Dolat Capital's research report on Cadila Healthcare
Cadila continues to bear heavy debt and high intangible assets from FY19 (acquisition of Heinz by its subsidiary Zydus Wellness). Hence, total intangibles remain high at Rs68bn, 65% of net worth, mainly due to the surge in goodwill from Rs14bn to Rs53bn in FY19 and Rs54bn in FY20. Other findings: i) Currency translation loss (FCTR) shot up by Rs4.3bn, out of which Rs2.8bn impacted cash flow. iii) Other operating income and other income together flared up to Rs10bn, 67% of PBT (FY19: 45% of PBT). iv) The cash tax rate lowered from 28% to 16% in FY20, whereas the P&L tax rate dipped from 22% to 17%. v) Net debt marginally lowered to Rs66bn, as cash and investments grew 41% YoY; net debt/EBITDA, thus, rose to 2.4x in FY20.
The company exhibited a CAGR of 16% in top-line and 23% in profits, since inception. Strong focus on brand building, product innovation, go-to-market strategy, cost management should help Marico navigate through challenging business conditions.