Buy Cipla; target of Rs 1350: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Cipla

We increase our FY24/FY25E EPS estimates by 9%/6%, as we factor in higher US sales and margins. CIPLA’s Q2FY24 EBITDA (Rs17.3bn; 26% OPM) was 10% above our estimates, aided by higher GMs (64.9%) and US sales of US$229mn. We continue to remain positive on key segments growth including India & US given 1) strong traction in respiratory & other portfolios, 2) potential +10% growth in domestic formulations and 3) sustainability of current US revs, backed by prospective key launches in FY25. We expect 17% EPS CAGR over FY23-26E.

Outlook

Maintain ‘Buy’ rating with revised TP of Rs1,350 based on 24x Sept 2025E EPS. Any further FDA escalation to Indore unit and erosion in key products in US will be key risk to our call.

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Cipla - 29 - 10-2023 - prabhu