Buy Cipla; target of Rs 1280: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Cipla

We reduce our FY24/FY25 earnings by ~4% factoring in delay in key US launches and lower margins. Cipla’s Q3FY23 EBITDA was largely in-line with our estimates (24%) aided by higher GMs and strong US sales. We continue to remain positive on CIPLA’s growth across key segments including India and US given 1) strong traction in respiratory and other portfolio, 2) ExCOVID, domestic formulation to potentially grow +10% going forward and 3) sustainability of current US revs, backed by potential key launches.

Outlook

We expect 18% EPS CAGR over FY23-25E given resilient earnings, improving US visibility and strong free cash flow generation. Maintain ‘Buy’ rating with revised TP of Rs1,280/share (Rs 1,300 earlier) based on 25x Dec FY24E P/E.

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Cipla - 27 -01-2023 - prabhu