Shares of Cipla surged by over 6% in early trading on Monday as the pharma company reported a 79% jump in the net profit in Q4FY24. The stock rallied by 6.44% to reach an intra-day high of Rs 1,425.95 per share on the NSE.
Pharmaceutical giant Cipla announced a net profit of Rs 939 crore for the quarter ending March 2024, marking a significant 79% surge from the Rs 525 crore reported in the corresponding period last year.
Revenue from operations also witnessed a 7% year-on-year increase to Rs 6,163 crore during the March quarter. The company’s board proposed a final dividend of Rs 13 per equity share for the fiscal year ended March 2024. EBITDA for the quarter experienced a 13% year-on-year rise to Rs 1,316 crore, compared to Rs 1,166 crore in the previous year.
In the domestic market, Cipla’s One-India business recorded a 7% year-on-year growth, driven by branded prescription and trade generics, with the former surpassing market growth by 100 basis points. Meanwhile, North America revenue reached $226 million, up by 11% year-on-year, supported by sustained growth in key differentiated assets and the company’s portfolio.
South Africa also witnessed significant momentum, with revenue growth at 26% in local currency terms, elevating Cipla to the top rank in the prescription market in the region.
Research and development investments during the fourth quarter amounted to Rs 444 crore, representing 7.2% of sales, marking a 19% year-on-year increase driven by product filings and developmental efforts.
Cipla maintains a robust net cash position of Rs 7,708 crore as of March 2024, with debt primarily comprising lease liabilities and working capital requirements.
Brokerages on Cipla
Motilal Oswal on Cipla
Motilal Oswal maintains its earnings estimates for FY25/FY26 and values Cipla through a sum-of-the-parts (SOTP) approach. The valuation includes a 25x multiple on 12-month forward earnings for the base business and a net present value (NPV) of NR30 for gRevlimid, arriving at a target price of Rs 1,600.
Motilal Oswal’s latest report on Cipla reveals a slight earnings miss for the fourth quarter of FY24, primarily attributed to higher operating expenses.
Despite this, Cipla concluded FY24 on a robust note, with impressive year-on-year growth of 13% in sales, 23% in EBITDA, and 39% in PAT, amounting to Rs 257 billion, Rs 63 billion, and Rs 42 billion respectively.
This growth was driven by strong performance in the US generics market and efficient execution in the branded generics segment within domestic formulations (DF) and South Africa. While g-Revlimid significantly contributed to FY24 earnings, Motilal Oswal anticipates a 12% earnings compound annual growth rate (CAGR) over FY24-26.
This growth is expected to be driven by the commercialization of complex assets in the US, strong performance of chronic therapies in the DF segment, improvements in the operating model for trade generics, and sustained growth in the consumer healthcare segment. In line with these expectations, Motilal Oswal reiterates its BUY rating on Cipla.
Pabhudas Lilladhar on Cipla
At the current market price (CMP), the stock is trading at 24x FY26E EPS adjusted for gRevlimid. Prabhudas Lilladhar reiterates its ‘Accumulate’ rating with a target price (TP) of Rs 1,405 per share. However, it highlights the risk of any further FDA escalation to the Indore unit and erosion in key products in the US as potential challenges to their call.
According to Prabhudas Lilladhar’s report on Cipla, the FY25/26E EPS estimates have seen a 3% increase. Cipla’s Q4FY24 EBITDA of Rs 13.2 billion, with a 21.4% operating profit margin (OPM), aligned with expectations, supported by higher gross margins (66.3%).
However, the delay in key launches such as gAdvair and gAbraxane, pushed back by at least 2-3 quarters, places emphasis on the timely launch of five peptides guided for FY25.
The report maintains a positive outlook on Cipla’s growth prospects in key segments, including India and the US, attributing it to strong traction in respiratory and other portfolios, potential over 10% growth in domestic formulations, and the sustainability of current US revenues. It anticipates a 10% EPS compound annual growth rate (CAGR) over FY24-26E.
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