At CMP, valuations remain unsupportive (30/24x FY19E/20E EPS). Maintain NEUTRAL with a TP of Rs 605 (22x FY20E EPS). Cipla reported a disappointing set of numbers in 2QFY19 with revenue at Rs 40.1bn, down 2%YoY/ up 2%QoQ. The domestic business was flat YoY on a high base due to post-GST restocking, whereas US sales grew 12%YoY in constant currency to US$ 108mn led by new launches. Despite gross margin expanding 285/95bps YoY/QoQ to ~65%, increased R&D; spend, sales-linked costs and capacity issues led to a 220/95bps YoY/QoQ fall in EBITDA margin, now at 17.5%.