Neutral Cipla; target of Rs 790: Motilal Oswal

Motilal Oswal 's research report on Cipla

Cipla’s sales for the quarter were largely in line with our estimates. However, it delivered a strong beat on earnings owing to significant reduction in opex. COVID-19-led disruption has enthused the company to re-imagine the business, to sustain cost saving and enhance resource productivity. We raise our EPS estimates by 19%/14% for FY21/FY22 to factor above-market growth in Trade Generics (Gx), ramp-up in Albuterol Sulfate sales, and cost saving benefits. We raise our price target to INR790 as we roll out our price target on a 22x 12M forward basis. Maintain Neutral, as the valuation factors potential upside in earnings over the medium term.

Outlook

We value Cipla at 22x 12M forward earnings to arrive at TP of INR790. Maintain Neutral, as the valuation leaves limited scope for returns from current levels.

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