Cipla expects lower margins in FY26 as gRevlimid fully phases out; Analysts see further pressure
Published on 14/05/2025 07:15 AM
Cipla expects lower margins in FY26 as gRevlimid fully phases out; Analysts see further pressureAnalysts who track Cipla believe that margins will see a further 300 basis points contraction in financial year 2027 as its key drug gRevlimid fully phases out.By Ekta Batra | Hormaz Fatakia May 14, 2025, 7:15:57 AM IST (Updated)2 Min ReadMumbai-based drugmaker Cipla Ltd., a Nifty 50 constituent, has warned in its earnings call that its margins for financial year 2026 and 2027 will be lower than current levels as a key drug fully phases out.
The management, in its earnings call on Tuesday, May 13, said that its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margins in financial year 2026 will range between 23.5% and 24.5%, which is lower than the 25.9% level it achieved in financial year 2025.
Analysts who track Cipla believe that margins will see a further 300 basis points contraction in financial year 2027 as its key drug gRevlimid fully phases out.
With the US business currently heavily reliant on the gRevlimid, new launches, including gAbraxane, gTasigna and gAdvair, are unlikely to offset this pressure on margins due to the phasing out of gRevlimid in the current financial year, according to the analysts.
For the new financial year, Cipla expects its topline to see "continued growth trajectory" and the management fell short of providing a number. Analysts are interpreting this as growth remaining flat to low-single-digits in the new financial year.
The management also highlighted during the earnings call that revenue for the US business is likely to remain flat for the June quarter.
For the March quarter, Cipla's US business was marginally better than expectations at $221 million, compared to estimates of $218 million, although the figure was lower than the $226 million it reported during the same quarter last year.
Cipla's March quarter profit was aided by lower tax outgo and higher other income, while margins, despite a 140 basis points expansion, were below expectations of 24%.
Shares of Cipla had a volatile reaction post the earnings announcement, eventually ending 0.6% higher on Tuesday at ₹1,520. The stock has remained flat so far in 2025.Continue ReadingFirst Published: May 14, 2025 4:16 AM ISTCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsCiplaCipla sharesshare market today