Motilal Oswal's research report on Cipla
We assessed Form 483 issued by USFDA after inspection at Cipla’s Goa site. Form 483 highlights issues largely related to testing methods, monitoring environmental conditions, cleaning/disinfections and root cause analysis. Considering the observations, we await classification of the inspection to incorporate potential business from key products like g-Abraxane. Nonetheless, Cipla remains on track to file complex products in respiratory, peptides and differentiated product category. We estimate a 12% earnings CAGR backed by 12%/7% sales CAGRs in DF/US generics and a 120bp margin expansion over FY24-26.
Outlook
Considering a healthy pipeline of niche products and superior execution in the branded generics segment, we value Cipla on SOTP basis (24x 12M forward earnings and NPV of INR30 for g-Revlimid) to arrive at our TP of INR1,700. We maintain BUY rating on the stock.
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