Brokerages are divided in their views on Cipla Ltd. post the first quarter of fiscal 2025-2026. While HSBC has maintained its 'buy' rating with a target price of Rs 1,740, Jefferies has maintained its 'hold' rating and hiked the target price to Rs 1,690 from Rs 1,610.
HSBC's target price implies an upside of 13.5%. The brokerage retained its 'buy' rating as it remains positive on the medium-term earnings outlook, despite short-term headwinds in US sales growth, particularly the decline in gRevlimid contributions.
The brokerage noted that Cipla's Q1 results exceeded expectations, driven by a favourable sales mix and lower operating costs. The company has retained its FY26 EBITDA margin guidance at 23.5–24.5%.
"We believe the medium-term outlook for its US sales is intact in view of a good line-up of differentiated launches, recovery in lanreotide supplies, and continued traction in albulterol inhaler should help offset the decline in gRevlimid sales," it said.
"It remains well positioned for strategic M&A, helped by net cash of $1.3 billion. Post Q1FY26 results, we have made minor changes to FY26-28," it added.
Jefferies trimmed its FY26–FY28 EPS estimates by 2–3%, citing pressure on margins. The brokerage valued Cipla at 25x September FY27 EPS to arrive at the price target of Rs 1,690.
"We maintain a hold rating as Cipla's US pipeline is under a rebuilding phase and will start delivering from 2HFY27," it added.
The brokerage highlighted that Cipla's Q1 results revenue was 3% below their estimate, Ebitda was in line, and PAT was 2% above estimate. "North America and India missed our estimate, while South Africa and EM+EU beat."
"Higher other operating income lifted Ebitda margin to 25.6% vs the estimate of 25%," it added.
Jefferies noted that US sales were lower than expected but they were offset by strong ROW sales and higher other income. "US sales could reach $1billion in FY27 or after," it further added.
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