Cipla hits fresh all-time high in a volatile market; rallies 12% in 1 week

Going forward, significant momentum in Cipla will likely continue due to US gains on the back of peptide portfolio unlocking and possible approvals and launches of gRevlimid, gAdvair and gAbraxane

Shares of Cipla hit a fresh all-time high of Rs 1,083.15, up 3.3 per cent on the BSE in Tuesday's intra-day trade, in an otherwise volatile market. As of 11:10 AM, the stock traded 1.6 per cent higher at Rs 1,065. In comparison, the S&P BSE Sensex was down 0.2 per cent at 56,392. In the past one week, the stock has rallied 12 per cent, as against a 5.4-per cent gain in the benchmark index.


The stock of the drug maker was quoting higher for the seventh straight trading day. Moreover, since February 25 (last 12 trading days), the stock has rallied 21 per cent after the company, on February 27, announced that it has received approval from the Subject Expert Committee (SEC) of the Central Drugs Standard Control Organization (CDSCO) to conduct local trials on anti Covid-19 pill Paxlovid.

Meanwhile, Y K Hamied, Chairman, and MK Hamied, Vice Chairman, who are also Non-Executive Directors and promoters, sold 20.17 million equity shares, representing 2.5 per cent of the total equity share capital of the company, on February 15. Post this transaction, the promoter group will continue to hold 34.23 per cent in the company, the company said in a disclosure made to the exchanges.

"The group remains fully committed and invested in the future of Cipla. The senior promoters, who are both in their eighties, intend to use the funds generated from this sale for personal purposes including philanthropy. The promoter group does not plan to sell any further shares in the foreseeable future," the company added. The names of the buyers could not be ascertained immediately.

Technical analyst at ICICI Securities expects Cipla to march northward and head towards Rs 1,135 in the coming months as it is the implied target of 11 month’s consolidation breakout (Rs 1005-850).

The company is focusing on front-end model, especially for the US, along with across the board transformation from tenderised model to private model in exports market and more focus towards consumerisation of important TGx, Rx products in Indian branded formulations.

"Going forward, significant momentum in Cipla is likely due to US gains on the back of peptide portfolio unlocking and possible approvals and launches of gRevlimid, gAdvair and gAbraxane besides gains from Albuterol portfolio and robust domestic business amid strong respiratory franchise," the brokerage firm said.

Technical View 

Support: Rs 1,030

Resistance: Rs 1,070

The stock has broken out of its 10-month consolidation pattern on the monthly charts, wherein the stock broadly traded between Rs 900-1,000. The Rs 985-level now becomes the major support for the stock going forward on the longer time-frame.

However, in the short-term, the stock has near support around Rs 1,030-odd levels, above which the bias is likely to remain positive. Further, bullishness can be expected on sustained trade above Rs 1,070-odd levels, with possibility of a rally towards Rs 1,140.

Select momentum oscillators on the daily charts are in the overbought zone, like the 14-day RSI (Relative Strength Index) and the Stochastic Slow. Hence, some profit-taking cannot be ruled out.

(With inputs from Rex Cano)