Cipla stock gains; US FDA inspection concludes with zero observations

Cipla stock gained 1.43 percent on March 2, just Rs 2 away from the 52-week high it hit in the previous session.

The United States Food and Drug Administration (USFDA) inspected a manufacturing facility of subsidiary Cipla (Jiangsu) Pharmaceutical in Qidong, Jiangsu Province, China, from February 26 to March 1. The inspection concluded with zero Form 483 observations, Cipla said.

In a separate filing, the company told bourses that it has completed the transfer of its generics business. “The company has completed the transfer of Generics Business Undertaking as a going concern on a slump sale basis to Cipla Pharma and Life Sciences Limited, a wholly-owned subsidiary of the company on 1st March 2024,” Cipla said.

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The transaction would help in capitalising on the high-growth potential business by increasing investments in new launches, deepening penetration in Tier 2-6 towns/cities and improving patient access through high-quality generic medicines, the company had said earlier.

The stock has gained 67 percent in the past year and over 6 percent in the past month.

Financials

The pharmaceutical major reported a consolidated net profit of Rs 1,068.4 crore in the quarter ending December 31, 2023, 32.25 percent higher as compared to the year-ago period. The net profit, in the third quarter of the previous fiscal year, had stood at Rs 807.8 crore.

Consolidated revenue came in at Rs 6,603.81 crore, up 13.66 percent.

Brokerage Call

Cipla has multiple growth drivers beyond limited gRevlimid cash flow. “Top-notch execution and sticky revenue call for a premium valuation. We are thus raising the core business multiple to 29x (from 27x). We are raising FY24E EPS by 6 percent; FY25 is largely unchanged. ‘BUY’ with a target price of Rs 1,600 (from Rs 1,350) along with a rollover to Dec-25E,” analysts at Nuvama Institutional Equities had said in a post results announcement.

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