Why Cipla shares are surging despite weak Q4 results; here’s what brokerages expect next

Shares of Cipla extended their upward momentum in Thursday’s trade, gaining on the back of strong management commentary even as the company reported a weak set of quarterly numbers. The stock rose as much as 8 per cent in intraday trade to Rs 1,432.35 on the BSE before trimming some gains later in the session. At 12:37 pm IST, Cipla was trading at Rs 1,411.40 on the NSE, up Rs 83.80 or 6.31 per cent.

The stock has seen a sharp move over the past two sessions, rising nearly 11 per cent in just two trading days. With this rally, Cipla has recovered about 23 per cent from its 52-week low of Rs 1,165.55, which it touched on April 2, 2026. However, it still remains below its 52-week high of Rs 1,672.20 recorded in October 2025.

The broader market was relatively flat during the session, with the Sensex rising only 0.53 per cent, which meant Cipla significantly outperformed benchmark indices and stood out among large-cap pharma stocks.

Q4 FY26 earnings disappoint on profit and margin pressure

Cipla reported a sharp decline in earnings for the fourth quarter of FY26. Consolidated net profit fell 54.6 per cent year-on-year to Rs 554.6 crore compared with Rs 1,221.8 crore in the same period last year. Revenue from operations also declined 2.8 per cent to Rs 6,541.2 crore.

The company said the decline was largely due to the absence of high-margin products such as Lenalidomide and Landreotide, which had supported earnings in the base period. Higher R&D spending also weighed on profitability as Cipla continued to invest heavily in respiratory therapies, peptides and complex generics.

In addition, rising operating costs linked to scaling up its US manufacturing facilities impacted margins. The company also noted initial disruptions from geopolitical tensions in West Asia, which added pressure on near-term performance.

Management commentary supports sentiment despite weak results

Despite the earnings miss, management commentary helped improve investor sentiment. Cipla expects performance to improve from FY27, supported by new product launches and expansion in key markets.

The company has guided for EBITDA margins in the range of 18.5 per cent to 20 per cent in FY27, with sequential improvement expected as new complex generics ramp up. Management also reiterated its target of achieving $1 billion revenue from the US market over the medium term.

Cipla is preparing for multiple launches, including four respiratory products and one major peptide-based product in FY27. The company is also scaling up operations at its Fall River facility in the US, which is expected to support future growth. Recently, Cipla received approval for the first AB-rated generic version of Ventolin from its US site, which is expected to be a key launch going ahead.

The company continues to focus on long-term growth areas such as biosimilars and differentiated products, with plans to introduce one to two biosimilars annually over the next several years. It is also open to selective acquisitions and partnerships in the US and Europe to strengthen its portfolio.

Broker views remain mixed after Q4 update

Brokerages remain divided on the stock’s outlook. ICICI Securities Limited maintained a positive stance, citing strength in India operations and improving traction in the US pipeline, along with expectations of stronger growth in the second half of FY27.

Motilal Oswal Financial Services kept a Neutral rating with a target price of Rs 1,380, pointing to earnings pressure from lower contribution of key products and time required for new launches to scale up.

Among global brokerages, JPMorgan Chase & Co. upgraded the stock to Overweight with a target of Rs 1,550, while Morgan Stanley maintained an Underweight view and cut its target to Rs 1,218. Citigroup Inc. stayed bullish with a Buy rating and raised its target to Rs 1,700.

Overall, the stock’s recent rally reflects improving sentiment driven by future growth visibility, even as near-term earnings remain under pressure due to margin compression and product mix changes.