CIPLA continues to trade at expensive valuations (29.9x FY18E and 23x FY19E at CMP). Considering the valuation and the ongoing business re-shaping, we maintain a NEUTRAL rating with a TP of Rs 490 (20x on Jun19E). Being a company strongly focussed on the domestic-market and thus facing GST headwinds, CIPLA put forth a relatively good performance in 1QFY18. While domestic revenues did decline (13.4% YoY), the EBITDA margin came in strong at 18.3% (~200bps above estimates). This was largely on account of improved gross margin of ~400bps YoY. The overall top-line declined 3%YoY to Rs 35.2bn vs expectations of 1% growth. PAT was Rs 4.25bn, up 55% YoY. This was largely owing to a one-time income of Rs 1.2bn, from gain on sale of investments in two South African subsidiaries.