Dolat Capital Market has given Buy recommendation for Cipla with a target price of Rs. 940 in its research report issued on Jan 31, 2021
Dolat Capital Market’s research report on Cipla
Cipla’s 3Q was a beat operationally led by superlative execution in domestic formulations and EU coupled with reduced opex. This led to significantly higher profitability at Rs7.5bn vs our expectation of Rs5bn. Digital and cost efficiency led initiatives drove margins (23.7%, vs our assumption of 20% in 3Q. Management has surpassed its earlier guidance of cost savings of ~Rs5bn in 9MFY21 driven by (1) leveraging digital technology in India branded formulations, (2) calibration of R&D – focussed products in inhalation. Management guided that host of complex products in the inhaler space being lined up for launch in FY22E and limited competition product launches are expected to resume in 1QFY22E.
Across the board transformation from tenderised model to private model in exports market, towards rapid consumerisation of important TGx, Rx in India bode well to change the investors’ perspective. At CMP, stock trades at 24.8x FY22 and 21.3x FY23E. Reiterate BUY.