Cipla Q1 Results Preview: Analysts Expect Flat-to-Modest Profit on US Pricing Pressure, Revenue May Rise!

India's leading pharmaceutical company, Cipla Ltd, is set to announce its financial results for the first quarter of the financial year 2025-26 (Q1FY26) on Friday, July 25. Analysts expect the company to post a mixed performance for the June quarter, driven by robust growth in India, Africa, and EU/Rest of the World (RoW) markets, but weighed down by ongoing challenges in the US generics business.

Cipla Q1 Results Preview

Despite a likely improvement in revenue on both a year-on-year (YoY) and quarter-on-quarter (QoQ) basis, pressure on profit margins and muted US sales are expected to temper overall earnings growth.

Cipla's revenue for the quarter is projected to rise between 3.6% and 9% compared to the same period last year. This growth is expected to be underpinned by strong demand in its domestic formulations segment, as well as healthy performance in Africa and other international markets.

However, analysts note that sales from the US are likely to decline due to pricing pressures and fewer product launches, particularly impacting high-margin offerings such as gRevlimid.

Cipla's Earnings: Top Brokerages' Expected Net Profit, Revenue and EBITDA

Despite the top-line growth, Cipla's profitability is expected to remain under pressure. The company's net profit or profit after tax (PAT) is forecast to range between Rs 1,140 crore and Rs 1,380 crore, reflecting YoY variations from a 3% decline to a 17.2% increase.

PhillipCapital estimates PAT at Rs 1,218 crore, suggesting a modest 2% rise YoY and a 5% sequential increase. Nuvama is more conservative, predicting a 3% YoY and 7% QoQ drop in PAT to Rs 1,140 crore, citing margin pressure from the US segment.

Motilal Oswal expects PAT at Rs 1,209 crore, up 2.6% YoY, while JM Financial is the most bullish, projecting Rs 1,380 crore in net profit, up 17.2% YoY and 13% QoQ. These wide-ranging estimates reflect uncertainty around the US market's contribution and potential erosion in gRevlimid sales.

PhillipCapital expects revenue to come in at Rs 7,323 crore, reflecting a 9% YoY and QoQ rise, while Nuvama Institutional Equities projects Rs 7,007 crore in revenue, indicating a 5% YoY and 4% QoQ increase.

Motilal Oswal forecasts slightly lower revenue at Rs 6,933 crore, up 3.6% YoY, whereas JM Financial anticipates Rs 7,049 crore, up 6.4% YoY and 6.8% sequentially.

On the operational front, Cipla's earnings before interest, tax, depreciation, and amortization (EBITDA) and margin performance are also expected to reflect the strain from a lower US product mix. While some sequential improvement is anticipated due to better domestic and RoW contributions, EBITDA margins are likely to contract on a YoY basis.

PhillipCapital sees EBITDA at Rs 1,797 crore, up 5% YoY and 17% QoQ, with margins at 24.5%, which is 110 basis points lower YoY but an improvement of 169 bps from the previous quarter. Nuvama forecasts EBITDA at Rs 1,715 crore, up 15% YoY and 12% QoQ, with stable margins.

On the other hand, Motilal Oswal projects a decline in EBITDA to Rs 1,629 crore, down 5% YoY, with margins at 23.5%. JM Financial remains optimistic with an EBITDA estimate of Rs 1,834 crore, marking a 6.9% YoY and 19.3% QoQ increase.

Disclaimer

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