Buy Cipla: Ventura

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26 Aug, 2025 12:21

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Ventura is bullish on Cipla and has recommended buy rating on the stock in its February 12, 2013 research report.
 
“Cipla’s revenues increased by 17.8percent YoY to Rs. 2070.5 crore in Q3FY13. Operating margins increased on account of lower material cost to 23.8percent over the same period. Net Profit has shown growth of 23.5percentYoY at Rs. 338.8 crore in Q3FY13. During Q3FY13, Cipla's domestic formulation reported a muted growth of 10.2percent YoY to Rs 960 crore mainly due to industry slow down. Management expects this business to maintain the growth of 14-15percent going forward on the account of its strong field force of ~7,500 and entry into new therapeutic areas such as CNS and oncology. However it expects the new pricing policy to have a negative impact and considers this to be a short-term issue. Over the same period formulation exports witnessed a strong growth of 38.2percent YoY to Rs 1040 crore. Cipla has 5 filings in US (Indore facility) of its own that is expected to be launched in the forthcoming years. During the quarter, the company has clocked Rs 100 crore of sales from the Indore SEZ plant and anticipates FY13E sales from the unit at Rs 600 crore. Further, the company has entered into an agreement with Meda to supply API for Dymista (azelastine HCL and fluticasone proprionate) nasal spray for treatment of seasonal allergic rhinitis (SAR) in 2009. The US FDA approved Dymista in May ’12 and the company received approval from the EU during the current quarter. While dispatches to the US have begun, the management indicated that these were not significant. A launch in the EU is likely in early FY14.”
 
“Low contribution of ARV volumes, higher Lexapro supply, and operational efficiency has helped Cipla post strong earnings this quarter. On the export formulations front the company is exploring M&A opportunities (front end in particular) and will be going aggressive in its own US filings. This augurs well in the long run, however we expect near term pressure on its base business margins. Scale up in Dymista supplies and monetizations over generic opportunities are anticipated to be near term growth drivers. At the CMP of Rs 393, the stock is currently trading at 18.5x and 15.9x of its FY14 and FY15E. We recommend a BUY on the stock,” says Ventura research report.

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