Accumulate Cipla; target of Rs 580: KRChoksey

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26 Aug, 2025 12:21

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KR Choksey  research report on Cipla

Overall opportunity for generic version of Advair MDI in EU markets is around  USD800mn. Germany and Sweden are smaller markets with combined market size of app.USD50-60mn. Therefore launch in these markets will not be significant opportunity. Major boost will come when the company will launch in UK which is around USD400mn market. While it has launched in smaller markets like Croatia, Germany & Sweden it expects to launch in Q4FY15. We believe company will be able to generate revenues of USD50-55mn out of generic Advair MDI launch in EU markets in FY16 considering 10% market share. We believe Advair MDI space will be a low competition market with other players- Sandoz, Orien, Chiesi & Mylan. We believe peak Sales & PAT from this launch would be around USD165-168mn & USD107 respectively assuming 25-30% market share. Currently company has 10 combination inhalers in pipeline targeted for US/EU launches. Currently we have not taken any upside from Advair DPI (market size- USD1.8bn) & Symbicort (market size-USD1.4bn) launches in Europe which is expected in 2017.

Cipla is focusing on restructuring its business model with 2-3 yrs strategy and is looking to shift from partnership model to front end model for which company will be able to reap the benefits in future. Launch of combination inhalers in EU/US will be a significant opportunity for the company to drive earnings in long term. We expect base business revenues to grow by 13.9% & 15.7%in FY15E & FY16E respectively & earnings to grow at 12% & 27.8% in FY15E & FY16E respectively. At CMP of Rs529 the stock is trading at 27xFY15E & 21.3xFY16E EPS. We recommend ‘Accumulate’ rating and value the base business at Rs 500 at 20xFY16E EPS & NPV of Rs 80(peak valuation valued at10x Rs8 EPS) from Advair MDI launch in EU to arrive at the target price of Rs580.

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