Buy Cadila Healthcare; target of Rs 550: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Cadila Healthcare

Cadila Healthcare (CDH) posted in-line 3QFY21 results, led by a superior performance in India/EM, partly offset by a dip in US sales. CDH is progressing well on NCE programs and developing complex injectables. It is not only working on developing a vaccine for COVID but is also building manufacturing capacity to meet commercial requirements once the vaccine is approved. We tweak our EPS estimates for FY21/FY22/FY23E to reflect a) superior growth in the Specialty sub-segment in the Domestic Formulation (DF) segment, b) a better outlook for the Consumer Wellness segment, and c) a gradual uptick in growth in the US Generics segment. We value CDH at 22x 12M forward earnings to arrive at TP of INR550. We remain positive on CDH on account of its strong ANDA pipeline (comprising injectables), its NCE portfolio, and outperformance in DF. The vaccine opportunity may be a potential trigger over the medium term. Maintain Buy.

Outlook

We value CDH at 22x (in line with its three-year average) 12M forward earnings to arrive at TP of INR550. Maintain Buy.

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