Shares of Cipla Ltd. are down as much as 4% on Wednesday, October 30 and are the top losers on the Nifty 50 index.

The fall in the stock price comes after analysts cut their target price on the stock following the company’s September quarter results that were reported during market hours on Tuesday.

The stock has seen its biggest drop since May 2024 and here are the reasons that may have triggered the fall:

Motilal Oswal

– Considering the subdued growth prospects and valuation of 24 times and 22 times the FY26 and FY27 price-to-earnings estimates, which factor in the earnings upside, Motilal Oswal has downgraded shares of Cipla to ‘Neutral’ with a price target of ₹1,420.

– The brokerage wrote in its note that Cipla’s Q2 operational performance was in-line with expectations. This was the fifth consecutive quarter of slowdown in year-on-year growth in revenue.

– Motilal has cut its earnings estimate by 3%, 4%, and 3% for FY25, FY26, and FY27 to factor in lower sales of Lanreotide on production modifications; unfavorable seasonality in domestic formulation; and deferral in potential ANDA approvals.

– North America was one of the key growth drivers in earnings over FY22-24. However, Motilal expects the growth trajectory to moderate for the next 12-15 months, considering the delay in potential approvals and scope of increased competition in g-Revlimid Q4FY26 onwards.

Emkay

– Even as Cipla delivered a gross margin-driven EBITDA beat in Q2, despite a weaker-than-expected domestic as well as US print, the near-term US outlook remains clouded owing to supply constraints in Lanreotide, the brokerage noted.

– However, Emkay said that it remains more concerned about weakness in the core domestic branded-prescription business, which was attributed to a weak acute season as in the base quarter.

– While consensus should see cuts to FY25 estimates given the management’s muted near-term US outlook, the brokerage expects Cipla’s US sales and overall margin performance in FY26 and FY27 to also disappoint as against Street expectations.

– Emkay has slashed its earnings estimates by 2% and retain a ‘Reduce’ rating, with a price target of ₹1,650 per share.

Nuvama

– The brokerage has highlighted near-term challenges for Cipla such as Lanreotide: temporary supply challenge due to capacity enhancement by
European manufacturing partner; Albuterol: rising competition; gAbraxane: approval contingent upon Goa unit clearance; and gRevlimid: higher competition after BMS’ patents expire.

– Due to high product concentration risk and near-term challenges in key products, the brokerage has retained a ‘Hold’ rating on Cipla, with a price target of ₹1,593 from ₹1,663 per share earlier.

Kotak

– According to Kotak Institutional Equities, Cipla’s headline print in the quarter was above estimates, led by traction in non-India, non-US markets and lower R&D. On the flipside, the domestic weakness in the first half of FY25 and the underwhelming near-term US outlook, cast a shadow over the Q2 beat.

– Nevertheless, despite the gRevlimid cliff and lowered US estimates for a few key molecules, Kotak expects a ramp-up in Lanreotide sales from Q4FY25, gAdvair launch in Q2FY26 and gAbraxane, gSymbicort and gQvar launches in FY27 to lead to a 3% US sales CAGR over FY24-27.

– In addition, the brokerage expects domestic recovery and healthy growth in the South Africa private market to drive a 9% earnings per share compounded annually for Cipla over FY24-27.

Kotak has retained an ‘Add’ rating, with a price target of ₹1,705 per share.

Nomura

– Nomura remains ‘Neutral’ on the stock with a price target of ₹1,568. The brokerage said that Q2 was in-line but accompanied by a weak narrative.

– Management Retained Guidance: For FY25E, management maintains an EBITDA margin guidance of 24.5-25.5%.

– On India, the management said there is a seasonal weakness in the prescription and trade generic segments, but strong growth is noted in consumer health.

– On North America Generics (NAG), sales declined quarter-on-quarter due to Lanreotide supply constraints. Further declines are expected in the third quarter of FY25, with a recovery anticipated in Q4.

– South Africa: Strong growth has been observed in both the tender and private markets.

– Management expects a sustainable growth rate of approximately 10% for the EM & Europe business.

Shares of Cipla are currently trading 3.80% lower on Wednesday at ₹1,421.45. The stock is currently the top loser on the Nifty 50 index. On a year-to-date basis, the stock has risen 14% so far.