Motilal Oswal has maintained a Neutral rating on Cipla, with a target price of Rs 1,530 which is 8% upside from the current market price. According to the firm, due to delays in niche product approvals and launches, earnings growth is expected to slow down to just 5% from FY25 to FY27.
Here are three main reasons why Motilal Oswal is staying cautious – Motilal Oswal on Cipla: Strong Q3 but limited upside from current levels
As per the brokerage firm, Cipla’s Q3FY25 exceeded expectations, mostly driven by a healthier product mix and lower research and development spending. The company reported a 7.1% YoY revenue growth to Rs 70.7 billion.
However, the brokerage firm has maintained a Neutral rating due to limited growth potential at current levels. The firm sees the stock’s upside as constrained, and earnings growth is expected to moderate in the coming years.
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Motilal Oswal highlights that Cipla has been expanding its market share, more specifically in the chronic prescription business and trade generics segment. However, a key risk for the company is the delay in approvals for niche products, which is holding back its growth potential in the medium term.
“We expect CIPLA to deliver 18% YoY earnings growth in FY25 after posting strong 39% YoY growth in FY24. However, considering the delay in niche approvals/launches, we expect earnings growth to moderate to 5% over FY25-27. We maintain Neutral, given limited upside from current levels,” added the brokerage firm in its report.
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The brokerage firm further points out that while Cipla expects growth in its upcoming launches such as g-Advair and g-Abraxane, but requires USFDA approval and could face delays.
Furthermore, it noted out that the launch of g-Advair is now expected in the first half of FY26, while g-Abraxane might not be available until the second half of FY26,
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