CIPLA Ltd. Last
closed 449.2
ROE 9.62%
ROCE 10.94%
DEBT/EQUITY 0.23
EPS 20.69
EV/EBITDA 9.97
P/E 21.72
P/B 2.32
sales growth yoy 9.60%
Sales growth 5 years 9.97%
This company belongs to pharma sector and one of the
leading companies in this industry. During this corona outbreak stock markets
have witnessed great decline but macros are supportive for pharma sector. This company
is currently trading 2.32 times of its book value which makes it an ideal
buying with such a multiplier. EV/EBITDA is 9.97 which is also ideal for a company
having good financials. PE multiplier is currently at 21.72. This year company
saw lowest PE multiplier at 18.59 which was cheaper than it saw in 2009 which
was 19.66. PE multiplier around 20 makes it a bargain buying. Other companies like
Dr. Reddy’s labs, Torrent Pharma. Biocon are trading with a PE multiplier of
30.75, 41.20 and 45.28 respectively. Company has been maintaining positive cash
flows from operations since 2008 and currently trading at 12.41 times of cash
flow making it a good deal.
Recommendation:
Based on information discussed above company deserves
to be in active portfolio. One can start accumulation in small proportions from
415 and can keep on adding more on each decline of 30 rupees. If company
manages its earning at same level which is currently 20.69 and reverts back to
PE multiplier of 30 and above like its peers then stock can be easily sold at
600 and above in next few years.
While investing keep in mind…
1 Never put all
your eggs in single basket
2 You
can be right dead right; but you must survive
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