Cipla Q4 Review: FY26 Forecast Appears Conservative, India Business Drive Optimism: Analysts

Cipla Ltd.'s fourth quarter results were operationally in line with expectations, with revenue and Ebitda largely matching consensus estimates. While Macquarie views the fiscal 2026 forecast as conservative, it expects strong performance from the Indian markets to drive business growth.

The company in the fourth quarter of the previous fiscal posted a beat on profit, driven by lower tax expenses. The India business grew 8% year-on-year, aided by contributions from the Sanofi portfolio and strength in respiratory and consumer healthcare segments.

Nomura flagged an Ebitda miss (1% below expectations), with margin at 26.9%—slightly above Cipla's guidance but impacted by higher research and development spending and staff costs. Nevertheless, profit grew 17% year-on-year, supported by a better income mix and tax benefits.

In the US, Cipla posted revenue of $221 million in the fourth quarter, slightly lower than the third quarter. Growth was dampened by a decline in generic sales, despite a ramp-up in Lanreotide supplies.

Three key peptide product launches remain on track for financial year 2026, including gRevlimid. Emerging markets and Europe reported 18% year-on-year growth, continuing a positive trend.

For financial year 2026, management guided for revenue growth with an Ebitda margin of 23.5–24.5%, below Bloomberg estimates of 25.4%. Macquarie views this guidance as conservative, especially since Cipla has consistently outperformed its own forecasts over the past three years.

The brokerage expects strong performance from the India and emerging markets businesses, with continued margin support from easing cost pressures and efficient execution.

Nomura maintained its 'Buy' rating with a target price of RS 1,780, noting that the product pipeline remains robust, especially in low-competition segments in the US. Macquarie also retained its 'Outperform' call with a target price of Rs 1,875.