What should investors do with Cadila Healthcare after Q1 earnings: buy, sell or hold?

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26 Aug, 2025 12:21

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Cadila Healthcare share price shed 2 percent in the early trade on August 12, a day after the pharma company reported a 29 percent year-on-year (YoY) jump in net profit at Rs 587 crore for the quarter ended June 30 (Q1FY22) led by strong growth in domestic formulation business and COVID-19 drug sales.

It had reported Rs 454 crore net profit in Q1FY21. Total income from operations for the quarter was Rs 4,025 crore, up 15 percent from the previous year.

Earnings before interest, depreciation and tax (EBIDTA) for the quarter were Rs 933 crore, up 18 percent YoY. The EBIDTA margin came in at 23.2 percent, an improvement of 140 basis points on a quarter-on-quarter (QoQ) basis.

Also Read: Cadila Healthcare Q1 net jumps 29%, led by domestic formulation sales

Here is what brokerages have to say about the stock and the company after the June quarter earnings:

Credit Suisse | Rating: Underperform 

The research firm maintained underperform rating as it is concerned about potential competition in Asacol HD’s generic.

The company's 30 percent market cap is already being attributed to COVID vaccine but the opportunity is shrinking. The market was ascribing 14-15x EV/EBITDA to the company’s vaccine "but we are skeptical of high volume", it added.

The current margin reflects the benefit of lower promotion costs in India.

CLSA | Rating: Outperform | Target: Rs 640

CLSA has kept the "outperform" rating as the consolidation phase before the next leg of growth kicks in.

It has cut FY22-24 by 4-10 percent as the stock lacks major near-term triggers, while the long-term growth story is intact given the R&D initiatives.

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Citi | Rating: Sell | Target: Rs 490

Citi has maintained a "sell" call on the stock as the near-term outlook is tough unless vaccine scales up.

Adjusted for forex gain, Cadila’s Q1 EBITDA was 4 percent below estimates. The underlying trends are not exciting as topline growth was purely COVID-led in India. The US revenue declined 11%/4% YoY/QoQ and the outlook appears challenging.

Sharekhan | Rating: Buy | Target: Rs 720

Cadila reported a healthy performance for Q1FY22. The company’s key segments—the US and India—have an improved growth outlook.

In the US markets, a sturdy product pipeline with a focus on specialty and complex generics products would be the key growth driver. Over the long term, IP-driven products such as Saroglitzar Mg and Desidustat provide sizeable growth opportunities.

While in India, new launches, especially in the chronics/sub-chronics segment could fuel growth, which would be complemented by a strong performance in the consumer business as well.

Motilal Oswal | Rating: Buy | Target: Rs 670

We reduce our FY22E/FY23E EPS estimate by 5 percent/6 percent to reflect the impact of higher price erosion in the US, offset to some extent by CDH’s cost-saving initiatives.

We expect 12 percent earnings CAGR on the back of 16 percent sales CAGR in DF (considering the muted growth in FY21) and steady US sales (despite increased competition), aided by an 110bp margin expansion from new initiatives in manufacturing, and reduced financial leverage. The vaccine opportunity in India is not built into our estimates and can provide a further upside after the  approval.

At 0920 hours, Cadila Healthcare was quoting at Rs 551.45, down Rs 12.20, or 2.16 percent, on the BSE.

The share touched a 52-week high of Rs 673.70 on May 12, 2021 and a 52-week low of Rs 358.10 on September 11, 2020. It is trading 18.15 percent below its 52-week high and 53.99 percent above its 52-week low.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.