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Brokerages see up to 20% upside in Cipla post Q1 results; time to buy?

Brokerages maintained their rating on post its June quarter results despite a marginal drop in net profit on a strong product pipeline and demand recovery.

Shares of Cipla rallied more than 4 per cent in intraday trade on Monday to reclaim Rs 1,000 levels. Long-term investors can look to buy the stock now or on dips for a potential target above Rs 1,100 in the next 12 months, suggested analysts.

Elara Global maintained its buy rating on Cipla for a target price of Rs 1,180, a fresh 52-week high, that translates into an upside of more than 20 per cent from Rs 978 recorded on 29 July 2022.

Cipla had hit a 52-week high of Rs 1,083 on 15 March 2022, and since then the stock has failed to hold on to the momentum. Positive commentary from results will add to the momentum.

Cipla on Friday reported a 3.96 per cent year-on-year (YoY) drop in consolidated net profit at Rs 686.40 crore compared with Rs 714.72 crore in the same quarter last year.

However, the profit figure managed to beat the Rs 601 crore figure anticipated by analysts in an ET NOW poll. An ET NOW poll had anticipated the profit figure at Rs 601 crore.
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We have collated a list of recommendations from various brokerage post Q1 results:

Credit Suisse: Outperform| Target: Rs 1,100| Upside 12%
Credit Suisse maintained its outperform rating on Cipla with a target price of Rs 1,100 which translates into an upside of more than 12 per cent from Rs 978 recorded on 29 July.

Key H2FY23 catalysts are on track as the US pipeline is getting stronger with peptide injectables, it said. Consumer Wellness (in India and SA) is already 9 per cent of total sales.

The global investment banks’ positive stance is driven by a strong pipeline of Cipla.

Elara Global: Buy| Target: Rs 1,180| Upside 20%
Elara Global maintained its buy rating on Cipla with a target price of Rs 1,180 which translates into an upside of more than 20 per cent from Rs 978 recorded on 29 July.

Cipla is on track to launch key products, such as gAdvair, gAbraxane, gRevlimid and three peptide products over FY23-24, it said, adding that the US sales run-rate will improve from H2FY23, and barring COVID-19, sales performance in India continues to be robust.

The brokerage firm expects a revenue CAGR of 13 per cent, an EBITDA CAGR of 21 per cent and a PAT CAGR of 28 per cent over FY22-24E.

Sharekhan: Buy| Target: Rs 1,150| Upside 17%
Sharekhan maintained its buy rating on Cipla with a target price of Rs 1,150 which translates into an upside of more than 17 per cent from Rs 978 recorded on 29 July.

“Cipla reported weak results for Q1FY23 on a YoY basis given the high base due to Covid-led demand. However sequentially, there has been a marked improvement with the operating profit and PAT staging a double-digit growth,” it said.

The outlook for US business is strong backed by growth in respiratory products and high-value launches being lined up in H2FY23 in the US markets, the brokerage observed.

Cipla expects to outperform the industry growth in the domestic markets, backed by strong growth in the acute as well as chronic therapies, new brands, and likely traction in the consumer business.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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