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Next-Gen Growth with GLP-1 & Respiratory Pipeline; Maintain BUY

Est. Vs. Actual for Q2FY26: Revenue – BEAT; Abs. EBITDA – BEAT; PAT – BEAT

Changes in Estimates post Q2FY26

FY26E/FY27E: Revenue: 0.2%/-0.5%; EBITDA Abs: -1.4%/-2.6% PAT: -0.6%/-1.8%

Recommendation Rationale

* Cipla US Sales Dip as gRevlimid Fades: The company’s US revenue for Q2FY26 stood at $233 Mn, reflecting a 1.7% YoY decline impacted by gRevlimid but offset by Albutero and Lanreotide as their market shares have now risen to 22% and Cipla's first biosimilar Filgrastim entry into the US market. It expects virtually no contribution from gRevlimid in Q3FY26.

* Strong Chronic, Trade Generics Boost One India 6.7% YoY: One India’s segment grew 6.7% YoY, largely driven by the robust performance of chronic products and strong double-digit growth in the Trade Generics business. Key chronic therapies like Dermatology, Anti-diabetes, and Cardiac grew at strong double-digit rates. Chronic products now contribute 61.8% of revenue, continuing to outperform the market, while the Acute segment remains affected by seasonal headwinds and the brief disruption from the GST rate transition. Cipla has now entered into obesity Market with a partnership with Eli Lilly for Tirzepatide (GLP-1) is exclusive to the Indian market.

* Cipla Africa Up 5% YoY; SA Leads Growth: The One Africa business grew 5% YoY in CC terms, driven by strong growth in South Africa (6%), where the private market outperformed the overall market by growing at a multiple of 6.2%. The next two quarters are critical for execution toward margin expansion in South Africa.

Sector Outlook: Positive

Outlook & Valuation: Cipla remains confident about its FY26 growth trajectory, focusing on accelerating execution and new product launches across key markets. In North America, the company aims to ramp up commercial performance through portfolio expansion, while in South Africa, the next two quarters are critical for margin improvement. In India (One India), Cipla plans to strengthen its branded prescription and trade generics businesses, aided by new launches such as Yurpeak (Tirzepatide-GLP1). The EMEU business will continue to drive penetration with stable margins. Cipla has revised its FY26 EBITDA margin guidance to 22.75–24% (from 23.5–24.5%) to reflect higher R&D investments, around 0.5% of revenue above plan. The company targets US revenues of about $1 Bn by FY27, supported by key upcoming respiratory and peptide launches (including generic Advair in Q4 FY26) and the recent biosimilar Filgrastim. Management remains cautiously optimistic, balancing the phase-out of gRevlimid with growth from its differentiated portfolio. We have incorporated the GLP-1 opportunity, gRevlimid wind-down, and margin guidance into our model.

Current Valuation: PE 23x for H1FY28 earnings (Earlier Valuation:PE 23x FY27E)

Current TP: Rs 1,700/share (Earlier TP: Rs 1,700/share)

Recommendation: BUY

Financial Performance

Cipla’s Q2FY26 results surpassed our expectations, with revenue rising 7.6% YoY to Rs 7,589 Cr. Growth was driven by a 6.7% increase in the India business, 5% growth in South Africa, and a strong 15% rise in EMEU markets, partially offset by a 1.7% YoY decline in North America, impacted by the ongoing gRevlimid erosion. The US performance was, however, supported by Albuterol and Lanreotide, both of which have now captured a 22% market share each. Additionally, Cipla marked its first biosimilar entry in the US with Filgrastim, strengthening its speciality portfolio.

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