Cipla Ltd - Research Report

Private Client Research




Pharmaceuticals & Drugs


Cipla Ltd

Pharmaceuticals & Drugs

April 27, 2020

Sensex: 31743.08

CNX Nifty: 9282.30


BSE: 500087

Reco Price
Rs. 615.00
Price Target (3 - 6 Months)
Rs. 770.00


April 27, 2020



CNX Nifty








Stock Data

CMP (Rs)
Face value (Rs)
52 Week Range (Rs)
615.00 - 355.30
Market cap (Rs Crores)
Price To Book Value (x)
P/E Ratio (x)

One Year indexed Stock Performance

Cipla Ltd Sensex
Cipla Ltd
Return (%)


(in %)

+91 22 6639 3000


Established in 1935, Cipla is a global pharmaceutical company focused on agile and sustainable growth. The company specialises in complex generics. Cipla’s strengths lies in the respiratory, anti-retroviral, urology, cardiology, anti-infective and central nervous system (CNS) segments. Cipla has 46 manufacturing sites around the world to produce 50+ dosage forms and 1,500+ products using cutting-edge technology platforms to cater to 80+ markets. Cipla is the 3rd largest pharma company in India, the 3rd largest in the pharma private market in South Africa, and is among the most dispensed generic players in the U.S. A responsible corporate citizen, Cipla’s humanitarian approach to healthcare in pursuit of its purpose of ‘Caring for Life’ and deep-rooted community links wherever it is present make it a partner of choice to global health bodies, peers and all stakeholders.

Approval for generic version of Proventil® HFA is key positive

Investment thesis

Cipla receives final approval for generic version of Proventil® HFA Inhalation Aerosol
Cipla’s Albuterol Sulfate Inhalation Aerosol 90mcg (base)/actuation, is the first AB-rated generic therapeutic equivalent version of Merck Sharp & Dohme Corp’s Proventil® HFA Inhalation Aerosol. It is used for treatment of acute episodes of bronchospasm or prevention of asthmatic symptoms. Proventil® HFA Inhalation Aerosol and its authorized generic equivalent had US sales of approximately $153 million for the 12-month period ending February 2020. The entire Albuterol Sulfate HFA Inhalation Aerosol market had US sales of approximately $2.8 billion for the 12-month period ending February 2020. At present there is no competitor in the generic space.

Successful completion of Phase-3 clinical study for generic version of GSK’s Advair Diskus®
Cipla has successfully completed Phase-3 clinical end-point study for fluticasone propionate and salmeterol inhalation powder. The product is indicated to treat asthma in patients aged 4 years and older as a twice-daily prescription medicine and in the long term to treat chronic obstructive pulmonary disease (COPD), including chronic bronchitis, emphysema, or both, for better breathing and fewer flare-ups. According to IQVIA (IMS Health), Advair Diskus® and its generic equivalents had US sales of approximately US$2.9 billion for the 12-month period ending February 2020.

Cipla receives final approval for generic version of AstraZeneca Pharmaceutical’s Nexium®
Cipla has received final approval for its Abbreviated New Drug Application (ANDA) for Esomeprazole for Oral Suspension 10mg, 20mg and 40mg from the United States Food and Drug Administration (US FDA). Cipla is the first company to file for the 10mg strength. Cipla’s Esomeprazole for Oral Suspension 10mg, 20mg and 40mg is AB-rated generic therapeutic equivalent version of AstraZeneca Pharmaceutical’s Nexium®. According to IQVIA (IMS Health), Nexium® and its generic equivalents had US sales of approximately $70 million for the 12-month period ending November 2019.

Covid-19 impact
COVID -19 has affected many industries due to various issues like supply chain disruption, labour shortage and logistic issues. The pharmaceutical sector being an essential service provider is exempt from many of these restrictions, but the indirect impact cannot be completely ruled out. In anticipation of Chinese New Year, majority of pharma companies had stocked up most of their raw materials. Hence, we expect negligible impact in Q4FY2020. However, the company can face short term issues like non-availability of labour or supply related issues. The company has a strong balance sheet to deal with any short term disruption.



Cipla Ltd

Market Leader, Consolidating For Next Run

Price: Cipla has gained 39.43% over last one month after finding bottom at Rs.355.30 made on 13 March 2020, which also ended short term down trend in the stock from the previous high of Rs.752.85 indicating its long term secular uptrend has resumed after its cyclical correction. The stock has been significantly outperforming both NIFTY and NIFTYPHARMA over last month. We expect the stock to continue its outperformance in the coming weeks. The stock has high of Rs.678.45 made on 17 September 2019 and move low till Rs.355.30 made on 13March2020. Drawing Fibonacci Retracement between this level the stock is trading in range of 61.8% and its 78.60% retracement, which has a values of Rs.555 and Rs.609. The stock has bounced from the support level with increased in volume which indicates the strength in the counter.

Indicator: The stock is trading above important moving average 21EMA, 50EMA & 200EMA on daily charts as well as weekly chart. Bollinger Band (20, 2, S) set up on weekly chart has started to expand and currently the stock is trading above the upper band of Bollinger Band indicating the volatility expansion on the higher side. RSI(14) on daily chart is pegged at sub 75.97 levels, indicating the stock has not yet been over bought. The Parabolic SAR is trading below its price action on daily charts reflect up trend in the stock will remain intact in near term. The MACD is trading above the signal in buy territory on daily chart, indicating positive momentum in the stock in the near term. The ADX (45.05) on the daily timeframe is also currently trading near the 40 mark suggesting that the stock is likely to witness more momentum in coming days.

Volume: Price and volume analysis plays an important part in determining overall strength or weakness in the stock. Price and volume pattern are moving in the same direction which reflects the true movements in the stock. Cipla stock has seen the profit booking with thin volume, which still shows the movement of this stock, is still on bull side.

Conclusion: Considering all the above data facts, we recommend buying for short to medium term. Trader may go long around current level Rs.615 with keeping the stop loss Rs.520 for target Rs.770.