KRChoksey's report on Cadila Healthcare
"Net sales grew by 21.5% YoY to Rs. 2064 crs driven by improved traction in US business. However domestic business showed subdued growth. EBIDTA excluding forex impact grew by 61.5% YoY to Rs.421 crs & EBITDA margins stood at 20.1% expanded by 490bps YoY due to lower operating cost. Reported PAT grew by 51.7% to Rs278crs. After adjusting forex impact, APAT grew by 63.2% YoY to Rs.279 crs."
"Domestic formulation business is still struggling showing single digit growth of 8.7% YoY & 8.3% during Q2FY15 & H1FY15 respectively. Excluding BI products, growth is around 13% during the quarter. Cadila has launched 16 new products including line extensions out of which 6 were first in India launches. We expect company’s domestic formulation segment to recover in H2FY15E and show around 13% CAGR over FY14-16E. Its key segments like GI, Gynaec, respiratory, women healthcare & Derma continues to do well while it needs to focus on CVS & CNS segments. Vaccines & biologics will be the future growth drivers. Wellness segment has shown muted growth of 5.9% YoY during the quarter which we believe must have impacted due to reorganization of sales and distribution model. Company maintains its leadership position in Sugarfree (93% mkt share). Company is undergoing distribution restructuring exercise in order to expand its reach both in rural and urban markets. Company has continuous thrust on new product launches with launch of several products under EverYuth brand and launch of low priced Nutralite yummy. We expect Wellness segment to recover in FY16. Animal Healthcare business showed growth of 16.2% YoY & 22.7% during Q2FY15 & H1FY15 respectively backed by 2 new product launches during the quarter."
"At CMP of Rs. 1416 the stock is trading at 27.4xFY15E & 20.1xFY16E EPS. Going ahead, we believe domestic business to recover & US business to continue to show strong growth on back of niche launches. We maintain ‘Accumulate’ rating with the revised target price of Rs 1480 at 21XFY16E EPS of Rs. 70.5", says KRChoksey research report.
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