Buy Cipla, target price Rs 1120: Centrum Broking

Centrum Broking has buy call on Cipla with a target price of Rs 1120. The current market price of Cipla Ltd. is Rs 897.35. Time period given by analyst is one year when Cipla Ltd. price can reach defined target.

Cipla Ltd., incorporated in the year 1935, is a Large Cap company (having a market cap of Rs 72586.73 Crore) operating in Pharmaceuticals sector.

Cipla Ltd. key Products/Revenue Segments include Pharmaceuticals, Other Operating Revenue, Export Incentives, Royalty Income and Scrap for the year ending 31-Mar-2021.



Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 5580.47 Crore, up .20 % from last quarter Total Income of Rs 5569.28 Crore and up 9.60 % from last year same quarter Total Income of Rs 5091.76 Crore. Company reported net profit after tax of Rs 712.00 Crore in latest quarter.


Investment Rationale
India business could post market-beating growth in FY22 while US business is expected to post faster ramp-up starting 2HFY23, with new launches like aAbraxane, gAdvair and gRevlimed. Considering lower R&D spend, given that major trials have been completed, along with consistent cost optimization, we expect better earnings trajectory. We look forward to (1) opportunities from inhaler – gAdvair filed in May 2020; (2) biosimilar product filings; (3) China market entry, focused on respiratory segment – more of H2FY22 opportunity. The brokerage maintains multiple at 26x average of FY23E & FY24E EPS, marginally changed FY22/FY23E earnings, and introduced FY24E. BUY with a TP of Rs1,120. At CMP of Rs917, the stock trades at 22.8x FY23E EPS of Rs40.1 and 19.4x FY24E EPS of Rs47.2.

Promoter/FII Holdings
Promoters held 36.12 per cent stake in the company as of 30-Sep-2021, while FIIs owned 28.1 per cent, DIIs 17.74 per cent.