Hold Cipla; target of Rs 1210: Sharekhan

Sharekhan's research report on Cipla

Among the new set of complex product launches, gAbraxane is held up due to Goa site being under Official Action Indication (OAI) status and it can delay the launch by 6-9 months. Thereby, leading to potential downgrade in earnings estimates for FY2024. Cipla has witnessed a slower than expected growth in its India Pharma market sales in Q3FY23E (Oct and Nov 22) and has lagged behind the industry average growth rate. While on one side, recent product launches in the US are holding up in terms of market share and newly launched product is gaining market share, relatively earlier launched product, gAlbuterol is losing market share due to competition.

Outlook

We reduce the Buy rating and price target (PT) on Cipla to HOLD, as we foresee headwinds to margins expansion and therefore reduce the earnings growth estimate to 17.1% CAGR vs. 20.5% CAGR estimated, before, during FY22-FY25E.