Cipla: Nomura maintains 'Buy' with Rs 1,510 target ahead of Q2 results

Nomura expects the EBITDA margin to improve to 19.2% in Q2FY27 from 16.7% in the previous quarter, in line with management's full-year guidance. One-India growth supported by partnerships and acquisitions Nomura expects Cipla to report low- to mid-teen year-on-year growth in its One-India segment, supported by the licensing of diabetes and weight-loss drug tirzepatide, a distribution agreement for Pfizer brands and the acquisition of Inzepra.

These contributions are expected to add around 600 basis points to year-on-year growth, according to the brokerage. However, Cipla's performance in India has been relatively subdued compared with peers. Its two largest therapy segments, respiratory and anti-infective, which account for nearly half of branded formulation revenues, have recorded single-digit growth, according to Pharmarack. Nomura expects the trade generics segment to grow at a steady low-double-digit pace, while growth in the consumer segment may remain in the single digits.

South Africa remains subdued; North America may improve Cipla's South African operations are expected to report muted year-on-year growth, partly due to tender losses in the recent past. The company has also changed its accounting treatment since the previous quarter, with certain promotional expenses now being netted off against revenue. In North America, Nomura expects the generics business to record some improvement in sales quarter on quarter.

However, contributions from new approvals, including generic versions of Ventolin and Advair, are likely to remain limited during the quarter. EBITDA margin expected to recover to 19.2% Nomura expects higher sales volumes and a limited increase in overhead expenses to drive a sequential improvement in profitability. It estimates an EBITDA margin of 19.2% for Q2FY27, compared with 16.7% in Q1FY27. Management has guided for an EBITDA margin of 18.5-20% for FY27.

The brokerage's revenue estimate is 1% below Bloomberg consensus, while its EBITDA and profit after tax estimates are 6% higher than consensus. Nomura retains 'Buy', target price at Rs 1,510 Nomura has maintained its 'Buy' rating on Cipla with a target price of Rs 1,510, based on 25 times its December 2027 estimated earnings per share of Rs 60.4. The stock is trading at 25.6 times and 21.2 times its estimated FY27 and FY28 earnings per share of Rs 52.2 and Rs 63.1, respectively.