Stock in Action: Cipla Ltd 31 October 2024

Highlights

1. Cipla stock news in October 2024 has been buzzing, especially after a significant regulatory update on its Goa facility.

2. The Cipla Q2 2024 earnings report revealed impressive profit growth, exceeding market expectations.

3. With the recent Cipla share price boost following USFDA approval, investors are closely watching its upcoming product launches.

4. A key development is Cipla’s anticipated launch of the Abraxane generic, a chemotherapy drug with substantial market potential.

5. The USFDA’s VAI status for Cipla's Goa facility has paved the way for new opportunities and expansions.

6. Analysts are offering a mixed view on Cipla stock, with some debating whether to buy or sell based on recent performance and outlook.

7. Cipla's quarterly profit growth in 2024 underscores its resilience and strong performance in key therapeutic areas.

8. In Cipla’s India business growth for Q2, chronic therapies in areas like respiratory and cardiac health have continued to excel.

9. Several brokerages have released updated Cipla stock price forecasts for 2024, reflecting the impact of new drug approvals.

10. Cipla's strategic entry into the chemotherapy drug market with Abraxane demonstrates its commitment to growth in high-demand treatments. 

Why is Cipla Share in News?

Cipla Ltd. shares surged over 10% on Thursday, following favorable developments concerning its Goa manufacturing facility and a positive quarterly earnings report. The U.S. Food and Drug Administration (USFDA) granted Cipla’s Goa facility Voluntary Action Indicated (VAI) status after an inspection conducted in June 2024, which included six observations. This classification allows Cipla to move forward with a critical product launch, including the anticipated Abraxane generic, a highdemand chemotherapy drug. With a market size of $700 million, Abraxane’s generic version is set to improve Cipla's revenue stream, elevating investor confidence. Additionally, Cipla’s Q2 results exceeded market expectations, reporting a 15% yearonyear increase in consolidated net profit, reaching ₹1,303 crore.

Cipla Result Highlights

For the quarter ending September 2024, Cipla reported a 15% growth in consolidated net profit, achieving ₹1,303 crore, up from ₹1,131 crore in the same quarter last year. This result surpassed the anticipated ₹1,218 crore in profit according to the ET Now poll. The company’s revenue from operations also showed a 6% yearonyear growth, reaching ₹7,051 crore, compared to ₹6,678 crore in Q2 of the previous year. Cipla’s EBITDA grew by 12%, underscoring strong operational performance and effective cost management.

Cipla’s Management Commentary

Cipla’s management expressed optimism regarding the company’s pipeline expansion and anticipated launches. They highlighted that the USFDA’s positive inspection outcome will accelerate the introduction of key products, particularly the Abraxane generic. This product, a paclitaxelbased chemotherapy drug, is expected to contribute significantly to Cipla's earnings. Management also noted that their strong quarterly performance was driven by growth in chronic therapies, with a marked outperformance in respiratory, cardiac, and urology segments. However, they acknowledged a slower growth rate in antiinfective therapies, attributing it to marketwide shifts postCOVID.

CIpla’s Operational Highlights 

Cipla’s India business grew by 5% yearonyear, bolstered by robust demand in its branded prescription portfolio. Chronic therapies led the charge, with respiratory, cardiac, and urology segments showing stronger growth than the market average. The company’s operations have faced some headwinds in the antiinfective segment, which, due to a slower recovery, grew at only 4.9% yearonyear, a significant decrease compared to the 12% growth experienced in the previous year. Despite these challenges, Cipla’s proactive regulatory compliance efforts in the U.S. market, along with its wellpositioned domestic portfolio, have allowed it to retain a stable growth trajectory.

Brokerage Overview of Cipla Ltd. 

Citi has maintained a buy rating on Cipla, with a price target of ₹1,830, emphasizing that the VAI classification for the Goa facility adds strength to Cipla’s pipeline visibility, especially as Abraxane accounts for 67% of Citi's earningsperstock estimates for FY26/27. Citi also projected that this approval could allow Cipla to generate $25 million to $40 million in additional sales by FY26 and FY27, improving the company's earnings outlook.
Bank of America (BofA), however, remains cautious with an Underperform rating and a target price of ₹1,400, citing mixed market conditions and potential launch delays that could impact Cipla’s earnings growth. BofA highlighted that while Cipla’s recent clearance for Abraxane is promising, any setback in regulatory compliance could still pose a risk to the company’s estimates. UBS and other brokerages, by contrast, provided a Buy recommendation, seeing a potential upside in Cipla’s U.S. portfolio and increased demand for chronic therapies in India.

Conclusion

Cipla’s recent USFDA clearance for its Goa facility and strong Q2 financial results position it well for growth in the near term, but mixed brokerage outlooks indicate that Cipla’s path forward will depend significantly on its continued regulatory compliance and market execution.