Add Cipla Ltd For Target Rs. 1,620 By Choice Broking Ltd
Revlimid Transition Manageable, Long-Term Upside Ahead
We believe Cipla has a robust product pipeline, led by respiratory products in India and Peptides and Biosimilars in North America. This positions the company for healthy growth from FY27E, with a manageable transition from the Revlimid loss in North America. While margins may face pressure in FY26E due to higher capex and R&D spends, an improved product mix is expected to offset this in the longer term. With no major change in management guidance, we maintain our estimates but introduce FY28E projections. We now value the company on the average of FY27E and FY28E EPS estimates at an unchanged multiple of 20x (factoring in the anticipated contraction in margins and return ratios), arriving at a target price of INR 1,620 (Q4FY25: INR 1,445) and upgrade our rating to ADD.
EBITDA Beat; PAT Surpasses on Lower Interest Costs
? Revenue grew 3.9% YoY / 3.4% QoQ to INR 69.6 Bn (vs. consensus estimate: INR 70.6 Bn).
? EBITDA increased 3.6% YoY / 15.6% QoQ to INR 17.8 Bn (vs. consensus: INR 17.3 Bn); margins were flat YoY / expanded 271 bps QoQ to 25.6% (vs. consensus: 24.5%).
? Adj. PAT rose 10.2% YoY / 6.2% QoQ to INR 13.0 Bn (vs. consensus estimate: INR 12.0 Bn).
Respiratory Launches and Trade Generics to Drive India Growth
India, contributing 44% of revenue, delivered healthy QoQ growth driven by robust performance across both branded prescriptions and trade generics. The YoY growth slowdown was largely due to an irregular respiratory season. We expect growth to accelerate with improved seasonality and the launch of new respiratory products, such as Foracort G Inhaler (India’s first triple therapy for enhanced COPD control). Additionally, continued momentum in trade generics is likely to sustain healthy growth in the region, outpacing overall market growth.
North America Positioned for FY27 Recovery
North America remains under pressure due to the Revlimid loss, with management expecting near-term headwinds to persist. However, traction from new launches like Albuterol and a robust pipeline—including gAbraxane (the first oncology biosimilar) and 2–3 peptide launches—positions the region for recovery. Additionally, the gAdvair launch in H2FY26 strengthens the outlook. With this pipeline, we expect the Revlimid transition to be manageable, paving the way for healthy growth from FY27 onwards.
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