A barrage of brokerages have turned bearish on Cipla after the Indian pharmaceutical major reported its third-quarter earnings for the financial year ending March 2026. The company reported a significant 57% year-on-year decline in net profit, largely driven by the one-time Labour Codes impact of around Rs 276 crore.
Cipla's profit for the December quarter stood at Rs 676 crore, which missed Bloomberg's estimates of Rs 1,247 crore by a significant margin. Revenue remains flat at Rs 7,074 crore, missing analyst expectations of Rs 7,528 crore.
Margin contracted significantly for Cipla in Q3, falling from 28.1% in Q3FY25 to 17.7% in the December quarter.
Cipla Q3 Highlights (Cons, YoY)
- Revenue flat at Rs 7,074 crore.
- EBITDA down 37% at Rs 1,255 crore versus Rs 1,989 crore.
- EBITDA margin at 17.7% versus 28.1%.
- Net profit down 57% at Rs 676 crore versus Rs 1,571 crore.
- The company incurred a one-time cost of Rs 276 crore related to the new labour codes.
In light of Cipla's weak Q3 earnings, brokerages including Goldman Sachs, HSBC, and BofA have all cut target price on the counter.
Brokerages On Cipla
Goldman Sachs on Cipla
Maintain Sell; Cut TP to Rs 1,275 from Rs 1,385
We see multiple headwinds ahead: gRevlimid absence in 2026 impacting profitability
Inferior product mix as well as higher R&D costs, leading to FY27 showing a tepid EBITDA growth despite a favourable base
We cut our FY26–28E EPS estimates by 2–15% to factor in the Q3 miss
HSBC on Cipla
Downgrade to Hold; Cut TP to Rs 1,285 from Rs 1,610
Diminished gRevlimid sales in Q3 led to a big dip in profitability
FY26 EBITDA margin guidance cut to 21% from 22.75–24%
Execution remains key for Cipla to tackle challenges
BofA on Cipla
Reiterate Underperform; Cut TP to Rs 1,325 from Rs 1,420
Weak Q3 as US decline weighs on margins
Pipeline execution remains key
The lower revenue, along with higher R&D cost led to the large EBITDA miss in the quarter
We expect the earnings downgrade to continue post the quarter, with the US pipeline monetisation being key for recovery in margins from current levels
Macquarie on Cipla
Maintain Outperform with TP of Rs 1,490
Management lowered its FY26E EBITDA margin guidance to 21%
Management signalled a downgrade to FY27E US revenue guidance
We believe the recent stock-price correction already reflects the near-term headwinds
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