Buy Cipla; target of Rs 894 KRChoksey

KRChoksey is bullish on Cipla has recommended buy rating on the stock with a target price of Rs 894 in its research report dated August 12, 2020.

Broker Research

August 13, 2020 / 15:02 IST

KRChoksey's research report on Cipla

Cipla reported Revenue growth of 9.0% YoY (-0.7% QoQ) to INR 43,462 mn in 1QFY21 on the back of strong growth in the domestic market, Europe, Emerging Markets & SAGA region. EBITDA for the quarter rose 15.9% YoY (+65.5% QoQ) to INR 10,487 mn. EBITDA margin expanded 145 bps YoY to 24.1% in 1QFY21 (from 22.7% in last year). On sequential basis, EBITDA margin expanded 965 bps QoQ from 14.5% in 4QFY20. Net Profit rose 20.9% YoY (up 135% QoQ). Net Profit Margin for the quarter expanded 131 bps YoY to 13.3% (up 768 bps QoQ). R&D investment for the quarter stood at INR 2.0 bn at 4.6% of sales. Company has 262 ANDAs as of 30th June 2020, with 66 ANDAs pending for USFDA approval.

Outlook

We are optimistic of company’s growth prospects and continue to apply P/E multiple of 24.5x on FY22E EPS of INR 36.5/share & raise our target price to INR 894 per share (previous TP: INR 700/share) ; an upside potential of 15%. Accordingly, we reiterate a “BUY” rating on the shares of Cipla.

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