Drug major Cipla posted a 45.1% rise in its consolidated net profit in Q1FY24 at ₹995.7 crore as compared to ₹696.4 crore in the corresponding quarter of the last year.
The company’s revenue during the quarter ended June 2023 increased 17.7% to ₹6,328.9 crore from ₹5,375.2 crore, YoY, driven by performance in India, US & South Africa.
The company’s US business reported the highest ever revenue of $222 million, registering a growth of 43% YoY growth driven by robust momentum in differentiated portfolios.
While resonating buoyancy on near-term generics pricing in the US, Cipla has hiked its US sales and EBITDA margin guidance for FY24.
Cipla raised its EBITDA margin guidance for FY24 to 23% from 22% earlier. The management raised its North America (NA) base business quarterly run-rate guidance to $210-215 million from $195 million earlier.
Strong US sales growth and sustained momentum in the domestic market helped Cipla Q1 performance beat estimates. This led analysts to give bullish outlook on Cipla shares with most brokerage houses raising target price on the stock.
Here’s what brokerages have to say:
Jefferies
Jefferies upgraded Cipla to Buy and raised the target price to ₹1,210 per share from ₹900 earlier.
It said that Q1FY24 EBITDA beat estimate by 12% despite an in-line revenue. superior product mix amid steady 12% growth in India led margin beat.
Cipla delivered better-than-expected 1QFY24 performance, led by superior executions in North America (NA) and domestic formulation (DF) segments. Cipla is on track to build a complex product pipeline in the peptide space, and reduce compliance risk by incorporating alternate manufacturing sites, Motilal Oswal Financial Services said.
It raised its earnings estimates by 6% each for FY24/FY25 to factor in reduced competition in the US generics segment, better visibility for niche launches in North America, and better operating leverage.
There has been a healthy revival in outlook for NA markets in addition to better than industry performance in the branded generics segment (DF/South Africa), it noted.
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The brokerage firm reiterated its ‘Neutral’ rating on limited upside from current levels. It raised the target price to ₹1,130 per share.
Kotak Institutional Equities
We continue to like Cipla’s sharpened focus on domestic Rx, US generics and strong delivery of cost efficiencies. We raise FY2024-25E EPS by 5-8% on higher US sales and margins. We increase Cipla’s target multiple a notch to 22X EPS on higher implied domestic valuations and roll forward to June 2025E to derive a fair value of ₹1,230 from ₹1,100 earlier, Kotak Institutional Equities said.
Nuvama Institutional Equities
Nuvama Institutional Equities says Cipla continues to monetise its pipeline much better than peers. It has already tasted success in lanreotide (~18% market share), and expects market share gains in leuprolide and albuterol.
“Moreover, it has retained guidance of four–five peptide products’ launch over next two years, which should aid US business. We flag that gAdvair and gAbraxane are intact given no new competition and management is confident of an FY25 launch. In India, 10% YoY growth ex-Galvus is impressive. Its strong respiratory franchise, field force addition and steady market share expansion in chronic should provide stability. Thus, earnings risk is minimal in our view,” the brokerage said.
It has a ‘Buy’ rating on the stock and raised the target price to ₹1,265 per share from ₹1,110 earlier.
At 9:30 am, Cipla share price was trading 7.74% higher at ₹1,151.40 apiece on the BSE.
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Updated: 27 Jul 2023, 10:47 AM IST
