Buy Cipla; target of Rs 1220: Prabhudas Lilladher

Prabhudas Lilladher's research report on Cipla

CIPLA’s Q1FY24 EBITDA (Rs15bn; 23.6% OPM) was 13% above our estimates, aided by higher GMs (64.3%) and US sales of US$222mn. We continue to remain positive on growth across key segments including India and US given 1) strong traction in respiratory and other portfolio, 2) potential growth of +10% in domestic formulations and 3) sustainability of current US revs, backed by prospective key launches over FY25. Our FY24E and FY25E EPS stands increased by ~5% as we factor in higher US sales and margins. We expect 17% EPS CAGR over FY23-25E.

Outlook

Maintain ‘Buy’ rating with revised TP of Rs1,220 based on 24x (22x earlier) FY25E EPS. Any further FDA escalation to Indore unit and erosion in key products in US will be key risk to our call.