Motilal Oswal neutral on Cipla

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26 Aug, 2025 12:21

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Motilal Oswal has maintained neutral rating on Cipla with a target of Rs 452, in its February 7, 2013 research report.
 
“Cipla, revenues grew 18% YoY to INR20.71b (v/s est INR20.17b), EBITDA grew 26% YoY to INR4.93b (v/s est INR4.71b) and PAT was up 26% to INR3.39b (v/s est INR3.25b). Top line growth was primarily led by 38% YoY growth in export formulations, while domestic formulations grew a modest 10% YoY. Export APIs stood at INR1.38b and declined by 16% YoY on a high base. We are positively surprised by the strong growth in export formulations, driven by Lexapro supplies (now part of the base business) and strong growth witnessed across key therapeutic areas. Also, there was a 6-7% benefit from currency; however, management indicated that this high growth is not sustainable, going forward. The muted domestic formulations growth of 10% is below our expectation of 15%. EBITDA margin increased 150bp YoY and stood at 23.8% (v/s our est of 23.3%).”
 
“Margin improvement was driven by favorable product mix, with higher contribution from anti-depressants segment (includes generic Lexapro supplies, now part of base business) and anti-allergics (includes Dymista, currently a small contributor). PAT growth was aided by strong top line growth coupled with healthy operational performance. There was a forex gain of INR190m for the quarter. While export formulations grew 38% YoY in 3QFY13, Cipla's core quarterly performance has not been encouraging in the past many quarters. Its muted export performance had raised uncertainty on the timelines of ramp-up at Indore SEZ. We believe it is imperative for the company to improve asset utilization at Indore to drive future growth and derive benefits of operating leverage (overhead expenses continue to adversely impact performance).”
 
“Post 3QFY13 performance, our core EPS est for FY13E has witnessed an upgrade of 2%, while FY14E/15E est are largely unchanged. Our revised est take into account betterthan- expected performance in export formulations during this quarter, partially offset by the muted growth in domestic formulations. The stock trades at 20.6x FY14E and 17.9x FY15E EPS. Maintain Neutral with a TP of INR452 (20x FY15E EPS),” says Motilal Oswal research report.

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