The brokerage house Nuvama Institutional Equities retained its ‘Hold’ rating on Cipla, with an unchanged target price of Rs 1,620. The company reported its quarterly earnings for the fourth quarter of the financial year 2024-25. The brokerage believes that the management gave margin guidance below expectations.
Nuvama on Cipla: Revlimid soon off the cliff
The brokerage firm said that Cipla’s margins from Revlimid have reached their highest level, and they’ll be going down starting the second half of FY25. The company’s margins are likely to be 23% in FY27.
The financial year 2025-26 should likely see a normalised revenue owing to Lanreotide. To offset the Revlimid’s phasing-out effect, Cipla has other launches in line, which are likely to be seen over the next two years. Also, the brokerage believes that Cipla’s margins would consolidate in FY27, which will further lead to flat earnings per share growth over the next year. Revlimid has high margins, which is why the company is likely to report margin contraction year-on-year.
Nuvama on Cipla: Other products not enough
“However, we note that key products from this pipeline are at least two–three years away while the wait continues for gAdvair and gSymbicort approval. We reckon gAbraxane/Nilotinib/gSymbicort shall help Cipla offset the impact of gRevlimid cliff,” said Nuvama.
Another positive is that Cipla is confident of outstripping Indian pharmaceutical market growth on the back of its chronic portfolio, trade generics business, and lucrative GLP-1 opportunity in CY26.
“gAdvair/gSymbicort approval is a critical future trigger, which can boost our confidence,” said Nuvama.
Cipla Q4 earnings
The pharma major posted a 30% YoY increase in its net profit at Rs 1,222 crore for Q4FY25, compared with a net profit of Rs 939 crore in the corresponding period of the last financial year. Cipla’s revenue from operations rose more than 9% to Rs 6,729.69 crore. Also, it announces a final dividend of Rs 13 per equity share for FY25, and a special dividend of Rs 3 per equity share on the occasion of completing 90 years.
Cipal’s stock performance
The share price of Cipla has risen 0.5% in the last five trading sessions. The stock has given a return of 1.22% in the last one month and has been negligible in the past six months. Cipla’s share price increased by 10% in the previous one year.