Stock in Action – Cipla

CIPLA Stock Movement of day 

Why Cipla Stock is in Buzz? 

• Cipla stock experienced significant surge of 6% amidst otherwise subdued market atmosphere, catalysed by optimistic management guidance. 
• Cipla's management provided bullish outlook, forecasting EBITD margin of 24.5%-25.5% for fiscal year 2025. This surge in stock price comes despite lingering uncertainties surrounding USFD compliance at Cipla's Go site. 
• Investors were particularly encouraged by company's focus on strong growth prospects in India, coupled with plans for differentiated & complex product launches in lucrative US market. 
• Cipla's diversified approach to growth & absence of adverse outcomes from potential regulatory issues have bolstered investor confidence in company's future prospects.

Highlights of Cipla Q4-FY24 Financial Results

• Cipla share price reported robust financial results for fourth quarter of fiscal year 2024, showcasing significant year-on-year growth. 
• Cipla's net profit surged by impressive 79% to reach ₹ 939 crore, primarily attributable to favourable base effects resulting from one-time impairment charges in previous fiscal year. 
• Despite slightly missing analyst expectations, Cipla achieved noteworthy 13% year-on-year increase in revenue, amounting to ₹ 6,163 crore.

(data source: Ip, ₹ in Cr.)

• Notably, Cipla's US business segment demonstrated solid growth, expanding by 11%, while its Indi operations experienced more moderate 7% growth rate, impacted by soft seasonal demand. 
• Moreover, Cipla's operational efficiency was underscored by expansion in its EBITD margin, which rose to 21.4%, representing 54 basis points increase compared to previous year.

Cipla Strong Net-Cash 

(data source: Ip, ₹ in Cr.)

Cipla Management Commentary 

Speaking about Cipla results, Umang Vohra, MD & Global CEO of Cipla Ltd., commented that while operating margins greatly increased to surpass ₹ 6,000 core for first time in FY24, company's revenues surpassed ₹ 25,000 crore.

"This was backed by One-India revenue breaching ₹ 10,000 crore, North America revenue surpassing USD 900 million & South Africa reaching top spot in prescription market, with all three businesses growing in double digits over last year with improved profitability," he stated.

In terms of road ahead, he stated, "As we enter into FY25, our focus will be on our priorities of market-leading growth in our key markets, growing big brands bigger, investing in future pipeline as well as focusing on resolutions on regulatory front."

Cipla Shares Dividend 

Cipla's board of directors proposed at its meeting that shareholders approve final dividend of ₹ 13 per equity share with face value of ₹ 2 each for FY24. This permission will be needed at next annual general meeting.

What should Investors do?

In light of Cipla's positive momentum & promising growth trajectory, investors are advised to carefully consider their position with respect to stock. company's strong pipeline of product launches, coupled with its optimistic margin guidance, suggests favourable outlook for future performance. Analysts have reiterated their bullish stance on stock, with upward revisions to price targets. 

Brokerages view on Cipla Share Price 

• JP Morgan maintained its 'overweight' rating & increased Cipla share price target per share from ₹ 1,450 to ₹ 1,540.

• As for CLSA, it reiterated its rating of 'outperform' & Cipla share price target of ₹ 1,480 per unit.

• In similar vein, Macquarie set target of ₹ 1,430 per Cipla share & kept its "outperform" rating. 

• Nomura went on to state that they were "neutral" & set target of ₹ 1,569 for each Cipla Stock Price.

• Likewise, HSBC reiterated "buy" with target price of ₹ 1,600 per share.

• On other hand, Goldman Sachs kept its "sell" rating & increased target price from ₹ 1,250 to ₹ 1,265.

• Additionally, Jefferies kept "hold" & increased goal to ₹ 1,400 per share from ₹ 1,250.

CIPLA Strength
• Cipla has reduced debt.

• Cipla is almost debt free.

• Cipla has delivered good profit growth of 25.4% CAGR over last 5 years

• Cipla has been maintaining a healthy dividend payout of 22.0%

Cipla Weakness

• Cipla has delivered a poor sales growth of 9.51% over past five years.
• Promoter holding has decreased over last 3 years: -3.26%.