Buy Cipla, target price Rs 910: Edelweiss

Edelweiss has given a buy rating to Cipla with a target price of Rs 910. The share price moved down by 0.18 per cent from its previous close of Rs 731.35. The stock’s last traded price is Rs 730.

Cipla Ltd., incorporated in the year 1935, is a Large Cap company (having a market cap of Rs 58995.68 Crore) operating in Pharmaceuticals sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 4972.58 Crore, up 16.27 % from last quarter Sales of Rs 4276.89 Crore and up 16.61 % from last year same quarter Sales of Rs 4264.24 Crore Company reported net profit after tax of Rs 661.85 Crore in latest quarter.

Investment Rationale
The brokerage believes Cipla has the least revenue risk among peers as albuterol ramp-up should keep the US ticking, domestic business recovers Q3 onwards, South Africa grows in high-single digits and covid-19 supplies bolster near-term revenue. With R&D likely to grow slowly and part of savings seen in Q2 to be sustainable, margins pressures are receding. The brokerage retains ‘BUY/SO’ with a TP of INR910 based on 25x FY22 EPS and INR60 from NPV-derived specialty pipeline. The stock is trading at 23.4x FY22E EPS.

Promoter/FII Holdings
Promoters held 36.7 per cent stake in the company as of Sept 30, 2020, while FIIs held 20.1 per cent, DIIs 16.7 per cent and public and others 26.6 per cent.