Buy Cadila Healthcare; target of Rs 701: Dolat Capital Market
Dolat Capital Market is bullish on Cadila Healthcare has recommended buy rating on the stock with a target price of Rs 701 in its research report dated May 28, 2021.
June 10, 2021 / 11:23 AM IST
An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.
Dolat Capital Market's research report on Cadila Healthcare
Cadila reported beat on the operating performance in 4Q as domestic formulations offset the subdued US (pricing pressure and lower offtake in Asacol HD). Revenue grew 4% YoY, an improved product mix (15% YoY growth in India formulations offset the US sales at $207mn, down $13mn QoQ) aided operating performance at 22% (our estimate 20%). Adjusted for write-off in Levarphanol and higher deferred tax, PAT grew 7% YoY at Rs4.4bn, in-line with expectation. Net debt halved to Rs35bn, with net debt/EBITDA at 0.8x, lowest in last 5 years. Management guided for sustenance in EBITDA margins over next 2 years; US to remain subdued in 1Q whereas; India to see higher sales from COVID n lower SGA spend.
However, due to lack of clarity on approval and pricing, we value the COVID portfolio as optionality. Maintain Buy with a target price of Rs700 (24x PE valuing the base business and Rs140 as optionality of R&D initiatives).
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