Buy Cipla; target of Rs 670: ICICI Direct

ICICI Direct's research report on Cipla

Revenues remained flat at Rs 4376 crore YoY due to 25.1% YoY decline in US revenues to Rs 856 crore, attributable mainly to high base of gSensipar. On the other hand, domestic formulations grew 15.3% to Rs 1730 crore. EBITDA margins fell 735 bps YoY to 14.5% mainly due to a sharp drop in gross margins (61.4% vs. 66.3% in Q4FY19). EBITDA de-grew 34.1% YoY to Rs 633.5 crore. Net profit fell 33.0% YoY to Rs 246.0 crore due to a below expected operational performance. Delta vis-à-vis EBITDA was due to lower depreciation.

Outlook

Our revised target price is Rs 670 based on 22x FY22E EPS Rs 30.2. We upgrade the stock from HOLD to BUY