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Business News/ Markets / Stock Markets/  Cipla shares jump over 5% after promoters sell 2.5% stake

Cipla shares jump over 5% after promoters sell 2.5% stake

Cipla shares surged over 5% after block deals worth ₹2,600 crore. Promoters sold 2.53% stake for liquidity needs including philanthropy. Post transactions, promoter group holds 31.67% stake.

Cipla shares surged over 5% after block deals. (REUTERS)Premium
Cipla shares surged over 5% after block deals. (REUTERS)

Shares of Cipla jumped over 5 percent in intra-day deals on Wednesday, May 15, after three block deals took place on the exchanges. Around 2.04 crore shares or 2.53 percent stake of Cipla changed hands in the block deals worth around 2,600 crore. As per the company, promoters of the firm sold the shares in the block deals.

"Ms. Shirin Hamied, Ms. Rumana Hamied, Ms. Samina Hamied and Okasa Pharma Private Limited (all categorised as Promoter Group) have sold 2.53 percent shares of Cipla Limited for the purpose of creating liquidity for specific needs including philanthropy," Cipla said in a regulatory filing.

Post transaction, the entire promoter group (including Person Acting in Concert) continues to hold 31.67 percent in the company, it added.

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The stock rose as much as 5.2 percent to its day's high of 1,427.70 post the block deals. It is now 6 percent away from its 52-week high of 1,519, hit on March 11, 2024. Meanwhile, it has advanced 56.5 percent from its 52-week low of 911.80, hit on May 18, 2023. The stock has rallied over 47 percent in the last one year and 14.5 percent in 2024 YTD.

Notably, in February 2020, the Hamied family reduced their holding by selling an additional 2.5 percent stake through open market transactions. The Cipla board includes three members of the promoter family: chairman Yusuf Hamied, his younger brother MK Hamied, and MK Hamied's daughter, Samina Hamied. All three serve in non-executive roles, contributing their experience and strategic guidance to the company's governance.

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Meanwhile, in the March quarter, the pharma firm posted a 79 percent year-on-year (YoY) jump in its net profit at 939 crore as against 525.6 crore in the same period last year.

Revenue from operations also increased 7 percent YoY to 6,163 crore in the March quarter from 5,793.3 crore last year. On the operating front, EBITDA for the quarter under review rose 13 percent YoY to 1,316 crore versus 1,166 crore in the last year period. EBITDA margin stood at 21.3 percent as compared to 20.5 percent in the same period last fiscal.

The company's board has also recommended a payment of final dividend of 13 per equity share for the financial year ended March 2024.

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"In FY24, our revenues crossed the threshold of 25,000 crore, whereas operating margins significantly improved to cross 6,000 crore for the very first time, growing at a healthy 14 percent on topline and 26 percent on profitability YoY," said Umang Vohra, MD, and Global CEO, Cipla.

"As we enter into FY25, our focus will be on our priorities of market-leading growth in our key markets, growing big brands bigger, investing in the future pipeline as well as focusing on resolutions on the regulatory front," Vohra added.

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Post the earnings announcements, brokerages have mixed views on the stock.

Incred Equities: The brokerage has a ‘hold’ call with a target price of 1,479, implying just a 3.5 percent potential upside.

"We expect FY25F to be a moderate year for Cipla, with key launches pushed back to FY26F, and expect the stock to be range-bound in the medium term. Our FY25F/26F earnings are reset by +1 percent/+4 percent, respectively, factoring in higher margins. Upside risks: Clearance of Goa/Indore plants and faster-than-expected product launch and vice versa on the downside," it said.

It further added that the firm's FY25F margin guidance of 24.5-25.5 percent comes as a positive surprise and is 100-150bp above expectations. With two key plants under the US FDA radar and likely field force addition in India, we had expected a decline in margins.

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Prabhudas Lilladher: The brokerage has an ‘Accumulate’ rating on the stock with a target price of 1,405, indicating a 1.5 percent downside.

"Our FY25/26E EPS estimates broadly stand increased by 3 percent. CIPLA’s Q4FY24 EBITDA was in line with our estimates, aided by higher GMs. Due to delays in some key launches like gAdvair and gAbraxane (pushed by at least 2-3 quarters), the timely launch of five peptides (guided for FY25) will be key. We continue to remain positive on key segments' growth including India & US given 1) strong traction in respiratory & other portfolios, 2) potential +10 percent growth in domestic formulations and 3) sustainability of current US revs. We expect a 10 percent EPS CAGR over FY24-26E. Any further FDA escalation to the Indore unit and erosion in key products in the US will be a key risk to our call," it said.

Axis Securities: The brokerage has a ‘Buy’ call with a target price of 1,550, indicating an 8.5 percent upside.

"The company’s US revenue stood at $226 Mn, which was led by improvement in the base business pricing and higher market share (MS) in gLenotirade and in gAlbuterol. India’s branded prescription grew by 100bps more than IPM growth, driven by respiratory and cardiac therapies. Chronic now comprises 61 percent of Revenue Gross margins, improving by 90 bps YoY to 66.4 percent due to a high proportion of gRevlimid and low other expenses. Furthermore, stable R&D expenses led to EBITDA margins of 26.5 percent," it explained.

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Choice Broking: The brokerage has also retained its ‘buy’ call on the stock with a target price of 1,552, implying an 8.7 percent potential upside.

Cipla’s top objective for One India going forward is to maintain leadership in Gx while growing Rx (within the chronic portfolio), and the US will continue to include the commercial execution of the current portfolio, new product launches, and the resolution of USFDA observations, it stated. Choice expects Revenue/EBITDA/PAT CAGR of 10.6 percent/13 percent/13 percent for the stock during FY24-FY26E.



Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 15 May 2024, 11:42 AM IST
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