ICICI Securities Recommends Buying Cipla, Sees Target Price of Rs 1550

Cipla Gains Momentum with Recent USFDA Approvals

Cipla's recent product approval of gOfev and gVentolin from the US FDA is expected to alleviate concerns surrounding its US growth following the discontinuation of Lanreotide, loss of exclusivity in gRevlimid, and regulatory issues at key plants in India. The company's management anticipates approval for gAdvair, as well as a couple of respiratory and peptide assets, in the near term. These launches are likely to contribute to Cipla reaching US sales of $880-$930 million in FY27E and FY28E.

In addition to its US growth prospects, Cipla's dominance in the branded business in India, coupled with in-licensing/marketing and M&A deals, could also boost growth. This diversified approach is expected to drive the company's overall performance.

Outlook and Recommendation

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In light of recent approvals and INR's depreciation benefits, we have raised our earnings per share (EPS) estimates for FY27 and FY28 by 1-2%. The stock is currently available at an attractive multiple of 19.2x FY28E EPS. Based on this valuation and our revised EPS estimates, we have upgraded our recommendation to BUY from Add and raised our target price to INR 1,550, corresponding to 23x FY28E EPS.