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Informist, Tuesday, Jan. 20, 2026

 

By Narayana Krishna

 

HYDERABAD - Cipla Ltd. is likely to report weak earnings for the December quarter, weighed down by continued pricing erosion and loss of market for some key generic products in the US. While the India and Africa businesses are expected to deliver healthy growth, the company's US sales may see a decline as the generic Revlimid loses relevance, compounded by the lack of major launches. Overall, profitability is expected to come under strain, with both operating profit and net profit contracting on a year-on-year as well as a trailing basis, analysts said.

 

The Mumbai-based generics manufacturer is expected to report a 21% on-year fall in its consolidated net profit for the December quarter to INR 12.4 billion, according to the average of estimates from 11 brokerages. The company's revenue is projected to grow 6% on year to INR 74.7 billion, according to the estimates. On a trailing basis, Cipla's net profit is seen falling 8% and net sales are seen declining 2%.

 

The highest net profit estimate for the December quarter is INR 13.5 billion by Systematix Share and Stocks (India) Ltd. and the lowest is INR 11.2 billion by Mirae Asset Sharekhan Ltd. The revenue estimates range from INR 78.9 billion by Emkay Global Financial Services Ltd. to INR 71.1 billion by Mirae Asset. Cipla will announce its Oct-Dec earnings Friday.

 

WEAK US SHOW

Like many other Indian generic manufacturers, Cipla is likely to report weak US sales due to a significant decline in Revlimid sales and pricing erosion in its existing products. However, products such as Abraxane, used to treat ovarian cancer, the asthma drug Albuterol, and the hormones and anti-tumour drug Lanreotide are likely to offset the negative impact to some extent, according to analysts. The US accounts for nearly 30% of Cipla's consolidated sales.  

 

After a patent settlement with innovator Bristol Squib Mayor, Cipla launched its generic version of Revlimid in September 2022, and was followed by Dr. Reddy's. As over 10 companies entered the market with their own versions in the last two years at lower prices, the drug has become a common generic and lost its sheen as a high-value, high-margin product. Like other generic companies, Cipla has also discounted this product as a significant contributor going forward, though it would continue sell it in the US.

 

Analysts' estimates for Cipla's US sales range from $192 million to $205 million, a year-on-year fall of 2-15%. Most analysts attribute the fall in US sales to the decline in Revlimid sales.

 

Apart from price erosion of key products, the absence of major product launches is also likely to impact Cipla's US performance for the reporting quarter, according to Nuvama Wealth Management Ltd. Kotak Securities expects a 11% quarter-on-quarter fall in US sales due to flat sales of the Lanreotide injection.

 

INDIA & AFRICA

Cipla is the third-largest generic company in India by revenue, according to market research firm Pharmatrac. Domestic sales account for nearly 40% of the company's consolidated sales. Cipla classified its India business as One India, combining its branded prescription, trade generics, and consumer health segments. Analysts are projecting healthy sales growth for Cipla in India, led by price hikes and traction in existing products.

 

Analysts expect Cipla's India business to grow 7%–10% on year. Motilal Oswal Financial Services Ltd. and Prabhudas Lilladher Pvt. Ltd. are at the lower end of the estimates with a projection of 7%–8% on-year growth, while JM Financial Institutional Securities Pvt. Ltd., Kotak Securities, and Nirmal Bang Equities Ltd. estimate it at 9% on-year, and Nuvama Wealth is at the upper end with a projection of 10%.

 

On Dec. 10, Cipla announced a partnership with Eli Lilly to launch its diabetes and obesity drug, Tirzepatide, under the brand name Yurpeak. Nuvama Wealth said the impact of this deal has yet to show up in the monthly numbers and hence may not contribute meaningfully in the December quarter. Eli Lilly sells the same drug under its own brand, Mounjaro, which is a top-selling drug in India as of December, according to Pharmatrac.

 

Cipla's Africa region sales, classified as One Africa, are expected to grow moderately in the December quarter. One Africa accounts for nearly 15% of Cipla's consolidated sales. Analysts estimate Cipla's One Africa business to grow 3–5% on-year during the December quarter. The performance is expected to be driven largely by South Africa, where steady demand is supporting growth of around 5% year on year.

 

In emerging markets, including Europe, Cipla is expected to report 8% sales growth, Kotak Securities said. Europe and emerging markets account for 13% of Cipla's total sales.

 

MARGIN PRESSURE

Analysts expect Cipla's December quarter earnings before interest, tax, depreciation, and amortisation margin to come under pressure, largely due to the sharp decline in US sales and an adverse product mix following the erosion of pricing for the generic Revlimid.

 

The absence of large, margin-accretive launches in the US further limits any near-term upside, analysts said. According to estimates, EBITDA margins are expected to be in the range of 21.8%–24.1%, down from 28.1% a year ago.

 

Motilal Oswal's projection is at the lower end, factoring in intense competition in generic Revlimid and weaker US performance, while Kotak Securities and Nirmal Bang expect margins close to the higher end of the band.

 

Overall, analysts see on-year margin contraction driven by pricing pressure in the US, worsening mix, and elevated expenses, partly offset by resilience in India and select international markets. Cipla's December quarter EBITDA is projected at INR 17.6 billion, according to the average of estimates from 10 brokerages.

 

Analysts will watch out for the management's commentary on Yurpeak's market penetration and the possible contribution from the drug in the coming quarters. On Jan. 15, Cipla said production of Lanreotide injection has been paused as its manufacturing partner, Pharmathen International S.A., is engaged in remediation at its plant in Rodopi, Greece. With the company projecting that the drug's supplies will resume by Apr-Sept, analysts will be keen to know its financial impact.

 

Of the 19 research reports available on the company with Informist, 13 have a 'buy' or equivalent recommendation for the stock, with an average target price of INR 1,706. This is nearly 24% higher than the current market price. Three brokerages have a 'hold' recommendation on the stock with a target price of INR 1,623 and three have a 'sell' recommendation with an average price target of INR 1,473.

 

The stock has fallen by over 10% since the announcement of its September quarter earnings. On Tuesday, the company shares ended at INR 1378.40 on the National Stock Exchange, down 1.0%. 

 

The following are the Oct-Dec earnings estimates for Cipla Ltd. based on reports from 11 brokerage firms in descending order by the estimate of net profit in INR billion:

 

Brokerage name	Net Sales	Net Profit	EBITDA
Systematix Shares and Stocks (India) Ltd	74.91	13.49	18.32
Emkay Global Financial Services Ltd	78.88	13.43	19.31
JM Financial Institutional Securities Pvt Ltd	75.21	13.38	17.91
Elara Securities (India) Pvt Ltd	73.69	12.99	18.54
Prabhudas Lilladher Pvt Ltd	75.65	12.77	18.21
Nuvama Wealth Management Ltd	76.70	12.74	17.86
Kotak Securities Ltd	74.16	12.18	17.04
Nirmal Bang Equities Pvt Ltd	72.86	11.63	16.46
ICICI Securities Ltd	75.18	11.60	16.76
Motilal Oswal Financial Services Ltd	72.82	11.27	15.88
Mirae Asset Sharekhan Ltd	71.09	11.17	16.97
Average	74.65	12.42	17.57

 

End

 

US$1 = INR 90.97

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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