Checkout Budget Highlights 2023Sharekhan's research report on Cipla
We reduce Cipla’s PT to Rs. 1,080 (from Rs. 1,158), as we foresee headwinds to margin expansion due to USFDA issuing form 483 for Pithampur’s plant as well. However, while we maintain our earnings growth estimates to an 11.7% CAGR during FY2022-FY2025E, we reduce its valuation multiple to factor in the current development. Latest Form 483 observations issued by the USFDA for Indore, Pithampur plant is likely to affect nearly ~5% of the revenue and nearly ~15% of EBITDA on an annual basis. We await more clarity around it from management. Cipla has witnessed slower growth in its India Pharma market’s (IPM) sales as well in January 2023, compared with industry’s average growth. IPM growth will continue to be a key monitorable going forward.
Outlook
The stock is trading at 20.9x/17.5x its FY2024E/FY2025E estimates; and hence, we maintain our Hold rating on the stock.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.