Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cadila Healthcare (CDH)
Pharmaceuticals
Still some steam left. PAT was 3% lower than our estimate due to lower-thanexpected operating margin at 20% versus our est. of 21%. Sales was in line with our
est., (1) marked by recovery in Latin America, (2) strong growth continuing in domestic
business (up 17%) and (3) in USA (up 33%). We leave our FY2011-12E estimates
largely unchanged. At current levels, Cadila is trading at 21X FY2012E est. Despite rich
valuations, we believe that underlying growth is intact and we move our rating to ADD
(from REDUCE) with PT at Rs880 (23X FY2012E).
Sales at Rs11 bn was in line with estimate marked by outperformance in US, Latin America
Sales was in line with our estimate marked by (1) 17% yoy growth in domestic business vs our est.
of 16%. India growth rate has picked up YTD due to marketing push, new launches and benefits
from added field force, (2) US sales of US$53 mn vs our est. of US$50 mn on account of 4 new
product launches in 3QFY11 and market share gains, (3) 33% yoy sales growth in Latin America
post weak 1HFY11 driven by new supplies and (4) qoq pick-up in Hospira JV sales. Sales from
Europe were down yoy as expected due to currency impact and lower Clopidogrel sales while
emerging market sales were flat yoy due to lower sales in South Africa and delay in product
approvals.
PAT was Rs1.6 bn, 3% lower than our estimate
EBITDA was being 3% lower than our estimate due to higher staff cost and other expenses.
Materials cost at 31.5% was 150 bps lower than our estimate due to strong growth in highmargin segment of domestic business. Despite EBITDA being 3% lower than our estimate, PBT
was 1% higher due to higher other income and lower depreciation due to (1) nil amortization in
animal healthcare as depreciable life of intangibles is over and (2) lower amortization of intangibles
due to favorable currency impact vs Euro. PAT was 3% lower due to higher tax rate at 18% vs est.
of 14.5%.
We upgrade to ADD (from REDUCE) with PT at Rs880 (23X FY2012E est.)
Despite rich valuations, (21X FY2012E est.) we believe that underlying growth is intact and we
move our rating to ADD (from REDUCE) with PT at Rs880 (23X FY2012E). We include US$20 mn
of sales to Abbott in our FY2012E estimate. (1) Higher supplies to Abbott and (2) higher than 16%
sales growth in total domestic business will provide an upside to our FY2012E estimates.
Key takeaways from conference call
` Sales from Hospira JV have ramped up YTD primarily on the basis of 3 product supplies
to Europe and initial quantities of 1 product supplied to US. Sales of this JV will ramp up
in 2011E on account of Docetaxel/Gemzar supplies, which Cadila believes can commence
soon upon Hospira getting final approval. By FY2013E, Cadila expects all 6 products of
this JV to be marketed.
` Sales from Nycomed API JV will trend downwards qoq due to patent expiry of
Pantaprazole and resumption in API supplies only post regulatory approval of Navi
Mumbai plant in 2QFY12E. We assume flat sales yoy in FY2012E.
` Sales from Abbott deal will start in FY2012E. We assume US$20 mn sales in FY2012E.
` Sales from USA, up 45% yoy in US$ terms on account of market share gains in launched
products and around 7 product launches YTD. Cadila is marketing 39 products currently
in US and has 59 pending approval. Guidance of 8-10 product approval per annum and
filing 16-18 products has been met YTD with 7 launches and 12 filings in 9MFY11. This
gives us confidence in growth of 20-25% per annum in key market of US sustaining over
FY2011-13E. Moreover, Cadila has filed ANDAs in niche segment of dermatology and will
start ANDA filings for transdermal in FY2012E.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Cadila Healthcare (CDH)
Pharmaceuticals
Still some steam left. PAT was 3% lower than our estimate due to lower-thanexpected operating margin at 20% versus our est. of 21%. Sales was in line with our
est., (1) marked by recovery in Latin America, (2) strong growth continuing in domestic
business (up 17%) and (3) in USA (up 33%). We leave our FY2011-12E estimates
largely unchanged. At current levels, Cadila is trading at 21X FY2012E est. Despite rich
valuations, we believe that underlying growth is intact and we move our rating to ADD
(from REDUCE) with PT at Rs880 (23X FY2012E).
Sales at Rs11 bn was in line with estimate marked by outperformance in US, Latin America
Sales was in line with our estimate marked by (1) 17% yoy growth in domestic business vs our est.
of 16%. India growth rate has picked up YTD due to marketing push, new launches and benefits
from added field force, (2) US sales of US$53 mn vs our est. of US$50 mn on account of 4 new
product launches in 3QFY11 and market share gains, (3) 33% yoy sales growth in Latin America
post weak 1HFY11 driven by new supplies and (4) qoq pick-up in Hospira JV sales. Sales from
Europe were down yoy as expected due to currency impact and lower Clopidogrel sales while
emerging market sales were flat yoy due to lower sales in South Africa and delay in product
approvals.
PAT was Rs1.6 bn, 3% lower than our estimate
EBITDA was being 3% lower than our estimate due to higher staff cost and other expenses.
Materials cost at 31.5% was 150 bps lower than our estimate due to strong growth in highmargin segment of domestic business. Despite EBITDA being 3% lower than our estimate, PBT
was 1% higher due to higher other income and lower depreciation due to (1) nil amortization in
animal healthcare as depreciable life of intangibles is over and (2) lower amortization of intangibles
due to favorable currency impact vs Euro. PAT was 3% lower due to higher tax rate at 18% vs est.
of 14.5%.
We upgrade to ADD (from REDUCE) with PT at Rs880 (23X FY2012E est.)
Despite rich valuations, (21X FY2012E est.) we believe that underlying growth is intact and we
move our rating to ADD (from REDUCE) with PT at Rs880 (23X FY2012E). We include US$20 mn
of sales to Abbott in our FY2012E estimate. (1) Higher supplies to Abbott and (2) higher than 16%
sales growth in total domestic business will provide an upside to our FY2012E estimates.
Key takeaways from conference call
` Sales from Hospira JV have ramped up YTD primarily on the basis of 3 product supplies
to Europe and initial quantities of 1 product supplied to US. Sales of this JV will ramp up
in 2011E on account of Docetaxel/Gemzar supplies, which Cadila believes can commence
soon upon Hospira getting final approval. By FY2013E, Cadila expects all 6 products of
this JV to be marketed.
` Sales from Nycomed API JV will trend downwards qoq due to patent expiry of
Pantaprazole and resumption in API supplies only post regulatory approval of Navi
Mumbai plant in 2QFY12E. We assume flat sales yoy in FY2012E.
` Sales from Abbott deal will start in FY2012E. We assume US$20 mn sales in FY2012E.
` Sales from USA, up 45% yoy in US$ terms on account of market share gains in launched
products and around 7 product launches YTD. Cadila is marketing 39 products currently
in US and has 59 pending approval. Guidance of 8-10 product approval per annum and
filing 16-18 products has been met YTD with 7 launches and 12 filings in 9MFY11. This
gives us confidence in growth of 20-25% per annum in key market of US sustaining over
FY2011-13E. Moreover, Cadila has filed ANDAs in niche segment of dermatology and will
start ANDA filings for transdermal in FY2012E.
No comments:
Post a Comment