Medpro acquisition, which we expect will receive a shareholder approval at the end of April 2013."
He further added, "This acquisition gives Cipla a control of its largest distributor in any export markets, which currently accounts for 8 percent of its revenues but could double in size or more than double in size once Cipla takes control. Contrary to street expectations, we think that this USD 512 million acquisition for Cipla will be close to 8 percent EPS accretive in the first full year of consolidation and that too without taking into account cost synergies, which we believe are in a pretty significant for a business of this nature, which was not a well-run business in South Africa."
"We continue to prefer some of the frontline names only. Our top picks are Cipla, Lupin and Sun Pharmaceutical Industries. Amongst the midcaps we continue to remain on sidelines for both Cadila Healthcare and Biocon, which are some of the covered stocks."