Buy Cipla: Target Price of ₹1730 by Prabhudas Lilladher
In a recent research report dated November 28, 2024, Prabhudas Lilladher expressed bullish sentiments on Cipla, upgrading their rating to ‘Buy’ with a revised target price of ₹1,730 per share.
Key Highlights:
1. USFDA Update: Cipla’s Goa facility has been classified as Voluntary Action Indicated (VAI) by the USFDA, setting the stage for the launch of gAbraxane, a critical high-value product.
2. Domestic Market Outlook: Despite challenges like gLanreotide supply issues affecting Q3FY25 US sales, Cipla’s domestic market is expected to bounce back strongly.
3. Future Growth Drivers: FY26E and FY27E will likely witness multiple high-value niche product launches in the US, supported by the normalization of gLanreotide supply.
4. Resilient Profitability: Unlike peers facing sharp profitability declines in FY27E due to high dependency on gRevlimid, Cipla’s earnings trajectory remains stable.
5. Strong Financials: With a robust net cash position of $1 billion, Cipla has ample flexibility to explore strategic mergers and acquisitions.
Current Valuation and Outlook:
At the current market price (CMP), Cipla trades at 23x FY27E EPS, offering significant growth potential. The stock has corrected by nearly 12% from its recent high, presenting an attractive entry point for investors. The revised valuation is pegged at 27x FY27E EPS, reflecting increased confidence in Cipla’s ability to deliver on key US launches and maintain robust domestic growth.
Recommendation:
Given these factors, Prabhudas Lilladher has upgraded Cipla to ‘Buy’ from ‘Accumulate’ with a revised target price of ₹1,730 per share. Investors are advised to keep an eye on the timely execution of Cipla’s US product pipeline and its strategic initiatives.
Disclaimer: This article is for informational purposes only. Please consult certified financial advisors before making investment decisions.
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