Cipla Q1 Results Review - Strong All-Round Performance: Nirmal Bang

Nirmal Bang Report

Cipla Ltd.'s Q1 FY25 results closely aligned with our estimates overall; revenues slightly missed our estimates, whereas there was beat on margins. Revenues missed due to distributor transitioning and improved gross margins lead to beat on margins.

The U.S. business reported the highest-ever quarterly revenue of $250 million as price erosion stabilized on the back of drug shortages and the launch of generic Lanreotide and regaining of market share of Albuterol.

With strong growth witnessed across major geographies, Cipla has maintained its Ebitda margin guidance for FY25 in the range of 24.5-25.5%.

We remain positive about Cipla, mainly due to high contribution from the branded business, robust India franchise, healthy U.S. pipeline, decent margins and improving return ratios. The company added around 1500 MRs recently; we believe this addition to be on the chronic portfolio side and we are increasing our PE multiple from 23 to 27.

We maintain Buy on Cipla with a revised target price of Rs1,876, valuing it at 27 times on FY25E base business earnings per share of Rs 69 and net present value of Rs 13.4 for the Revlimid opportunity.

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