Cipla Ltd.'s June-quarter earnings fell short of Street estimates as higher costs weighed on profitability, prompting mixed reactions from brokerages. While profit and operating margins missed expectations, analysts remained constructive on the company's medium-term outlook, citing a recovery in the US business, strong India franchise and a healthy product launch pipeline.
Brokerages said the margin miss was largely driven by higher investments, lower North America sales and temporary cost pressures rather than a deterioration in the underlying business. Most expect earnings to improve over the rest of FY27 as key product launches gather pace.
The company reported a decline in profit and operating margin during the quarter, while revenue was broadly in line with analyst expectations.
Cipla Q1 Highlights (Consolidated, YoY)
- Revenue rose 2.3% to Rs. 7,119 crore from Rs. 6,957 crore. (Bloomberg Estimate: Rs. 7,131 crore)
- EBITDA declined 33% to Rs. 1,192 crore from Rs. 1,778 crore. (Estimate: Rs. 1,269 crore)
- EBITDA margin stood at 16.7% versus 25.6% a year ago. (Estimate: 17.8%)
- Net profit fell 39.2% to Rs. 789 crore from Rs. 1,298 crore. (Estimate: Rs. 840 crore)
Here's What Brokerages Are Saying After Cipla Announced Q1 Results
JPMorgan
- Maintained 'Overweight'; Target Price Raised To Rs. 1,600 From Rs. 1,550
- Revenue was in line with expectations, while margins missed estimates.
- Expects sequential recovery in the US business supported by key product launches.
- India outlook remains healthy, led by branded prescription growth.
- One Africa continues to outperform the private market, while EMEU remains focused on top-line growth.
- US launch pipeline and India momentum continue to support upside.
Citi
- Maintained 'Buy'; Target Price At Rs. 1,700
- Strong execution in the India business.
- US launch momentum continues to improve.
- Margin miss is seen as temporary.
- FY27 guidance maintained.
Jefferies
- Maintained 'Underperform'; Target Price Raised To Rs. 1,170 From Rs. 1,120
- Higher costs led to the June-quarter earnings miss.
- Lower North America sales weighed on profitability.
- Sees downside risk to US guidance if key product launches are delayed.
- Raised FY27 EPS estimates by 2%.
Morgan Stanley
- Maintained 'Underweight'; Target Price At Rs. 1,218
- June-quarter performance was broadly in line with expectations.
- Revlimid loss of exclusivity, war-related costs and pre-launch investments weighed on EBITDA.
- Expects the US revenue run rate to improve from the second half of FY27.
Catch all the live updates on stock markets here.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.