Cipla has received a reaffirmed ‘BUY’ rating from Prabhudas Lilladher following a pivotal regulatory development—the USFDA approval of its generic version of Abraxane (gAbraxane). This critical greenlight is expected to meaningfully enhance Cipla’s US revenues over the next two fiscal years. With a strong product pipeline, net cash reserves of over $1 billion, and the timely execution of niche launches, Cipla is strategically positioned for value creation. The brokerage maintains a target price of Rs 1,730, representing a robust upside from the current market price of Rs 1,416. Investors are advised to watch for key product launches and revenue scaling in the US market.

USFDA Approval of gAbraxane: A High-Impact Catalyst

Cipla has secured the highly anticipated USFDA nod for gAbraxane—its generic version of albumin-bound paclitaxel, used for cancer therapy. The company is now the second generic entrant into a lucrative U.S. market valued at approximately $500–550 million annually.

Cipla targets a first-half FY26 launch, allowing time for necessary batch validations. Assuming a 15–20% market share, this product could contribute $65–80 million in annual revenue, offering meaningful support to Cipla’s US growth trajectory. The brokerage expects $30 million in sales from gAbraxane in FY26 and $50 million in FY27, underlining the product’s two-year cash-flow generation potential before anticipated competitive entries.

gAdvair Launch Could Be Another Earnings Lever

Cipla has tactically relocated the manufacturing of its generic Advair (gAdvair) from its Indore plant to its U.S.-based Invagen facility, overcoming past compliance hurdles. The firm expects to launch gAdvair in H1FY26, targeting another significant U.S. revenue stream.

The potential market contribution from gAdvair is pegged at $50–70 million annually. This launch is expected to partially cushion the revenue attrition from gRevlimid, which is likely to taper off by FY27. Together with gAbraxane, gAdvair serves as a cornerstone in Cipla’s U.S. growth roadmap.

Strong U.S. Pipeline: Cipla’s Competitive Moat

Cipla’s U.S. revenues account for roughly 30% of total sales and have grown at a 14% CAGR from FY21 to FY25E, outperforming many of its Indian peers. Its competitive advantage stems from consistent niche launches and depth in its respiratory, injectable, and peptide portfolios.

The company has filed 5 complex respiratory and 12 peptide assets, with launches like gAbraxane, gAdvair, Nilotinib capsule, gSymbicort, and gQvar on the radar for the next 24–36 months. Management has forecasted US revenues to cross $1 billion by FY27, reinforcing its dominant presence in the complex generics arena.

Financial Stability Reinforced by Robust Metrics

Cipla’s earnings trajectory continues to reflect operational stability and efficient capital allocation:

Despite a slight moderation in margins, Cipla continues to generate healthy returns and maintains a net cash position exceeding $1 billion, empowering it to pursue strategic M&A opportunities.

Stock Levels and Investment Outlook

Current Market Price (CMP): Rs 1,416

Target Price (TP): Rs 1,730

52-week Range: Rs 1,310 – Rs 1,702

Valuation Basis: 21x FY27E EPS

With a reasonable valuation multiple and a string of high-value U.S. launches on the horizon, the stock presents a compelling investment opportunity. The BUY call is underpinned by visible earnings triggers and execution capabilities in the regulated markets.

Dividend and Shareholder Returns Enhancing Value

Cipla has demonstrated its shareholder-friendly approach with rising dividends:

FY24 DPS: Rs 9.3

FY25E DPS: Rs 14.9

FY27E DPS: Rs 19.9

At current levels, the dividend yield stands at 1.4% for FY27E—indicative of steady income even as the stock targets capital appreciation.

Key Risks to Monitor

While the outlook is optimistic, a few risk variables remain:

Delay in critical product launches (e.g., gAdvair or Nilotinib)

Increased competition in gAbraxane or other niche categories

Regulatory hurdles or compliance issues in key manufacturing hubs

Foreign exchange volatility impacting U.S. earnings contribution

Investors should monitor the timeliness of U.S. product launches, which remain the linchpin for unlocking the full earnings potential embedded in Cipla’s current valuation.

Bottomline

Prabhudas Lilladher’s reaffirmation of a ‘BUY’ call on Cipla stems from a fundamentally strong outlook, bolstered by the strategic launch of gAbraxane, upcoming pipeline visibility, and a fortified balance sheet. With the stock trading at 21x FY27E earnings, the valuation remains attractive relative to peers with similar growth prospects. Investors can consider accumulating the stock on dips, targeting Rs 1,730 in the medium term, with a watchful eye on regulatory clearances and U.S. market dynamics.

Disclaimer: Investors are advised to conduct their own due diligence or consult financial advisors before making any investment decisions.