Shares of Cipla Limited, the top Nifty gainer, rallied 10 percent to touch an all-time high of Rs 1,219 apiece in Thursday's trade after the drugmaker raised its EBITDA margin guidance to 23 percent from 22 percent earlier. The pharmaceutical major delivered better-than-expected June quarter (Q1FY24) performance, led by superior executions in North America (NA) and domestic formulation (DF) segments. Cipla delivered a 9 percent EBITDA beat in Q1 of FY24, driven by strength across the US and India.

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At around 2:15 pm, Cipla shares were trading 9.98 percent higher at Rs 1,175.15 apiece. The stock has gained nearly 16 percent in a month, while it has risen 20 percent in the last one-year period. Market cap of the drugmaker rose to Rs 94,039.31 crore on Thursday.

Cipla stock targets

Share price targets on the counter suggests an upside potential of up to 17 percent for the stock ahead.

Axis Securities has a 'Buy' recommendation on the stock, with a target price of Rs 1,250 per share. Meanwhile, Nuvama has a target of Rs 1,265 from Rs 1,110 earlier.

Prabhudas Lilladher has a 'Buy' call on the counter with a target of Rs 1,220, while Motilal, on the other hand, has a 'Neutral' rating with a target of Rs 1,130. This suggests an upside potential of 6 percent from the current market levels.

Kotak too has a 'Neutral' stance on the stock, with a target of Rs 1,230 per share.

Tech view

In terms of technicals, the stock has been consistently forming strong candles on the weekly charts after re-testing its 200-EMA (exponential moving average) on the weekly charts at 860 levels which resulted in a steep rise till 1000 levels.

"The stock is expected to witness further upside on a weekly close above 1,190 levels which can push it towards 1,300 levels in the short-term. Traders are advised to book profits as it is approaching a major resistance whereas investors can book partial profit and hold the stock for further gains. Long term supports are now placed around 1,020 levels," Gaurav Bissa of InCred Equities said.

US drives beat

Cipla reported the highest-ever US business of $222 million (+26 percent quarter-on-quarter), which was majorly driven by better execution in the base business and higher-than-expected revenue contribution from gRevlimid.

Despite limited period gRevlimid cash flow, Cipla has other growth drivers — India business growing steadily across channels; albuterol, lanreotide, leuprolide in the US; gAbraxane and gAdvair in the pipeline, wherein competition is likely to be limited; and peptide, inhaler filings.

The management has guided that the average run rate of the US business is likely to be in the range of $210-$215 Mn in the upcoming quarters.

The company’s India business (ex-Covid) grew by 11 percent, driven by chronic therapies that posted better than expected performance.

Outlook & guidance

Analysts continue to remain positive on growth across key segments including India and US given strong traction in respiratory and other portfolio, potential growth of +10 percent in domestic formulations and sustainability of current US revs, backed by prospective key launches over FY25.

The base business in the US reported better than expected results ($185-$190 million). This was driven by the following factors — only a few distributors buying locally manufactured drugs, channel readjusting, shortage of drugs in a few segments, the company launching new products in the market.

gAdvair and gAbraxane may add revenue in FY25E despite current regulatory challenges, analysts say. gSynbicort is to be launched in Q4FY24 and the company has planned to launch three more peptides in the next year (size $30-50 million).

Cipla posted a 45 percent year-on-year (YoY) rise in consolidated net profit for the June 2023 quarter to Rs 996 crore. The total revenue from operations surged by nearly 18 percent to Rs 6,329 crore. EBITDA grew by 31 percent YoY to Rs 1,494.02 crore, while operating margin expanded a sharp 234 basis points to 23.6 percent.

First Published:Jul 27, 2023 11:44 AM IST