Cipla, a leading pharmaceutical giant, is poised for heightened profitability driven by its robust growth in the complex respiratory portfolio, as highlighted in a report by brokerage firm Sharekhan. The report underscores key factors contributing to Cipla’s upward trajectory, emphasizing the company’s strategic emphasis on complex products and its positive impact on margins.

The report reaffirms a ‘Buy’ call for Cipla, accompanied by a revised Price Target (PT) of Rs. 1,700, up from Rs. 1,600, citing several favorable indicators in the company’s performance. These include a buoyant presence in the US market, alleviation of price erosion pressures, volume growth due to drug shortages, and a concentrated focus on complex products.

Cipla’s recent growth figures in the Indian Pharmaceutical Market (IPM) exhibit its strong market position, with a growth rate of 8.1% in February 2024, surpassing the overall IPM growth of 6.7%. On a Moving Annual Total (MAT) basis, Cipla’s growth stands at 9.9%, indicating sustained momentum.

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Sharekhan anticipates a notable increase in Cipla’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margins, projecting a rise to 26% by FY26E. This optimistic outlook is attributed to strategic initiatives by Cipla, including an augmented share in chronic products domestically, new launches of complex generics in the US market, and the finalization of the Actor Pharma acquisition in South Africa.

In addition to its US operations, Cipla’s India business has reported substantial traction, with a 60% contribution from the chronics portfolio. The company’s strategic focus on expanding its flagship brands and its success in key therapeutic segments position Cipla as a frontrunner in the Indian pharmaceutical landscape.

Looking ahead, Cipla‘s growth trajectory is expected to continue, fueled by sustained momentum in key markets, a robust pipeline of new products, and strategic acquisitions. Sharekhan’s report underscores Cipla’s potential for further profitability and market leadership, presenting an enticing investment opportunity in the pharmaceutical sector.

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