Sharekhan's research report on Cipla
Cipla’s Q4FY2023 numbers was a mixed bag as it outperformed our expectations on the revenue front as revenue of ~Rs. 5,739 Cr was above our estimate of Rs. 5,565.1 Cr. while EBITDA came in line at ~Rs. 1,174 Cr vs. our estimate of Rs. 1,169 Cr and adjusted PAT was slightly below estimates at ~Rs. 653.7 Cr vs. our estimate of ~Rs. 673.0 Cr. Some of Cipla’s key facilities continue to languish under the USFDA scanner such as Indore and Goa. India segment revenue continue to grow at a tepid pace due to high base effect associated with COVID 19 sales. R&D spend is expected to continue to rise due to a likely increase in spend on differentiated portfolio of products and biosimilars, which restricts the likelihood of EBITDA margin expansion over the short – medium term.
Outlook
We reduce the PT to Rs. 1030 (vs. before Rs. 1,080) and maintain HOLD on it as it trades at ~22.0x and ~19.0x its FY24 and FY25E EPS estimates vs. peers trading at ~18.3x and ~16.1x its FY24E and FY25E EPS estimates, indicating higher valuation.
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