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Cadila Healthcare -- 4QFY11 results
Cadila’s 4QFY11 numbers were materially higher than our expectations
with all segments posting strong growth - domestic (22.4% YoY), US
(51% YoY) and Hospira JV (517% YoY). One time bonus to staff
(Rs510m) impacted Ebitda margins, excluding which profits were
materially higher. Ramp down of Nycomed JV was countered by strong
performance of Hospira JV that is likely to have strong contribution
through FY12 (led by taxotere generic). We estimate Cadila’s net profits
to grow at 18% cagr over FY11-13CL. We value the stock at 20x FY13
EPS and as per lower upside downgrade the stock to O-PF.
Strong numbers across segments
All business segments delivered strong numbers in 4QFY11 with domestic
formulations growing 22.4% YoY, US growing 51% YoY and Hospira joint
venture growing five fold. Cadila launched 60 new products including line
extensions during FY11 in the domestic market. In the US generics, it
introduced 11 new products with four day-one launches. It also maintained
strong filings momentum with 24 ANDAs filed during FY11. In Japan, it
became first Indian company to gain approval of a product (amlodipine)
manufactured in India. Formulation supplies to Abbott are likely to begin in
FY12 though a reasonable contribution can be expected in FY13/14.
One time bonus to staff impacted reported margins
Reported margins came below estimates due to one time bonus to employees
on account of achieving US$1bn revenue mark. Excluding the cash charge,
margins were higher than expected although helped by substantial
contribution from high margin Hospira JV sales (Taxotere generic). Underlying
gross margins were slightly weaker due to a seasonally weak quarter and
higher costs at Zydus Wellness (raw materials for nutralite are crude linked).
Reasonable growth, O-PF
Cadila Healthcare valuations have moved up sharply through FY11 based on
improving growth outlook. We expect growth momentum to be maintained
based on pipeline in the US, ramp up in JVs and efforts in domestic market.
We estimate net profit growth of 18% cagr over FY11-13CL with potential
upsides from Prevacid and Hospira JV. Considering that the company has a
large proportion of domestic business (c.55%), currency appreciation is a
lesser risk in case of Cadila than some of the other pharma companies. We
revise our earnings marginally, value the stock at 20x FY13 EPS and
accordingly lower the stock to O-PF.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cadila Healthcare -- 4QFY11 results
Cadila’s 4QFY11 numbers were materially higher than our expectations
with all segments posting strong growth - domestic (22.4% YoY), US
(51% YoY) and Hospira JV (517% YoY). One time bonus to staff
(Rs510m) impacted Ebitda margins, excluding which profits were
materially higher. Ramp down of Nycomed JV was countered by strong
performance of Hospira JV that is likely to have strong contribution
through FY12 (led by taxotere generic). We estimate Cadila’s net profits
to grow at 18% cagr over FY11-13CL. We value the stock at 20x FY13
EPS and as per lower upside downgrade the stock to O-PF.
Strong numbers across segments
All business segments delivered strong numbers in 4QFY11 with domestic
formulations growing 22.4% YoY, US growing 51% YoY and Hospira joint
venture growing five fold. Cadila launched 60 new products including line
extensions during FY11 in the domestic market. In the US generics, it
introduced 11 new products with four day-one launches. It also maintained
strong filings momentum with 24 ANDAs filed during FY11. In Japan, it
became first Indian company to gain approval of a product (amlodipine)
manufactured in India. Formulation supplies to Abbott are likely to begin in
FY12 though a reasonable contribution can be expected in FY13/14.
One time bonus to staff impacted reported margins
Reported margins came below estimates due to one time bonus to employees
on account of achieving US$1bn revenue mark. Excluding the cash charge,
margins were higher than expected although helped by substantial
contribution from high margin Hospira JV sales (Taxotere generic). Underlying
gross margins were slightly weaker due to a seasonally weak quarter and
higher costs at Zydus Wellness (raw materials for nutralite are crude linked).
Reasonable growth, O-PF
Cadila Healthcare valuations have moved up sharply through FY11 based on
improving growth outlook. We expect growth momentum to be maintained
based on pipeline in the US, ramp up in JVs and efforts in domestic market.
We estimate net profit growth of 18% cagr over FY11-13CL with potential
upsides from Prevacid and Hospira JV. Considering that the company has a
large proportion of domestic business (c.55%), currency appreciation is a
lesser risk in case of Cadila than some of the other pharma companies. We
revise our earnings marginally, value the stock at 20x FY13 EPS and
accordingly lower the stock to O-PF.
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