Daljeet Singh Kohli, head of research at India Nivesh Securites told CNBC-TV18, "Two-three days back we have re-rated at around Rs 585 to buy on Cipla. The past quarter numbers were not so good, mainly their sales were good but bottom-line did not grow very well. It was below expectations mainly because their one off item which was from Nexium, the sales happened but profit had not come. However, the management clarified on the concall that this will happen with lag effect. It means that the June quarter numbers will have an impact of the profitability coming from this particular product. Also they have been building in on their lot of front-end at various places in Africa, in US and in Europe. So that cost is still increasing and profitability therefore was not coming."
"Due to this the stock has come off significantly from its peak. So in June and September quarters, we are expecting very good bottom line mainly because Nexium supplies have started already and the stock correction has given it a good valuation point and entry point. Therefore we reiterate a buy. We have a target price of Rs 640 in the near term which is around say 6 months to 8 months time period, taking care of September results. Beyond that it will depend upon what kind of profitability will come from Nexium as well as other growth areas," he added.
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