Cipla: No surprises in 4Q but 2HFY27 weighted improvement keeps us Neutral

研报英文原文证据摘录

Cipla: No surprises in 4Q but 2HFY27 weighted improvement keeps us Neutral

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normal seasonality. However, the company indicated focus on growing share in key

chronic therapies including anti-diabetic, resp, urology.

Margin performance and outlook: The 4Q reported EBITDA margins at 15.2% were

ahead of our estimates (but lower vs street) with impact from lanreotide disruption &

4Q being seasonally soft as well as some impact from West Asia disruption.

Management guided for FY25 EBITDA margin in 18.5-20% with higher margin profile in

2H supported by limited competition launches in the US. The company guided for R&D

spend at ~7% of sales in FY27. Management also alluded to some impact from West

Asia disruption in 2H particularly as it consumes higher cost inventory vs utilizing lower

cost inventory currently. Beyond FY27, Cipla indicated a target of 20%+ margins. On

gross margin trends, Cipla noted that 4Q was higher margin vs 3Q on better mix as well

as higher R&D consumables related costs in 3Q. The company expects gross margin

trends to move in positive direction from here with higher contribution from in-house

products (partly weighed down by profit share in peptide launches) as well as higher

chronic share in India portfolio.

Capital allocation: Cipla expects its capital deployment to be focused on R&D to

progress its complex gx as well as biosimilar pipeline. Management guided for capex to

remain at the current elevated level for 1-2 years and moderate thereafter. In terms of

inorganic opportunities, the company sees differentiated specialty products for

developed markets as a preferred segment which gives revenues as well as capability.

The company does not see meaningful M&A opportunity in India as its size leaves