Buy Cipla, target price Rs 1260: Axis Securities

Axis Securities has buy call on Cipla with a target price of Rs 1260.The current market price of Cipla Ltd. is Rs 1071.65. Cipla, incorporated in the year 1935, is a Large Cap company (having a market cap of Rs 86522.68 Crore) operating in Pharmaceuticals sector.

Cipla key Products/Revenue Segments include Pharmaceuticals, Royalty Income, Other Operating Revenue, Export Incentives and Scrap for the year ending 31-Mar-2022.

Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 5951.49 Crore, up 8.63 % from last quarter Total Income of Rs 5478.62 Crore and up 6.65 % from last year same quarter Total Income of Rs 5580.47 Crore. Company has reported net profit after tax of Rs 797.76 Crore in latest quarter.

The company’s top management includes Dr.Y K Hamied, Ms.Punita Lal, Mr.Adil Zainulbhai, Dr.Peter Mugyenyi, Mr.Robert Stewart, Mr.P R Ramesh, Mr.Ashok Sinha, Mr.S Radhakrishnan, Mr.Umang Vohra, Ms.Samina Hamied, Mr.M K Hamied, Dr.Mandar Vaidya. Company has Walker Chandiok & Co. LLP as its auditors. As on 30-09-2022, the company has a total of 81 Crore shares outstanding.

Investment Rationale
The brokerage expect the new base for Cipla’s US business to be in the range of $170-180 Mn per quarter led by steady traction in gRevlimid/ Lanreotide (increasing market share) and expected approval for gAdvair in H2FY23. Furthermore, peptide injectables and respiratory assets are expected to drive US growth. India's non-Covid business is also expected to outperform the IPM, led by sustained momentum in key therapies and retained margin expectation at 21-22%, given increasing R&D (at 5.5-6% of sales) for the respiratory portfolio.

Promoter/FII Holdings
Promoters held 33.61 per cent stake in the company as of 30-Sep-2022, while FIIs owned 31.68 per cent, DIIs 21.38 per cent.