Shares of Cipla Ltd surged 11% in two sessions amid pharma major's Q4 earnings. Cipla reported a 54% fall in Q4 profit to Rs 554.64 crore against Rs 1,221.84 crore in the year-ago period. Cipla clocked an impairment of Rs 42.02 crore in the financial results in respect of associates, on account of change in certain business conditions and market dynamics. However, the stock zoomed 11% in two days and 8% in the current session. 

The stock took cues from the management commentary, which said the India business is projected to witness double-digit YoY growth in revenue, which is likely to sustain in FY27 as well.

Also the US sales run-rate is expected to improve to $250m per quarter by the end of FY27; this excludes Lanreotide’s revival. The rise in run-rate from current $155m (4QFY26) to $250m is backed by certain potential launches (business prospects of USD100m each on an annualized basis). 

Revenue from operations in Q4 fell 2.80% to Rs 6,541.20 crore from Rs 6,729.69 crore, year-on-year (YoY). EBITDA during the quarter slipped 38% to Rs 955 crore from Rs 1,537.6 crore, while margin slipped to 14.6% from 22.80%.

The management added that Cipla has guided for 18-20% EBITDA margin in FY27, with 2H posting a higher EBITDA margin compared to 1H. 

Cipla shares rose 11% in two sessions from Rs 1292 on May 12 to Rs 1432 in the current session. In today's  session, the stock surged 8% intra day. Market cap of the firm rose to Rs 1.14 lakh crore.   

Brokerage JM Financial has a price target of Rs 1,546 on the Cipla stock.

"We have built in 11%/11%/18% revenue/EBITDA/adjusted PAT CAGR over FY26–28, led by steady ex-US growth and gradual US recovery by FY28. Despite conservative estimates versus management guidance, the stock is trading at 20.6x FY28E EPS, below -1 standard deviation. With the worst quarter likely behind Cipla and improving visibility on US product launches, earnings momentum could improve from H2FY27; hence, we upgrade the stock to BUY from ADD and value it at 24x FY28E EPS to arrive at a TP of Rs 1,546," said JM Financial. 

Sentiment around the stock was also supported by the performance of Indian business, comprising Domestic Formulation (DF), trade generics, and consumer wellness, reported a broad-based double-digit YoY growth during the quarter.

The African business, comprising private markets, tender business, and North Africa, also clocked a healthy growth rate of 14% YoY (in CC terms) for the quarter.