Technology

For 3QFY2016, Cadila Healthcare (Cadila) posted a robust performance on the
net profit front while sales came in lower than expected. Sales came in at
Rs2,342cr (V/s Rs2,600cr expected), growing by 8.4% yoy. On the operating front,
the OPM came in at 21.0% V/s 21.4% expected and V/s 19.3% in 3QFY2015.
The expansion in the OPM was driven by expansion in the GPM to 65.9% V/s
64.8% in 3QFY2015 and almost flat growth in staff and other expenditure. R&D
expenditure during the quarter came in at 10.1% V/s 8.7% of sales in 3QFY2015.
The net profit came in at Rs389cr V/s Rs353cr expected and V/s Rs282cr in
3QFY2015, a yoy growth of 38.2%. The Adj. net profit came in at Rs390cr V/s
Rs278cr in 3QFY2015, a yoy growth of 40.0%. We maintain our Accumulate on
the stock.
Results better than expected at the net profit level: For 3QFY2016, sales came in
at Rs2,342cr (V/s Rs2,600cr expected), growing by 8.4% yoy. On the operating
front, the OPM came in at 21.0% V/s 21.4% expected and V/s 19.3% in
3QFY2015. The expansion in the OPM was driven by expansion in the GPM to
65.9% V/s 64.8% in 3QFY2015 and almost flat growth in staff and other
expenditure. R&D expenditure during the quarter came in at 10.1% V/s 8.7% of
sales in 3QFY2015. The net profit came in at Rs389cr V/s Rs353cr expected and
V/s Rs282cr in 3QFY2015, a yoy growth of 38.2%. The Adj. net profit came in at
Rs390cr V/s Rs278cr in 3QFY2015, a yoy growth of 40.0%.
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 Accumulate rating on the stock.

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