Hem Securities maintains `Buy` on Cipla with a price target of Rs 370 as against the current market price (CMP) of Rs 294.15 (Nov. 9, 2009).

``The company has registered decent results for the quarter ended September 2009. The net sales surged a little less than 7% in Q2FY10 at Rs 14,428.80 million as against Rs 13,546.90 million clocked in same quarter last year. Operating profits witnessed a sharp rise of 80% from the like period last year. Similarly, the bottom line of the company climbed 82% from Rs 1,514.30 million in Q2FY09 to Rs 2,757.40 million. The company has been able to maintain its margins trajectory intact. Operating profit margins manifold 1081 bps to stay at 26.39% while the net profit margins advanced 793 bps at 19.11%,`` the broking house said. ``EPS for quarter ended September 2009 stood at Rs 3.55 while the trailing twelve months (TTM) EPS was at Rs 12.79. Domestic sales for the quarter grew by about 7% while export sales grew by about 4% during the quarter, exports of API and other grew by more than 37% whereas formulations have gone down by about 3.5%. Material costs dipped from about 46% to 44% mainly due to changes in product mix which includes contribution of anti-retrovirals segment,`` it added.

With the expectation of 10 to 12% growth in topline along with rich product pipeline for the regulated markets are the key drivers for the growth of the company. Further, tie-ups with 21 players in the USA for marketing 118 ANDAs of which 36 approved and 23 products already launched will help its topline. Also the partnership with Chinese company for launch of biosimilar could be a booster to tap high value market over the medium term.

Being the market leader Cipla seems to be extremely attractive investment opportunity. Presently, the stock is trading at Rs 294 which is at 22.85 times to its earnings and 5.29 times to its book value of Rs 55.93. Since the stock offers good opportunity, the broking house initiate a `BUY` signal on the stock with a target price of Rs 370 in medium to long term investment horizon expecting an appreciation of about 25% from the current level of Rs 294``, the broking house said.