Cipla shares rise 3.7% despite Q1 profit fall, brokerages remain cautious
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Cipla shares rose 3.7% despite a significant 39% drop in Q1 PAT, with total revenue increasing to ₹7,119 crore. Brokerages have mixed views, with Jefferies and Morgan Stanley maintaining underperform and underweight ratings, respectively, citing concerns over higher costs and US sales targets. Motilal Oswal remains neutral, raising earnings estimates due to growth in the Indian market but warns of potential earnings decline in FY27.
Cipla shares soared 3.7 per cent on Friday despite a 39 per cent decline in first-quarter PAT, with the stock trading at ₹1,426.40 on the NSE at 9.52 am after hitting a high of ₹1,444.80, compared with the previous close of ₹1,393.
The company’s Q1 PAT fell to ₹789 crore from ₹1,298 crore in the same period last year, while total revenue from operations rose to ₹7,119 crore from ₹6,957 crore.
Jefferies maintained an underperform rating and raised its target price to ₹1,170 from ₹1,120. It said higher costs drove a miss in the June quarter and that downside risk to US guidance persists. The brokerage said Q1 missed due to higher costs and lower sales from North America. It also said the North America exit rate of US$250 million in Q4 is a tall ask, especially with a gradual ramp-up of recently launched gVentolin. Jefferies sees downside risk to the EBITDA margin guidance of 18.5–20 per cent if key US launches are delayed.
Morgan Stanley maintained an underweight rating with a target price of ₹1,218. It said Q1 was in line and highlighted the importance of hitting the US$1 billion US sales target.
Motilal Oswal maintained a neutral rating and set a target price of ₹1,420. The brokerage raised its FY27/FY28 earnings estimates by 4 per cent/2 per cent, driven by stronger India growth led by the chronic portfolio and continued strength in the SA Rx business supported by portfolio expansion. It expects FY27 to be a second consecutive year of earnings decline as per its estimates, while potential product launches in 2HFY27 are expected to drive growth revival in FY28. Motilal Oswal said the current valuation factors in an earnings revival in FY28.
Infosys shares fall over 2% after Q1 results; brokerages trim target prices
Choice Institutional Equities reiterated its reduce rating and set a target price of ₹1,330. It maintained a cautious view amid persistent headwinds, including delays in revenue contribution from key US product launches, the ongoing impact of Revlimid and higher opex. The brokerage expects the US business to remain under pressure in FY27E, weighing on overall revenue growth and resulting in margin contraction. It also believes Cipla’s earlier target of achieving US$1 billion in US revenue is likely to be deferred to FY28E, subject to the pace of product scale-up.
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Published on Hindu BusinessLine