Top Pick 2023:This Pharma Stock Grew 126% In 3 Yrs, Trading Near 52 Week High, Buy For Robust Gains

Stock Outlook, Returns, & Market Capitalisation

The stock's Current Market Price is Rs 1,087.55 apiece on NSE. Its 52-week low was recorded at Rs 860 apiece on 21 January 2022 and its 52 week high at Rs 1,185.25 apiece on  01 November 2022, respectively. It has a market capitalization of Rs 87,765.46 crore.
 
 In terms of returns, the stock has fallen continuously giving negative returns in the past 3 months. It fell 3.11% in 1 week, 3% in 1 month and 2.54% in 3 months, respectively.  However, in the last 1 year, it has given 16.25% positive return. It has given the highest 126.05% multibagger returns in the last 3 years. Whereas, in the past 5 years, it has given 78.73% positive returns. 

Investment Rationale

Positive US Rx Trends: Cipla's Lanreotide has been ramping up well with market share (MS) at ~14% in Nov'22, up from 10% in Sep'22. In Albuterol Sulfate HFA, Cipla has gained 90bps MS in Nov'22 from Sep'22 with volumes growing 27% YoY in Nov'22 and average monthly volumes standing 19% higher than the 2Q levels. In Brovana, Cipla has gained MS of 230bps in Nov'22 (vs. Sep'22) and its average monthly volumes are trending 5% higher than the last quarter. In gRevlimid, Cipla's performance has slowed (-14% MoM) in Nov'22 with 3.6% MS. 

US Business driven by respiratory franchise and peptide assets: The company's US business reported strong sales of $179 Mn (vs. exp. $166 Mn), which was contributed by gRevlimid and gLanreotide. The management expects gAdvair to launch in H2FY23 though it foresees modest price erosion in the US business to continue in the following quarters.

Strong branded franchise among One-India and South Africa: One-India business reported Q2FY23 revenue growth of 6.1% YoY due to a high base elevated by the Covid-19 products in the last year. India's business, which is majorly contributed by the chronic portfolio (59% of prescription business) has delivered growth of 15% YoY. The company has launched 19 brands in trade generics based on a continued focus on customer engagement for healthy order flows. Global consumer franchise (8% of revenue) has achieved breakeven at the EBITDA level. The market-beating growth continues in South Africa (SA) private business though the tender business has been muted in line with our expectations.

Outlook & Valuation

Axis Securities said, "We expect the new base for Cipla's US business to be in the range of $170-180 Mn per quarter led by steady traction in gRevlimid/ Lanreotide (increasing market share) and expected approval for gAdvair in H2FY23. Furthermore, peptide injectables and respiratory assets are expected to drive US growth. India's non-Covid business is also expected to outperform the IPM, led by sustained momentum in key therapies and retained margin expectation at 21-22%, given increasing R&D (at 5.5-6% of sales) for the respiratory portfolio."

It added, "We maintain our BUY recommendation with a TP of Rs 1,260/share, implying a significant upside of 16% from CMP."

About the company

Cipla is a global pharmaceutical company focused on agile and sustainable growth, complex generics, and deepening portfolio in our home markets of India, South Africa, North America, and key regulated and emerging markets. Its strengths in the respiratory, anti-retroviral, urology, cardiology, anti-infective, and CNS segments are well-known. CIPLA has 47 manufacturing sites around the world that produce over 50 dosage forms and over 1,500 products using cutting-edge technology platforms to cater to our 86 markets.

Disclaimer

The stock has been picked from the brokerage report of Axis Securities. 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 consult with certified experts before making any investment decision.