CLSA upgrades Cipla to 'Buy' from 'Outperform'; raises target price

Shares of Cipla advanced as much as 5 per cent in early trade on Monday after global brokerage CLSA upgraded the pharma major stocks to 'Buy' from 'Underperform', citing steady India growth and ramp-up in the US are likely to drive operating leverage benefit over the next few years.

CLSA raised the target price of Cipla to Rs 655 from Rs 525 post Q1.

The scrip was trading 3.69 per cent up at Rs 562.75 around 9.45 am (IST). Shares of the company opened at Rs 552 and touched a high and low of Rs 570 and Rs 552, respectively, in trade so far. Benchmark BSE Sensex was up 214 points, or 0.68 per cent, at 31,427.18.

Cipla on August 11 posted a 23.63 per cent increase in consolidated net profit to Rs 424.92 crore for the first quarter ended June 30. It had reported a net profit of Rs 343.70 crore for the corresponding period of the previous fiscal.

Consolidated total income from operations stood at Rs 3,525.05 crore during the quarter under review as against Rs 3,650.03 crore for the same period a year ago.

The company also said even as the industry faces several hurdles, the government's new drug policy will boost the pharma sector and the company hopes to generate sustainable and profitable top-line growth in FY18.