CIPLA’s underperformance over the past two months may have been triggered by the weak outlook for formulations exports after the Dec11
quarter results. The large recent fall in the stock has pulled down the P/E close to its three‐year low. We believe this valuation amply
reflects the weakness in exports. Over the longer term, CIPLA’s valuation driver is likely to tilt towards the company’s performance in the domestic business.
The sharp correction in the stock, coupled with relatively stable consensus forecasts, has pushed CIPLA’s one‐year forward multiple to a three‐year low, which in our view, presents an opportunity to invest.
EPS for FY 13 will be Rs 15 and on historical P/E basis the stock target will be Rs 350 in 12 Months.
