Global research firm CLSA has reiterated its bullishness on the shares of Cipla Ltd, after the pharma firm reported a 19% rise in consolidated profit to Rs 422.59 crore for the quarter ended September 30 against Rs 354.34 crore in the corresponding quarter last year. Total income from operations increased 8.83% to Rs 4,082.41 crore during the quarter under review against Rs 3,751.02 crore in the same period last year.
CLSA said that the US sales of the company should improve in the coming quarters, as there are limited product launches by competitors. Notably, the shares fell by nearly 8 percent on Tuesday despite better-than-expected earnings due to weak market sentiment after drug-maker Lupin received warning letter for two sites.
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CLSA has increased the target price on the shares to Rs 730, from Rs 655 earlier. Cipla shares were trading at Rs 635.75, up by more than 4.5% since the previous close. CLSA’s target price implies an upside of more than 15% from the current market prices. Cipla shares have returned 6% in the year so far, as compared to BSE Sensex returns more than 25% in the same period. The BSE Healthcare Index has shed more than 4% in the same period. CLSA said that cost containment drove PAT ahead of estimates. The company’s India business, US ramp-up and cost control should be the major growth drivers. The research firm has also increased the EPS estimates for FY19-20 by 3-5%.