Motilal Oswal's research report on Cipla
Cipla reported lower-than-expected performance in 4QFY23, led by higher operational cost. It achieved the highest ever annual earnings in FY23, driven by strong traction in North America (NA) sales. Cipla grew better-thanindustry in domestic formulation (DF) market by ~500bp YoY in FY23. We cut our earnings estimates for FY24/FY25 by 7%/4% factoring in: a) delays in approval for g-Advair/g-Abraxane, b) costs related to additional field force in DF segment, remediation measures and adding alternate sites for critical products in the US generics segment.
Outlook
We value Cipla at 21x 12M forward earnings and add NPV of INR30 related to g-Revlimid to arrive at our TP of INR970. We expect 12.3% earnings CAGR over FY23-25, led by 9%/11% sales CAGR in DF/NA segments and marginal improvement in profitability. Considering a delay in potential launches in NA, regulatory risk at Indore and limited upside from current levels, we maintain our Neutral rating on the stock.
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