Core markets, operating leverage drive earnings growth

Company
29 Jan 2024
5 Min read 
  • Cipla's 3QFY24 results beat estimates, driven by strong performance in domestic formulation and North America segments.
  •  The company is focusing on minimizing approval timelines for potential drugs in the North American market.
  •  EPS estimates for FY24/FY25/FY26 have been raised to factor in niche approvals, growth in core therapies, and brand building efforts.
  •  Cipla's valuation is at 25x 12M forward earnings with a target price of INR1,600.
  •  The company is positive on the back of respiratory/peptide asset build-up, robust brand franchise, and potential for inorganic growth.
  •  Revenue grew 13.7% YoY in 3QFY24, with strong growth in domestic formulation and North America segments.
  •  EBITDA margin expanded 220bp YoY, driven by lower raw material costs and better gross profit.
  •  Cipla plans to launch four peptides in FY25 and is focusing on brand building in the private and OTC markets.
  •  The company expects to sustain EBITDA margin in the consumer healthcare segment.
  •  Maintain BUY rating with expectations of 10% earnings CAGR over FY24-26.
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