Sharekhan's research report on Cipla
Warning Letter for Pithampur unit on November 17, 2023, from the USFDA for the routine cGMP inspection conducted from 6-17 February 2023. USFDA has issued three critical observations, of which the key issue is of gAlbuterol where the company received 3000 complaints from the start of commercial manufacturing in April 2020 to December 2022. We believe the Pithampur regulatory issue will not impact existing products but would likely delay new launches by 6-7 months. We lower our EPS estimates by 5% and 6% for FY2025E and FY2026E, respectively, to Rs. 52.8 and 62.3, as the plant contributes ~30% to US sales.
Outlook
After the price correction, stock trades at an attractive P/E of 22.7x/19.3x its FY2025E/FY2026E EPS. We have maintained Buy with a revised PT of Rs. 1,350.
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