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Cadila Healthcare
For 1QFY2012, Cadila Healthcare (Cadila) reported net sales of `1,174cr (`1,169cr),
registering an increase of 11.2% yoy, slightly below our estimates of `1,280cr. Domestic
and exports sales increased by 4.8% and 18.7%, respectively. The company’s gross margin
came in at 69.1%, almost flat during the quarter. However, OPM decreased to 19.6% yoy
(20.7%) on the back of 29.5% growth in other expenses at `419.8cr (`324.3cr). Employee
expenses grew by 26.5% to `161.5cr (`127.7cr). Adjusted net profit increased by 17% yoy
to `187cr (`159cr), lower than our estimates of `179cr, on the back of lower OPM and
higher interest outgo than expected. At the CMP, the stock trades at 24.3x FY2012E and
17.8x FY2013E earnings. We recommend Accumulate with a target price of `1,053.
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