ICICI Securities research report on Cipla
Cipla’s outperformance in Q3FY24 was led by better EBITDA margin (up 224bps YoY) and profit (up 45%). US sales of USD 230mn were flat QoQ, though its better performance in India (up 11.5% YoY) and South Africa (15% YoY) boosted revenue growth. Cipla continues to have a robust pipeline of peptide and respiratory assets in the US which may lead to 19% CAGR over FY23-26E. US growth in FY25E is likely to be driven by the launch of four peptide products while the launch of gAbraxane and gAdvair is contingent on obtaining clearances from the USFDA for Goa (re-inspection in Q1FY25) and Pithampur plants. Management has raised FY24 margin guidance by 50bps to 23.5-24% and expects flattish gross margin in FY25.
Outlook
We maintain BUY on the stock, but raise target price to INR 1,660, valuing the company at 22x FY26E earnings (including gRevlimid).
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