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Last Updated : May 23, 2018 10:49 AM IST | Source: Moneycontrol.com

Cipla shares gain 7% after March quarter earnings; analysts cut EPS estimates

Brokerage houses remained positive on the stock, but slashed target prices following cut in earnings estimates.

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Drug maker Cipla share price rallied as much as 7 percent in morning on Wednesday after the company turned profitable for the quarter ended March 2018.

The pharma company posted profit of Rs 153.25 crore in January-March quarter of FY18, against loss of Rs 63 crore reported in corresponding period last fiscal.

Revenue for the quarter grew by 3.2 percent year-on-year to Rs 3,697.97 crore while the operating profit increased 10.2 percent to Rs 558 crore compared to year-ago.

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The operating profit margin expanded 100 basis points to 15.1 percent from 14.1 percent in Q4FY17.

The company guided for an above market average growth in revenue and said it targets $1 billion sales in India in FY19.

Brokerage houses remained positive on the stock, but slashed target prices following cut in earnings estimates.

Brokerage: CLSA | Rating - Buy | Target - Cut to Rs 750

Global brokerage firm said earnings growth expectations tapered down but were still healthy at 27 percent.

India & South Africa continued growth momentum during the quarter, but the US earnings disappointed.

CLSA said US should be strong with recent approvals & one launch every quarter. It expects moderate margin expansion in FY19.

For FY20, margin expansion should be strong, the research house said.

While maintaining Buy rating on the stock, CLSA slashed target price to Rs 650 (from Rs 750) following cut in FY19-20 EPS estimates by 18 percent.

Brokerage: Jefferies | Rating - Hold | Target - Cut to Rs 510

While assigning Hold call on the stock, Jefferies cut its target price Rs 510 from Rs 560 following decline in FY19-20 EPS estimate by 16/10 percent.

The global research firm expects the company to report better growth ahead, but it said risks are high.

It sees little upside from current levels; delay in key product approval in US a risk.

Brokerage: Macquarie | Rating - Outperform | Target - Rs 636

Macquarie has maintained its Outperform rating on the stock with a price target of Rs 636, saying Cipla remained preferred largecap pharma pick.

Management looked optimistic about 2018-19 and the US business is on growth track, the research house said.

Brokerage: Motilal Oswal | Rating - Neutral | Target - Rs 540

Unlike other large cap peers, Cipla is well poised to deliver robust growth in US due to lower base coupled with significant pick-up in filling quality and rate, Motilal Oswal said.

The research house has maintained Neutral rating on the stock with a target price of Rs 540.

It has cut FY19/20E EPS by around 8/9 percent on the back of slower margin revival and also cut target multiple (in-line with industry) on back of weak industry outlook.

At 10:06 hours IST, the stock price was quoting at Rs 546.10, up Rs 21.75, or 4.15 percent on the BSE.

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First Published on May 23, 2018 10:33 am
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