ICICI Direct recommended hold rating on Cadila Healthcare with a target price of Rs 250 in its research report dated August 12, 2019.
ICICI Direct's research report on Cadila Healthcare
Q1FY20 revenues grew 20.8% YoY to Rs 3496.3 crore (I-direct estimate: Rs 3557.6 crore) mainly due to consolidation of Craft Portfolio in Wellness segment. US revenues grew 11.2% YoY to Rs 1367 crore (I-direct estimate: Rs 1532.9 crore). Domestic formulations grew 6.2% YoY to Rs 947.6 crore (I-direct estimate: Rs 919.4 crore). EBITDA margins contracted 421 bps to 18.1% (I-direct estimate: 21.3%), mainly on account of higher other expenditure. EBITDA de-grew 2% YoY to Rs 632 crore (I-direct estimate: Rs759.3 crore). PAT de-grew 34.1% YoY to Rs 303.8 crore (I-direct estimates: Rs 391.8 crore). Delta vis-à-vis EBITDA was due to higher interest cost due to consolidation of Craft portfolio.
Overall, the balance sheet expansion and muted growth guidance for the US may weigh on the sentiments in the near term. Our new target price is Rs 250 based on 14x FY21E EPS of Rs17.9.
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