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Outperform Cipla, target Rs 639: IDFC Securities

Outperform Cipla Ltd. at a price target of Rs 639.0 .

ETMarkets.com|
Updated: Jun 25, 2018, 10.21 AM IST
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IDFC Securities has an outperform call on Cipla Ltd. with a target price of Rs 639.0 . The current market price of Cipla Ltd. is Rs 614.25 Time period given by the brokerage is a year when Cipla Ltd. price can reach defined target. Cipla Ltd., incorporated in the year 1935, is a largecap company with a market cap of Rs 49438.74 crore.

Investment rationale by IDFC Securities

With flat profits over FY13-17 at ~Rs15bn, Cipla reported ‘below potential’ earnings for a prolonged period, as revenue growth failed to match aggressive growth investments. Signs of profitability turnaround were visible in FY18 with change in strategy and management. Scale-up in the US business through the launch of niche ANDAs should add to this momentum. Over the medium term, we expect Cipla’s relatively small US business (~$385m in FY18) to grow briskly as on-going R&D investmentsin developing complex drugs including multiple inhalation products begin to yield results. This will complement the steady profitability growth in Cipla’s sturdy domestic formulations franchise. We estimate 20% EPS CAGR over FY18-20E, as Cipla capitalizes on its ‘underleveraged’ R&D capabilities. Maintain Outperformer with a price target of Rs 639.

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Disclaimer: This recommendation is analyst's own and does not represent those of economictimes.com & ETMarkets.com. Please consult your financial advisor before taking any position in the stock/s mentioned.

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