Buy Cipla Ltd; target of Rs 627: KRChoksey

KRChoksey's research report on Cipla Ltd

Cipla reported Net Sales of INR 34,323 Mn which was down by 1.9% y-o-y and 1.5% q-o-q. The decrease in revenues was due to low business in North America and Emerging markets. However, the company has registered healthy growth of 21% and 33% Y-o-Y in South Africa and European market. The India business has performed well in the quarter even after GST rollout with sales at INR 12bn registering growth of 6% Q-o-Q.

Outlook

At CMP of INR 542 the stock is trading at PE of 25.4x at FY19 with EPS of INR 21.7 We recommend “BUY” rating on the stock and value the stock at 29x FY19E EPS of INR 21.7 with a target price of INR 627 indicating 15.9% upside from CMP.