Accumulate Cipla; target of Rs 913: Prabhudas Lilladher

Prabhudas Lilladher's research report on Cipla

We increase our earnings estimate by 3/10/4% for FY21E/22E/23E as CIPLA surpassed its earlier cost saving of Rs4-5bn for FY21E and believe part of it would continue in FY22E/23E. CIPLA’s performance in recent quarter was due to 1) COVID led products in domestic market 2) launch of gAlbuterol in US and 3) savings in marketing related overheads. We believe benefit from COVID products will subside gradually and core India formulations to grow in 8-10% range, while next leg of growth will be led by US markets given that 1) launch of one inhalation product each year, 2) further ramp-up of gAlbuterol 3) launch of gRevlimid in FY23E and 4) approval of Tramadol IV (inj).

Outlook

We maintain ‘Accumulate’ rating but increase our TP to Rs913 (earlier Rs879) based on 22x (Unchanged) PE of FY23E EPS of Rs39 and Rs51/share (assigning 1x(PE) benefit from Revlimid over FY23-26E using NPV method.

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