Motilal Oswal, in its research report dated January 16, 2024, has expressed a bullish outlook on Cipla, recommending a buy rating with a target price of Rs 1540. The report highlights Cipla’s strategies to combat price erosion and drive growth through its robust ANDA pipeline.
In the fiscal year 2023, Cipla witnessed a moderate 7% YoY earnings growth, but the forecast for FY24 is much more optimistic, anticipating a substantial 26% YoY earnings growth.
The company has implemented initiatives to enhance its growth trajectory beyond FY24, focusing on strengthening its presence in India across prescription, trade generics, and consumer healthcare segments. Additionally, Cipla is making strides in the US generics market by developing a pipeline of challenging-to-manufacture products, including respiratory and peptide products, to sustain its growth momentum.
Looking ahead, Motilal Oswal models a 13% earnings CAGR over FY24-26. The valuation of Cipla stands at 25x 12-month forward earnings, with an added NPV of INR30 for g-Revlimid, resulting in the target price of INR1,540. Cipla maintains its position as the top pick in the large-cap pharma sector, attributed to its three-pronged growth strategy in India, a robust ANDA pipeline, and a de-risked regulatory profile through filings from alternate sites.
Motilal Oswal continues to uphold a BUY rating on Cipla. It’s important to note that the opinions and investment tips presented in this report are those of investment experts, and users are advised to consult certified experts before making any investment decisions.