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Buy Cipla, target of Rs 246: IIFL

Posted on: March 5th, 2009 and is filed under Brokerage Recommendations.

IIFL has maintained its buy rating on Cipla with a price target of Rs 246 in its March 5, 2009 research report. “We expect Cipla’s core earnings to register a CAGR of 36% over FY08-11, significantly aided by rupee depreciation and consequent margin expansion, apart from accelerated growth in volumes. Recent capacity expansion through new plants in Indore and Sikkim will contribute to volume growth. Recent industry reports indicate the return of growth momentum in the domestic pharma market, where Cipla has one of the strongest franchises, especially in
respiratory medicine.”

“In the long term, it can also benefit from consolidation in the domestic market. Cipla’s unique business model of registering products in other countries and partnering with other companies to market them makes it the best counter-cyclical play in the Indian pharma space. We are raising our FY09-11 earnings estimates by 5-20% and raising our price target to Rs 246 from Rs 215. Maintain BUY rating,” says IIFL’s research report.

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