1QFY27 miss on lower GMs, US launches key for 2H

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1QFY27 miss on lower GMs, US launches key for 2H

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Cipla

1QFY27 miss on lower GMs, US launches

key for 2H

Reiterate Rating: NEUTRAL | PO: 1,480 INR | Price: 1,393 INR

EBITDA miss on lower gross margins 24 July 2026

Cipla 1Q earnings were impacted by accounting changes in South Africa; adjusted for Equity

this revenue growth of 4% was broadly inline. However, gross margins declined nearly

300bps QoQ due to adverse product mix (higher EM/EU), no PLI income, West Asia

Key Changesconflict impact & higher inventory provisioning. The lower GMs (62.5%) lead to EBITDA

of Rs11.9bn with margins at 16.7% vs. estimate of 18-19%. The company reiterated its (Rs) Previous Current

$1bn exit guidance for US revenue and margin of 18.5-20%, which is dependent on the Price Obj. 1,500.00 1,480.00

seasonality tailwinds in India and respi/peptide launches in US in 2HFY27. We believe 2027E Rev (m) 313,781.6 306,578.1

that the stock is pricing in these high-value US launches with any delay being key risk. 2028E Rev (m) 354,650.6 346,753.9

Reiterate Neutral with PO Rs1480 (Rs1500 previously) as we adjust our EPS marginally. 2029E Rev (m) 378,461.9 369,704.2

2027E EPS 52.12 51.04

2028E EPS 63.41 63.03India growth could have been better

Cipla’s India business showed improving trends in 2HFY26 (post few qtrs of lagging 2029E EPS 66.34 65.81

industry) with guidance of outperforming market across segments in FY27. However,

Cipla reported India business growth of 12% YoY despite contribution from tirzepatide ( Neha Manpuria >>

10-11% ex-tirzepatide) vs our 15% estimate that is broadly inline with industry. While Research Analyst BofAS India

Cipla’s in-licensed GLP1 does seem to be growing despite sema Gx, we believe the +91 22 6632 8307