Buy Cadila Healthcare; target of Rs 655: Emkay Global Financial

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26 Aug, 2025 12:21

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Emkay Global Financial's report on Cadila Healthcare

Cadila announced the settlement of Revlimid patent suit with the innovator Celgene (BMS). As part of the settlement, Cadila is enjoined from marketing generic lenalidomide before the expiration of the patents-in-suit, except as provided for in the settlement. The settlement terms are not disclosed yet. While this is a positive news for the company, it is difficult to quantify the positive impact of the settlement given the confidential nature of the settlement. Our estimates suggest that gRevlimid could represent a stock price upside of Rs20-40, depending on the settlement terms. Our base-case upside of ~Rs20/share assumes low-single digit volume share in FY23E, with it gradually increasing to mid-single digit in FY26E. The bull-case of Rs40/share assumes settlement terms similar to Alvogen and mid-single digit volume share in FY23E, with it increasing to high-single digit in FY26.

Outlook

Given the lack of clarity on settlement terms and approval time, we view this as an option upside to our TP of Rs 655. We reiterate Buy rating on the stock as we believe that the company’s innovation efforts continue to remain underappreciated.

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