Hold Cadila Healthcare; target of Rs 247: Prabhudas Lilladher

Prabhudas Lilladher's research report on Cadila Healthcare

CDH revenue grew 2% YoY and 8% QoQ to Rs36.38bn (PLe Rs33b), while EBITDA declined 17% YoY and grew 11% QoQ to Rs6.93bn (PLe Rs6.1b). EBITDA margin were 19.1% (PLe 18.6%). India business increase 8% YoY, below the industry average and company guidance post restricting of sales team. Consumer healthcare grew 2% QoQ due to seasonality of Heinz portfolio. US formulations grew 14% in constant currency on account of Rxt share gain in non-AG portfolio, additional volume gain, new launches and benefits of shortage in Losartan. Europe business continued to decline at 21% QoQ. CDH trades at PER of 15.8x (FY21E) and 14.3x (FY22E). With higher leverage, key product concentration in US and many one-off sales in EMs, we expect drag in valuation to continue in FY21E and FY22E.

Outlook

We rolled forward to FY22E and derive our new TP of Rs247 (previous TP of Rs220) on PE 13x of FY22E. We maintain 'Hold'