Neutral Cipla; target of Rs 880: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Cipla

CIPLA delivered a lower-than-expected 4QFY22 performance. Higher operational cost and R&D expense pulled margin to lower-than-expected levels.We cut our FY23/FY24 EPS estimate by 7% each to factor in: a) higher procurement cost, b) logistics cost, c) initiation of clinical trials in its Respiratory asset driving higher R&D spends, and d) the ongoing price erosion in its US base portfolio. We now expect 14% earnings CAGR over FY22-24.

Outlook

We value CIPLA at 23x 12-months forward earnings and add INR35 per share of gRevlimid NPV to arrive at our TP of INR880. CIPLA continues to build its complex product pipeline for developed markets. Despite better-than-industry growth in the branded Generics segment of Domestic Formulation (DF) and in South Africa, the current valuation adequately factors in an earnings-led upside. We reiterate our Neutral rating on the stock.

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