8 CIPLA share price target reports by brokerages below. See what is analyst's view on CIPLA share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
New limited competition launches will drive revenues as well as margins. With the approval of Albuterol inhaler and other phase 3 completed inhalation molecules, it is well on track towards global leadership as an inhalation company. Gross margin should favourably move once these limited competition launches gain momentum. The margin during the quarter, adjusted for the Covid-19 pandemic challenges, reflects base business earnings. Going forward, R&D spend will trend downwards and hence the earnings should get a boost. During the quarter, R&D spend stood at Rs3,110mn (7.1% of sales and 34% of US sales). We have tweaked our forecasts slightly on Cipla and recommend Accumulate with a target price of Rs575 (from Rs582 earlier), which is based on 20x FY22E EPS.
CIPLA’s Adj. Revenue was Rs43bn (PLe Rs39.9bn) flat YoY and growth of 2% QoQ while EBITDA declined 32% YoY and 10% QoQ to Rs5.6bn (PLe Rs5.3bn). Adj. EBITDA margin was 13% (PLe 13.2%) vs. 19.4% YoY and 14.7% QoQ. Domestic biz continued to lead for CIPLA with 12% YoY growth while export markets performance and remediation of Goa facility (costing Rs430-450mn i.e. 1% of revenue) impacted EBITDA margin (showing a decline of 200bps YOY). Currently plants are operating at 80-85% capacity utilization. We believe CIPLA’s SAGA and Emerging markets biz (combined 27% of revenue) would be a biggest concern in near-term due to currency devaluation and pricing pressures. US business even with surprise approval of Albuterol was not able to meet its own guidance of US$125-130m/quarter. With falling prescriptions for Albuterol in last few weeks, interchangeable brands and prospective approval for one more generic, CIPLA’s could have a minimal gain from Albuterol. Accordingly, on perceiving no growth levers (apart from India) and multiple headwinds (including FDA issues in Goa plant) we maintain ‘REDUCE’ and retain TP of Rs542 (22x of FY22E).
Cipla's Q4 revenues came in line, however, margins missed estimates on account of Covid led disruption and remediation cost for Goa plant. The outlook for key businesses remains strong with US likely to see improved traction on account of ramp up in gProventil and limited competition launches. India growth trajectory has improved (double digit growth in last 3 quarters) and with enhanced focus (implementation of One-India strategy), domestic growth should outperform the market. Cipla's balance sheet further improved with reduction in net debt (Rs8bn) and improvement in working capital days. We believe with healthy earnings growth (~22% CAGR) and core ROCE expansion (~350bps) over FY20-22e, valuations are likely to re rate. We maintain Buy rating and increase our TP to Rs655 based on 22x FY22 EPS.
Incremental addition is ~5-6% to FY21/22 estimates - We expect gradual ramp up as shipments are expected to be staggered. We factor sales contribution of USD60mn/70mn sales in FY21/22 respectively. Incrementally, this adds ~5-6% to our EPS estimates. Strong respiratory franchise (gAdvair filing in Q1FY21, Proventil approval), specialty portfolio targeting Institutional space (IV Tramadol, Zemdri) and complex products (40% of projects under development) will drive US growth in the medium term. We revise our target price to Rs 600 (20x FY22 EPS + Rs 30/share for gAdvair). Reiterate Buy.
We expect 15% earnings CAGR, led by superior execution in the US with share of differentiated products in the portfolio increasing and gradual improvement in DF growth over FY19-22E. We continue to value Cipla at 20x 12M forward earnings to arrive at price target of INR490 (from INR500 earlier). Maintain Neutral on limited upside from current levels.
Given strong growth across the segments, solid pipeline and new products, the company’s top line is bound to increase further. We reiterate our HOLD on the stock with a revised target price of Rs 487 using a target multiple of 19x P/E on FY21E adj. EPS.
Valuation - Maintain Buy with revised PT of Rs. 540: Cipla has corrected by ~20% from its highs and is currently trading at 13x its FY2022E earnings. The concerns in the domestic business in Q1FY20 due to re-alignment of distributors have been completely resolved and the business is expected to normalise in Q3FY20. In the US, a strong set of product and launches would be key growth drivers. Given better–than-estimated results in Q2FY20, we have tweaked our earnings estimates for FY20/FY21 and introduce FY2022 estimates in this note. We expect the company toreport sales and profit CAGRs of 11% and 25%, respectively, over FY2019-FY2022E. We maintain our Buy recommendation on the stock with a revised PT of Rs. 540.
With guidance of lower US sales in H2FY20E (due to competitive intensity in gSensipar and gLyrica) and limited visibility of similar profiles of drugs, we expect erosion of value to lead a tepid growth in core US generics in FY20E- 21E. Reported sales in South Africa remain muted though local currency sales outperformed industry growth. We maintain ‘Reduce’ and retain TP at Rs439.
