Buy/Sell? Pharma Stock Jumps 10% After Big USFDA Inspection Update, Q2 Profit Up 15.2%

Leading drug maker Cipla shares today saw a steep rally of 10% after the USFDA classified its Goa facility as a "Voluntary Action Indicated" (VAI) status, according to its BSE filing. Cipla shares closed 9.58% higher at Rs 1553.20 apiece on Bombay Stock Exchange (BSE) on Thursday, October 31, 2024. According to BSE, the company has a total market cap of Rs 1,25,435.72 crore. The scrip witnessed a rally of 29.50% in last 1-year period and declined 6.09% in last 1-month. Earlier, the pharma major on October 29, 2024 announced a jump of 15.2% in its consolidated net profit for the quarter ended September 2024 to Rs 1303.53 crore as against the net profit of Rs 1131 crore reported in the corresponding quarter of last year.

Cipla Issues Update on USFDA inspection At Manufacturing Facility In Goa

According to the exchange filing of the company dated October 31, 2024, "pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and further to our intimation dated 21st June, 2024, regarding the routine current Good Manufacturing Practices (cGMP) inspection at Company's manufacturing facility in Goa, India between 10th - 21st June, 2024, we hereby notify that the United States Food and Drug Administration (USFDA) vide communication dated Wednesday, 30th October, 2024 (8:28 p.m. IST) has classified the above referred inspection as Voluntary Action Indicated (VAI)."

It is worth mentioning here that the Goa facility has been re-inspected by the regulator between June 10 to June 21, 2024 after which 6 key observations were announced. The latest VAI status is likely to prove helpful towards the crucial launches like Abraxane generic.

Abraxane has been used to treat cancer with a market size of more than $700 million. As of now, Sandoz has obtained nod in October 2024.

Cipla Shares Performance

The 52-week high price of Cipla Ltd shares on BSE is Rs 1702.00 per share (as on 09/10/2024) and 52-week low price is Rs 1165.10 per share (as on 23/11/2023), respectively. Cipla shares recorded a surge of 24% so far this year and the stock delivered returns of 33% in last 2-years.

Cipla Ltd Q2 Results

Its revenue from operations surged 6% YoY to Rs 7051 crore for the July to September 2024 quarter as compared to Rs 6678 crore declared in the similar quarter of last year. Speaking on Q2 results, Umang Vohra, MD and Global CEO, Cipla Ltd said, "I am pleased to share that we continue to make considerable progress across our focused markets. In Q2 FY25, we recorded a revenue growth of 9% over last year with a highest-ever EBITDA margin of 26.7%, driven by mix and other operational efficiencies."

Cipla Dividend History

Cipla announced 26 dividends since August 6, 2001. In last 1-year, Cipla recommended an equity dividend amounting to Rs 13.00 per share.

Cipla Shareholding

FII/FPI have increased holdings from 25.82% to 27.82% in June 2024 quarter. Number of FII/FPI investors increased from 1031 to 1103 in June 2024 quarter. Mutual Funds have increased holdings from 16.83% to 17.62% in June 2024 quarter. Number of MF schemes increased from 37 to 41 in June 2024 quarter. Institutional Investors have increased holdings from 50.25% to 52.76% in June 2024 quarter, according to Trendlyne.

Should you Buy Cipla?

Out of 38 analysts that have been tracking the stock, 21 recommended buy call for Cipla shares, eight suggested hold rating, and remaining of them have sell rating on the stock. Citi gave buy recommendation to Cipla shares with a price target set at Rs 1,830. Investec too assigned buy call to Cipla with a price target of Rs 1,900. UBS maintained buy rating as the brokerage firm slashed target price to Rs 1960 per share from Rs 2060.

Bank of America (BoFA) has underperform call with a target price of Rs 1400. "EBITDA beat but Q3 trends mixed; Margins to moderate in H2. Likelihood of delay yet again in its much-awaited near-term launches with Goa clearance beaing a key catalyst. Any disappointment in clearance of the facilities is a risk to estimates. Limited catalysts keep us underperform," said BoFA.

Disclaimer: The stock has been picked from the brokerage report of Investec, BoFA, Citi, and UBS. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.