Buy Cadila Healthcare, Cipla: Angel Broking
Brokerage house Angel Broking is bullish on Cadila Healthcare, Cipla and has recommended 'Buy' rating on both the stocks with a target price of Rs 894 and Rs 477 respectively in its research reports dated August 12, 2013.
August 22, 2013 / 14:50 IST
Angel Broking's research report
Cadila HealthcareCadila Healthcare (Cadila) reported lower-than-expected numbers for 1QFY2014. On the sales front, the company posted a 6.0 percent yoy growth in its top-line to end the period at Rs 1,608cr, vs our expectation of Rs 1,820cr. On the operating front, the margins at 16.0 percent came ahead of our expectation of 15.7 percent. While the other income came in lower than expected, the lower-than-expected interest expenses and taxations led the net profit to come in at Rs 196cr vs our expectation of Rs 237cr during the period, posting a flat 0.4 percent yoy growth during the period.We expect Cadila's net sales to post a 16.6 percent CAGR to Rs 8,367cr and EPS to report an 18.1 percent CAGR to Rs 44.7 over FY2013–15E. While, the growth momentum has slowed down, the stock has corrected significantly, making it attractive. We recommend a Buy on the stock with a revised target price of Rs 894.CiplaCipla reported a better-than-expected set of results for 1QFY2014, both the on sales and profitability fronts. Its net sales grew 19.4 percent yoy to Rs 2,308cr vs our expectation of Rs 2,113cr. The gross margin dipped by 328bp, while the OPM (excluding technical know-how fees) came in line with our expectation at 22.2 percent, down 410bp from the corresponding quarter of the previous year. However, a significant rise in other income aided an 18.7 percent yoy growth in the net profit to Rs 485cr vs our expectation of Rs 367.2cr. The other income during the quarter was at Rs 246.3cr vs Rs 92cr in 1QFY2013.For FY2014, the Management has given a revenue growth guidance of 14-15 percent (excluding Medpro). We expect the company's net sales to post a 15.5 percent CAGR to Rs 10,796cr and EPS to record a 12.1 percent CAGR to Rs 23.9 over FY2013–15E. We recommend a Buy on the stock with a target price of Rs 477.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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