Buy Cipla; target of Rs 1450: Motilal Oswal

Motilal Oswal's research report on Cipla

CIPLA beat our earnings estimates in 2QFY24, led by a superior performance in the branded generics segment of domestic formulation (DF) and SAGA. The company sustained robust sales growth in North America (NA), led by market share gain and healthy demand for its base portfolio.  We raise our earnings estimates by 7%/4.4% for FY24/FY25, factoring in better growth prospects in DF, increased visibility for niche launches in NA, and controlled opex. We value CIPLA on SOTP basis (25x 12M forward earnings and add NPV of INR30 for g-Revlimid) to arrive at a TP of INR1,450. We remain positive on CIPLA given its market-beating growth in prescription market, efforts to enhance NA product pipeline with differentiated products, and improving profitability in the consumer health business. Reiterate BUY.

Outlook

We raise our earnings estimates by 7%/4.4% for FY24/FY25, factoring in better growth prospects in DF, increased visibility for niche launches in NA, and controlled opex. We value Cipla on SOTP basis (25x 12M forward earnings and add NPV of INR30 for g-Revlimid) to arrive at a TP of INR1,450.

For all recommendations report, click here