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Cadila Healthcare Ltd Research Report - 21st Jan 2016

Pharmaceutical | Published on Oct 30th 2015

IT

For 2QFY2016, Cadila Healthcare (Cadila) posted better than expected on the OPM front. Sales came in at Rs2,374cr (V/s our estimate of Rs2,500cr), a yoy growth of 15.0%. In terms of geographies, US, India and Emerging Markets grew by 25.2%, 10.3% and 34.9% yoy, respectively. On the operating front, the GPM came in at 66.0% V/s 60.2% in 2QFY2015, leading the OPM to come in at 22.6% V/s 18.2% in 2QFY2015. This was against our expectation of an OPM of 20.3%. The expansion in the OPM was lesser than in the GPM owing to a significant rise in R&D expenditure, which rose by 46.7% yoy. Thus, the net profit came in at Rs391cr (V/s our estimate of Rs367cr), ie a yoy growth of 40.7%. We maintain our Neutral stance on the stock. Results better than expected at the OPM level: The company posted better than expected results on the OPM front, for the quarter. Sales came in at Rs2,374cr (V/s our estimate of Rs2,500cr), a yoy growth of 15.0%. In terms of geographies, US, India and Emerging Markets grew by 25.2%, 10.3% and 34.9% yoy, respectively. On the operating front, the GPM came in at 66.0% V/s 60.2% in 2QFY2015, leading the OPM to come in at 22.6% V/s 18.2% in 2QFY2015. This was against our expectation of an OPM of 20.3%. The expansion in the OPM was lesser than in the GPM owing to a significant rise in R&D expenditure, which rose by 46.7% yoy. The R&D expenditure as a % of sales came in at 7.3% V/s 5.7% in 2QFY2015. This led the net profit to come in at Rs391cr (V/s our estimate of Rs367cr), a yoy growth of 40.7%. Outlook and valuation: We expect Cadila’s net sales to post an 18.0% CAGR to Rs11,840cr and EPS to report a 24.6% CAGR to Rs17.6 over FY2015–17E. We maintain our Neutral rating on the stock.

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CMP 425
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)40,043.69
MCAP NSE (Rs in Cr)40,069.29
P/E (x)27.20
EPS (Rs.)14.38
BV (Rs.)64.16
Div Yield (%)0.82
FV (Rs.)1.00
P/BV (x)6.10
EV/Sales (x)4.27
EV/EBITDA (x)17.60

Shareholding Pattern (%)

Promoter75.0
Foreign10.0
Institution7.0
Public & Others6.0
Corporate2.0
Grand Total100.0

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