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gRevlimid bigger; others delayed

Results ahead of estimates, driven primarily by gRevlimid

Cipla (CIPLA IN) Q3 results were ahead of our revenue, EBITDA and PAT estimates by 6%, 18% and 40%, respectively. While it seems to have performed well across segments, a major part of the outperformance was driven by higher gRevlimid contribution in the US, in our view. gRevlimid contributed ~USD 60mn to the US business in Q3, as per our estimates.

Delay in gAdvair, gAbraxane

Management gave negative incremental updates regarding key upcoming products for the US. gAdvair and gAbraxane, where site switches were being planned, are being pushed to FY26 from FY25. gSymbicort, filed recently from Indore, will likely receive approval only in FY27; clearance of manufacturing quality issues at the facility is mandatory before its approval.

Bigger gRevlimid and undisclosed peptide could offset

gRevlimid is turning out to be a bigger product than we had projected. We expect USD 165mn in revenue for FY24E and USD 185mn for FY25E, up from USD 140mn and USD 150mn, respectively. One should not forget this product revenue falls off sharply in January 2026. Management maintained guidance for a significant undisclosed peptide product launch in Q1FY25. These can more than offset the delay in gAdvair and gAbraxane.

Improvement in the domestic business and South Africa growth

Domestic business growth at 11.5% YoY and South Africa ZAR growth at 14.8% YoY were robust this quarter. India business growth seems settling at ~10%, better than the pre-COVID levels. South Africa growth seems to revert to 9-10% levels of pre-COVID.

Valuation: retain Accumulate with a higher TP of INR 1,499

We increase our FY24-26E core earnings estimates in the range of 3-7%. Cipla trades at 26.5x FY25E core P/E. We raise our TP to INR 1,499 from INR 1,349 which is 26x FY26E P/E plus cash per share. Delay in key product launches in the US is a downside risk.

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