Buy Cipla; target of Rs 805: HDFC Securities

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HDFC Securities' research report on Cipla

Cipla’s Q1 results were strong (EBITDA/PAT beat of ~85%) driven by good growth across regions and higher than expected cost savings. With strong traction in US (ramp up in Albuterol, niche launches), good growth in India (Rx business outperformed IPM growth for past four quarters, benefits of One-India strategy, Covid portfolio) and reduction in costs (good part of cost savings are likely to sustain owing to digital initiatives) margins are set to structurally improve. We forecast ~400bps of margin expansion over FY20-22e and increase our FY21/22e EPS estimates by 22%/13% to factor lower costs and strong revenue momentum.

Outlook

We increase our TP to Rs805 based on 23x FY22 EPS and Rs30/share for gAdvair opportunity. Maintain Buy.

For all recommendations report, click here

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