Angel Broking`s research report on Cadila Healthcare
“For 4QFY2014, Cadila Healthcare (Cadila) posted lower-than-expected numbers on the sales and OPM front, while the net profit came in higher than expected. The company posted a 22.4 percent yoy growth in net sales to Rs1,916cr (lower than our expectation of Rs1,979cr). Exports grew by 38.3 percent yoy, driven by US markets, which grew by 74.7 percent yoy. Other markets posted a lackluster growth during the period. The Indian formulations market grew by 9.4 percent yoy. The OPM for the quarter stood at 16.0 percent (V/s an expected 17.0 percent), expanding by 63bp yoy; a dip in R&D expenses by 25.0 percent yoy aided operating margin expansion during the period. The gross margin dipped by 100bp yoy. The adjusted net profit came in at Rs251cr V/s an expected Rs198cr, on back of lower-than-expected tax and depreciation expense. We maintain our Buy recommendation with a price target of Rs1,080.”
“Cadila’s net profit for the quarter came in higher than expected while sales and OPM came in lower than expected. The company posted a strong quarter with a 22.4 percent yoy growth in net sales to Rs1,916cr V/s an expected Rs1,979cr. Exports grew by 38.3 percent yoy, driven by the US markets, which grew by 74.7 percent yoy. Other markets posted a lackluster growth during the period. The Indian formulations market grew by 9.4 percent yoy. The OPM for the quarter stood at 16.0 percent V/s an expected 17.0 percent, expanding by 63bp yoy; a dip in R&D expenses by 25.0 percent yoy aided operating margin expansion during the period. Gross margins dipped by 100bp yoy. The adj. net profit came in at Rs251cr V/s an expected Rs198cr, on back of lower-than-expected tax and depreciation expense.”
“We expect Cadila’s net sales to post an 18.4 percent CAGR to Rs9,905cr and EPS to report a 16.2 percent CAGR to Rs54.0 over FY2014–16E. The stock is currently trading at a discount to its peers, even after factoring a conservative expansion in the OPM. Hence, we maintain Buy on the stock with a price target of Rs1,080,” says Angel Broking research report.
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