Sharekhan's research report on Cipla
Cipla’s Q3FY2023 numbers were in line with our expectations on revenue and EBITDA fronts but fared below expectations on a net income basis. It was largely due to higher interest and taxes. Outlook for the US business is strong with a quarterly run-rate of $195 million reached in Q3FY23 versus $175-180 million quarterly run rate reached, earlier, in Q2FY23, while the India consumer business is expected to deliver higher annual revenue of Rs. 1,100 crore by the end of FY2023 versus expectations of Rs. 600 crore of revenues guided for, before. R&D spend is likely to rise along with partnered products, which cannot support consistently higher margins, going forward, as Q3FY2023 margins were higher due to favorable products mix and strong seasonal buying in the US.
Outlook
We maintain our Hold rating on Cipla, with a revised price target of Rs. 1,158 as we believe that certain high value product launches such as gAbraxane and gAdvair being deferred due to pending USFDA facility clearances, expected increase in share of partnered products, and increased R&D spend, may not support consistent margins growth, going forward.
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