Brokerage firm Nomura projects Cipla’s operating profit margin will rise to 19.2% for the September quarter, up from 16.7% in the previous three months. The positive outlook relies on the firm's 'One-India' business growth, fueled by new partnerships like the weight-loss drug tirzepatide, though core therapies are showing signs of slowing.
Ahead of the upcoming quarterly results for the September period, brokerage firm Nomura has shared a positive outlook for Cipla, specifically highlighting an expected improvement in operating profitability. Analysts at the firm forecast an EBITDA margin of 19.2% for the quarter, marking a recovery from the 16.7% margin recorded in the first quarter of the fiscal year. This expectation stems from a focus on increasing sales volumes while keeping a strict check on overhead expenses.
The company’s primary growth engine is the 'One-India' segment, where Nomura anticipates low-to-mid-teen year-on-year growth. This business unit is being transformed through several tactical moves, including the distribution partnership for Pfizer products, the integration of Inzepra, and the licensing of the diabetes and weight-loss medication tirzepatide. These strategic steps are expected to add about 6% to the company's annual growth rate, helping to offset the slowing momentum in its older, established segments.
While the expansion in India remains a bright spot, the company faces challenges in its core portfolio. Traditionally, respiratory and anti-infective treatments have been the bedrock of Cipla’s revenue. However, these categories are currently seeing slower growth rates in the low single digits. This fatigue in core therapeutic areas means the company is increasingly reliant on its newer partnerships to drive overall expansion.
International markets also present a mixed picture for the company. Operations in South Africa continue to struggle with hurdles, including the loss of some government tenders and adjustments in accounting practices related to promotional costs. Meanwhile, the North American business, a crucial market for generic drug makers, is expected to show only a minor sequential improvement. Large contributions from new product launches in the US, such as generic versions of Ventolin and Advair, are likely to be limited during this reporting period due to intense generic competition and regulatory factors typical of the US pharma landscape.
Nomura’s projections align with Cipla management’s annual margin guidance of 18.5% to 20% for fiscal year 2027. Investors will be closely watching the upcoming earnings to see if the company can meet these operational efficiency goals. The key monitorable for shareholders will be whether the new partnerships and products can continue to compensate for the slowing growth in traditional respiratory and anti-infective drugs, as well as how the company manages the persistent competitive pressures in the US and tender-related issues in South Africa.