Geojit recommended hold rating on Cipla with a target price of Rs 653 in its research report dated February 21, 2018.
Geojit's research report on Cipla
Cipla is a leading global pharmaceutical company with 1,500 plus products across various therapeutic categories. It has presence in over 80 countries. Cipla reported ~7% YoY revenue growth in Q3FY18 led by improvement in the domestic market post GST and better performance of South Africa, Europe and API businesses. India formulation business grew 15% YoY in Q3FY18 due to re-stocking post GST implementation and launch of new in-licensed products. US revenues declined ~2% YoY impacted by continued pricing pressure and lower contribution from limited competition drug launches during the quarter. EBITDA margin rose 230bps YoY in Q3FY18 led by gross margin improvement on back of better geography and product mix and cost control measures. We lower our revenue estimates by 3%/2%/3% for FY18/19/20E due to decline in Emerging markets and continued competitive & pricing pressure in the US.
Outlook
Hence, we recommend ‘Hold’ rating on the stock with a revised TP of Rs 653 based on 20.5x FY20E EPS.
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