Maintain buy with downward revised PT of Rs. 650: The stock has corrected by ~25% from its high and is currently trading at 14.4x its FY2021E earnings. We feel that the domestic business slowdown and the company’s decision to realign distributors (in domestic business) are likelyto affect overall growth of the India business in FY2020E. Hence, we have reduced our sales/profit estimates by 10%/8% and 12%/10% for FY2020E and FY2021E, respectively. However, we feel that all these factors are mostly factored in. We expect the company to report sales and profit CAGRs of 14% and 40%, respectively, over FY2019-FY2021E. Also we feelunlike its larger peers, Cipla faces minimal regulatory woes making it abetter investment option. Hence, we maintain our Buy recommendation on the stock with downwardly revised price target (PT) of Rs. 650.
Q1 results were largely impacted by the realignment of distributors in domestic trade generics and deferral of dispatches in branded domestic formulations. US market growth was driven by gSensipar. The management has maintained its guidance of launching one limited product every quarter in the US. On the Africa front, the company continues to rebase its business model towards private business in the backdrop shrinking tender opportunities. Despite distribution related issues, the management remains upbeat on India growth prospects mainly on the back of promotional (Rx) traction. Across the board transformation from tenderised model to private model in the exports market and from trade generics (Tx) to promotional (Rx) in India is likely to continue for some time. This may have some implications on the quarterly performance. We ascribe a target price of | 520 based on 20x FY21E EPS | 25.9.
Margin improves but revenue impacted by disruption in trade generics In FY19, Cipla finally posted a turnaround in its US business and in FY20 we should witness a full-year impact of this turnaround. The headwinds that have impacted its tender business in FY19 has put this business on a low base and there should be little downward pressure from here on. Cipla’s brand business in India also continues to do well, which it continues to strengthen through in-licencing deals. The trade generic business which was impacted by a reorganization of the distribution channel should see normalcy in the next one or two quarters. The US business continues to progress favourably and the momentum should sustain as they continue to push limited competition launches (one per quarter).
Q1: India continues to struggle, core US muted With lower single digit growth in branded drugs of India formulations and uncertainty over the recovery of growth in India generics, we have reduced our sales and EBITDA estimates for FY20E and FY21E. Lower benefits from gSensipar (competitive intensity) and limited visibility of similar profiles of drugs, we expect 13% CAGR in US generics FY19-21E. There was strong reduction (38% fall) of global tender (ARV/malaria) business as well as 14% fall in SA tender business in Q1FY20. With challenging geo-political scenariosthose affects Cipla’s business prospects in key geographies, we maintain‘Reduce’ and decrease our TP to RsRs439 (20.5x PE of FY21E earnings) from Rs475.
We have retained Buy rating on the stock. In FY19, Cipla finally posted a turnaround in its US business and in FY20 we should witness a full-year impact of this turnaround. The headwinds that have impacted its tender business in FY19 has put this business on a low base and there should be little downward pressure from here on. Cipla’s brand business in India also continues to do well, which it continues to strengthen through in-licencing deals. The channel de-stocking impact knocked of a couple of basis points from Cipla’s FY19 growth, but the phenomenon is now done and the performance should fall in line. We have tweaked our financial estimates based on 4QFY19 financial results and arrived at a target price of Rs653 (from Rs695 earlier) based on 22x FY21E EPS.
Q4 was largely driven by one-off gSensipar launched at-risk. The US business has now almost got completely transformed into direct to market (DTM) thus giving the company enough flexibility to leverage on its capabilities in a tough market like US. On the Africa front, the company continues to rebase its business model towards private business in the backdrop of shrinking tender opportunities. India is on course for double digit growth in the long run. This transformation across geographies from tenderised model to public model is likely to continue for some time. This may have some implications on margins initially. We ascribe a target price of | 580 based on 20x FY21E EPS.
Cipla’s US business continues to remain strong driven by ramp-up of key launches with one limited competition product to be launched per quarter. Notably, its US revenue has touched US$125mn in 4QFY19 from US$105mn in 4QFY18 led by new launches. We trim down our sales/PAT estimate by 3.1%/3.5% for FY21E on account of lower India sales and higher tax rate guidance. Rolling over our earnings estimate to FY21E, we reduce our target multiple to 20x (from 22x earlier).However, in light of healthy quarterly performance and increased visibility in the US business, we upgrade our recommendation on the stock to BUY from HOLD with a revised Target Price of Rs650 (from Rs580 earlier).
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
DISCLAIMER: Information is provided "as is" and solely for informational purposes, not for trading purposes or advice, and may be delayed. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and FrontPage will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein.