Pharma stock falls 8% in 2 trading sessions as brokerages cut target price; Check revised targets

Synopsis: Cipla shares fell 8 percent in two sessions as weak Q3 results and cautious brokerage outlooks raised concerns over margins, earnings visibility, and near-term growth prospects.

The shares of this company, which is a Leader in respiratory care (inhalers), anti-retroviral (HIV/AIDS), cardiovascular, diabetes, and infectious diseases, are in focus after the brokerage became cautious.

With a market capitalization of Rs 1,06,783 crore, Cipla Ltd’s shares today made a day low of Rs 1,283, down by 7.4 percent from its Friday’s high of Rs 1,385.9 per share. The shares of the company have given a return of 60 percent over the last five years.

Brokerage’s view

Goldman Sachs Target Price: Goldman Sachs has reiterated its Sell rating on Cipla and cut its target price to Rs 1,275 from Rs 1,385(a target cut of around 8 percent), reflecting a more cautious stance on the company’s near to medium term earnings visibility.

Rationale: The brokerage flagged a miss in Revlimid performance due to a sharper-than-expected gRevlimid cliff and supply-side constraints. EBITDA margins remain under pressure, driven by higher R&D spending and weaker operating leverage.

Goldman believes multiple headwinds will weigh on profitability through FY27. Delays in product launches and slower pipeline monetisation limit earnings recovery, leading to EPS cuts of 2–15 percent across FY26–FY28.

Motilal Oswal Target Price: Motilal Oswal has maintained a Neutral rating on Cipla while sharply cutting its target price to Rs 1,310 from Rs 1,500 (a target cut of 12.7 percent), indicating reduced confidence in the stock’s earnings momentum.

Rationale:  While revenue met expectations, EBITDA and PAT missed estimates by 21 percent and 22 percent, respectively. The brokerage also lowered FY26 EBITDA margin guidance to 21 percent, reflecting persistent margin pressures.

Motilal expects earnings to decline in FY26, remain flat in FY27, and recover modestly in FY28. With earnings estimates cut and valuations already factoring in recovery, the brokerage sees limited upside at current levels.

Weak Quarterly results & others: The revenue from operations stayed flat at Rs 7,074 crore, corresponding to the same quarter last year. Accompanied by a net profit decline of 44 percent YoY to Rs 674 crore, with an exceptional item amounting to Rs 276 crore. Followed by Cipla’s acquisition of perpetual Galvus rights for Rs 1,107 crore, boosting its portfolio but raising near-term cash flow concerns.

Established in 1935, Cipla is a global pharmaceutical company focused on agile and sustainable growth, with a strong presence in India, South Africa, North America, and other regulated and emerging markets.

The company has well-established strengths across respiratory, anti-retroviral, urology, cardiology, anti-infective, and CNS segments, supported by 46 manufacturing facilities producing over 1,500 products across 50+ dosage forms for 80+ markets.

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