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Centrum Broking
Cipla (Buy)
CMP: ₹532.1
Target: ₹730
We maintain buy rating for Cipla and revise our TP to ₹730 (earlier ₹830) based on 24x March 2020E EPS of ₹30.3. Cipla’s Q4FY18 results were below our and consensus estimates. Cipla’s revenues grew 3 per cent y-o-y, margin improved 100 bps to 15.1 per cent and net profit after EO item grew to ₹153 crore from ₹62.8 crore.
The acquired Invagen and Exelan in the US are well-integrated with Cipla. The domestic business (37 per cent of revenues) grew 13 per cent y-o-y after successful implementation of GST. Steady growth in the domestic market, with leadership position in respiratory, oncology and anti-infective segments would drive future growth.
Risks: Key risks to our assumptions include slow growth in the domestic market and regulatory risks for its manufacturing facilities catering to global markets.
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