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Cadila Healthcare share price falls after Q1 numbers; here's what brokerages have to say

The company has posted 49.5 percent jump in its Q1 net profit at Rs 454 crore against Rs 303.6 crore.

September 25, 2020 / 05:52 PM IST

Cadila Healthcare share price fell more than percent in the early trade on August 6 after the pharma company reported better numbers for the quarter ended June 2020.

On August 5 the company has posted 49.5 percent jump in its Q1 net profit at Rs 454 crore against Rs 303.6 crore and revenue was up 4.1 percent at Rs 3,640 crore versus Rs 3,496.3 crore.

Zydus Cadila announced that its plasmid DNA vaccine, ZyCoV-D,  to prevent COVID-19 was found to be safe and well-tolerated in Phase I clinical trial. The company commences Phase II of the trials from August 6.

Nomura | Rating: Neutral | Target: Rs 370

The Q1 EBITDA was ahead of the estimate on lower costs, while there were concerns about the near-term growth outlook. The most prominent headwind is that gAsacol HD faces competition in H2FY22, reported CNBC-TV18


Citi | Rating: Sell | Target: Rs 290

The growth is likely to remain subdued over the full year, the brokerage said. Citi maintained sell on concerns over high product concentration in the US. The launch of key products was uncertain due to compliance issues at Moraiya plant, CNBC-TV18 reported.

Motilal Oswal | Rating: Buy | Target: Rs 460

Motilal Oswal raised EPS estimates for FY21/FY22E by 10 percent /9 percent to reflect margin improvement and pickup in DF sales.

It expects 21 percent earnings CAGR on the back of 8 percent sales CAGR in the US (compared to flat US sales for FY20), 7 percent sales CAGR in DF (considering muted growth in FY21), 23 percent sales CAGR in EMs, supported by 280bp margin expansion and reduced financial leverage.

Motilal Oswal continues to value stock at 21x (in line with its three-year average) 12M forward earnings to arrive at a target price of Rs 460.

Dolat Capital | Rating: Reduce | Target: Rs 408

Dolat Capital believes Cadila is a benefactor of its bigger product portfolio in the US. Cadila aims to maintain a strong launch momentum (30 launches pa) to keep a broad-based portfolio that could lead to one-off opportunities and offset base business erosion.

However, the lack of large launches in the US (despite a higher number of pending approvals) makes margin expansion tough. Regulatory compliance, higher profit dependency on Asacol HD remain key concerns.

Prabhudas Lilladher | Rating: Sell | Target: 329

The Q1FY21 revenue was in-line with the estimate but EBITDA and EBITDAM were beat due to a 17 percent SG&A decline. The broking house believes its foray into COVID-related products diverted its focus from core business when its top revenue contributors (India, US Gx) have been lacking consistency.

With HCQ no longer preferred for COVID treatment and multiple players in Remdesivir, its ambitious COVID vaccine project might also be disappointing as world-class innovators are far ahead in the race, it said.

Prabhudas Lilladher also believes its investment in specialty products may not be as rewarding as expected by management.

At 0924 hours, Cadila Healthcare was quoting at Rs 394.50, down Rs 1.45, or 0.37 percent on the BSE.

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Moneycontrol News
first published: Aug 6, 2020 09:36 am
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