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Cipla stock slips 3% despite 73% rise in Q4 profit

Cipla stock touched an intraday low of Rs 870, falling 3.77% on BSE

Cipla share trades higher than 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages. Cipla share trades higher than 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages.

Cipla share slipped nearly 4% today despite the firm reporting a 73% rise in consolidated net profit in Q4. Cipla stock touched an intraday low of Rs 870, falling 3.77% on BSE.

The stock has fallen after 2 days of consecutive gain.

Cipla share trades higher than 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages. The share has gained 54% in one year and risen 7% since the beginning of this year. Market cap of the firm fell to Rs 70,848 crore.

The pharma firm reported a 73 per cent rise in consolidated net profit at Rs 412 crore in Q4 on the back of robust sales across markets.

The Mumbai-based firm had reported a net profit of Rs 238 crore in January-March quarter of 2019-20. Revenue from operations rose to Rs 4,606 crore in Q4 compared with Rs 4,376 crore in the same period of 2019-20.

In last fiscal, the drug maker reported a consolidated net profit of Rs 2,389 crore in Q4 against Rs 1,500 crore in the previous year.

Revenue from operations for the last fiscal year rose to Rs 19,160 crore as against Rs 17,132 crore in 2019-20. The board recommended a final dividend of Rs 5 per share (face value Rs 2 each) for 2020-21.

Motilal Oswal has assigned a neutral stance on the stock. "We cut our EPS estimate by 12%/11% for FY22/FY23E, factoring in a) lower operating leverage, b) increased price erosion in the US base business, and c) inferior execution in the API segment. We value Cipla on 22x 12M forward earnings to arrive at target price of Rs 840. While Cipla is building a complex product portfolio - comprising respiratory/injectables and strong traction from COVID drugs - we believe current valuations adequately factor in an upside in earnings. Hence, we maintain Neutral."

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ICICI Securities said,"Cipla reported weak Q4FY21 performance due to shelf stock adjustment of Albuterol in US and muted India growth. However, we believe growth and margin would improve in coming quarters led by growth recovery in India and ramp-up in US sales."

"The company has increased Remdesivir supplies by 5x which would help in driving strong growth in coming quarters. Recent rally in stock has capped the upside and hence we downgrade Cipla to ADD from Buy," the brokerage added.