Cipla - Striving For Sustainable Growth Beyond FY24: Motilal Oswal

Motilal Oswal Report

After exhibiting a moderate 7% YoY earnings growth in FY23, we expect Cipla Ltd. to end FY24 on a strong note with a 26% YoY earnings growth. Cipla has executed efforts to improve its growth outlook beyond FY24. 

On the India business front, in particular, Cipla is working to not only enhance its prescription base but also strengthen its trade generics and consumer healthcare businesses.

Even in the U.S. generics segment, Cipla is developing a pipeline of difficult-to manufacture products, including respiratory and peptide products, to sustain its growth momentum.

Hence, we model a 13% earnings compound annual growth rate over FY24-26.

We value Cipla at 25 times 12- month forward earnings and add an net profit value of Rs 30 for g-Revlimid to arrive at our target price of Rs 1,540.

Cipla remains our top-pick in the large-cap pharma space, given:

1. its three pronged growth levers in India,

2. a robust acquired new drug application pipeline to overcome price erosion and deliver growth, and

3. a de-risked regulatory factor through filings from the alternate sites.

We maintain our 'Buy' rating on the stock.

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