CIPLA - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.4

📊 Core Financials:

- Quarterly PAT at 1,211 Cr. vs 1,303 Cr. shows slight decline but overall stability (+2.75% YoY).

- EPS of 67.3 ₹ reflects strong profitability.

- ROCE (20.1%) and ROE (16.0%) indicate healthy efficiency and shareholder returns.

- Debt-to-equity ratio of 0.00 highlights a debt-free balance sheet.

- Cash flows remain robust, supported by strong margins and zero leverage.

💹 Valuation Indicators:

- Current P/E of 23.6 is below industry average (30.6), suggesting undervaluation.

- P/B ratio ~ 3.7 (1,517 ₹ / 412 ₹), reasonable compared to peers.

- PEG ratio of 1.29 indicates fair valuation relative to growth.

- Intrinsic value appears slightly higher than current price, offering margin of safety.

🏭 Business Model & Competitive Advantage:

Cipla operates in pharmaceuticals with a diversified portfolio across generics, respiratory, oncology, and specialty drugs. Its competitive advantage lies in strong R&D, global presence, and leadership in respiratory therapies. The company benefits from consistent demand in healthcare and expansion into regulated markets.

🎯 Entry Zone & Long-Term Guidance:

- Entry zone: 1,400–1,470 ₹ (near support levels and undervaluation zone).

- Long-term holding: Attractive for investors seeking exposure to healthcare growth. Accumulate on dips for steady compounding and defensive portfolio positioning.

Positive

• Debt-free balance sheet
• Strong ROCE (20.1%) and ROE (16.0%)
• EPS of 67.3 ₹ reflects solid profitability
• DII holdings increased (+1.00%)
• Global presence and leadership in respiratory therapies

Limitation

• Slight decline in quarterly PAT (1,303 Cr. → 1,211 Cr.)
• Dividend yield at 0.87% is modest
• Weak technical momentum (RSI 43.5, MACD negative)
• FII holdings decreased (-0.70%)

Company Negative News

• Quarterly PAT decline despite overall stability
• FII holdings reduced (-0.70%)

Company Positive News

• DII holdings increased (+1.00%)
• Strong 52-week performance (+57.0%)
• Debt-free status ensures financial stability

Industry

• Industry P/E at 30.6 indicates sector is richly valued
• Pharmaceutical demand driven by healthcare expansion and global generics market
• Competition from domestic and global pharma companies

Conclusion

⚖️ Cipla demonstrates strong fundamentals with high ROE/ROCE, debt-free balance sheet, and global presence. Valuation is attractive compared to industry peers, making it a solid long-term defensive investment. Best accumulated near 1,400–1,470 ₹ for optimal entry.