Mumbai: Centrum broking has slashed the one year target price of Cipla from Rs 750 to Rs 680 due to less than expected results posted by the pharma company for September quarter. At the current market price of Rs 521 apeice, the broking house is still expecting an upside of 20%.

The revenues of Cipla during Q2FY19 declined 2% year-on-year while the margin was down by 220 basis points (bps). Even the net profit of the pharma player fell 16% to Rs 367 crore from Rs 435 crore during the same quarter last year.

The domestic business of the company also declined 2% year-on-year due to restocking by trade after the introduction of Goods and Services Tax (GST). The domestic business contributes to 41% of the revenues of Cipla.

However, the brokerage still has a buy rating on the stock as it expects a steady growth in the revenues of Cipla coming from domestic market especially in respiratory, oncology, urology and anti-infective segments. The US business of Cipla is also expected to do well in the medium term.

“We expect the company’s margins to improve further, with strong growth in the domestic market, the launch of combination inhalers across various global markets, and several comprehensive restructuring initiatives. The US business also had good growth during the quarter,” Centrum said in the report.

The stock has fallen 14% year to date even as its other listed peers such as Lupin and Dr Reddy’s Laboratories have remained little changed. The BSE Healthcare, a gauge of pharma stocks, has gained 5% in 2017 so far.