Hold Cadila Healthcare; target of Rs 445: Sharekhan

Sharekhan's research repor on Cadila Healthcare

Cadila reported better-than-expected performance for Q1FY2021. Revenues grew 4% y-o-y to Rs 3640 crore backed by strong growth in the US business, while India business performed poorly. The adjusted PAT stood at Rs 454 cr, up 25% yoy. Cadila’s India business is witnessing a gradual pickup post June with relaxations in lockdown leading to rise in prescriptions, however a meaningful revival is a key monitorable. The US business is well placed to grow backed by new product launches, easing pricing pressures and strong pipeline. Cadila has submitted its responses to the USFDA for the approval of the Moraiya plant. Resolution of the USFDA issues is critical from the growth perspective and would be a key point to watch for.

Outlook

Stock price has run up substantially by ~50% in almost past four months, leaving limited upside potential. We retain our Hold recommendation on the stock with a revised PT of Rs. 445.

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