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Sharekhan's research report on Cipla
We reiterate a Buy call with a higher PT due to buoyancy in the US, as price erosion pressures ease, volume growth due to drug shortages and focus on complex products. Cipla’s growth in the IPM February 2024 stood at 8.1% (IPM growth of 9%) and 9.9% on MAT basis (IPM growth of 6.7% on a MAT basis). We expect EBITDA margins to rise to 26% by FY26E driven by higher chronic share in the domestic business, new product launches in the complex generics in the US and completion of acquisition of Actor Pharma in South Africa.
Outlook
Stock trades at a P/E of 25x/ 21.2x its FY2025E/FY2026E EPS. Due to continuous healthy traction in both the US and India. We increase our ascribed multiple to 24x on FY26E to arrive at a PT of Rs. 1,700 (earlier PT Rs 1,600).
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