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S h o r t - t e r m s p e e d b r e a k e r s …
Cadila Healthcare’s Q2FY12 results were below our expectations.
Revenues grew by 10.7% YoY to | 1236.4 crore, below our expectations
of | 1297 crore on the back of lower growth in the domestic formulation
business (6.6%) and wellness business (10%). On the positive side, sales
from advanced countries like the US and Japan posted strong growth of
36% and 21.8%, respectively. Operating profit margins declined ~275
bps YoY to 19.2% on the back of higher employee cost and forex losses
(| 38 crore). It also booked forex losses of | 51.4 crore related to
restatement of forex debt, which led net profit to decline by 40% to |
102.7 crore. Adjusting forex, the net profit was at | 187 crore in line with
our expectation of | 180 crore. With a sharp correction in the share price,
we maintain our BUY rating on the stock.
ƒ Domestic formulation clocks 6.6% YoY
Domestic formulations grew by 6.6% YoY to | 470 crore on the back
of de-growth in some of large brands in gastro intestinal (GI) and
respiratory therapies. It also took inventory correction, which
affected growth in the business. We expect a marginal recovery in
the second half on the back of a strong product pipeline.
ƒ Like to like US sales grow 26% YoY
Sales from the US regions posted strong growth of 36% YoY to |
307 crore on the back of growth in existing products and addition of
Nesher Pharmaceuticals. Excluding sales of Nesher (~| 22 crore),
the like to like sales grew by 26% to | 285 crore.
V a l u a t i o n
We have cut our target price from | 953 to | 839 on short-term concerns
like (i) slowdown in domestic formulation business growth due to
pressure in some of its key brands, (ii) increased competition in Ever
Youth (wellness brands) segment from MNCs and lower growth
anticipated in sugar free segment across India and (iii) fewer product
launches in the US market. However, in the last two months the stock has
corrected ahead of valuation. Hence, we ascribe a value of | 839 based on
18x FY13RE EPS | 46.6 with a BUY rating. We believe the stock will still
trade at just ~ 5-10% discount to larger peers among pharma large caps
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S h o r t - t e r m s p e e d b r e a k e r s …
Cadila Healthcare’s Q2FY12 results were below our expectations.
Revenues grew by 10.7% YoY to | 1236.4 crore, below our expectations
of | 1297 crore on the back of lower growth in the domestic formulation
business (6.6%) and wellness business (10%). On the positive side, sales
from advanced countries like the US and Japan posted strong growth of
36% and 21.8%, respectively. Operating profit margins declined ~275
bps YoY to 19.2% on the back of higher employee cost and forex losses
(| 38 crore). It also booked forex losses of | 51.4 crore related to
restatement of forex debt, which led net profit to decline by 40% to |
102.7 crore. Adjusting forex, the net profit was at | 187 crore in line with
our expectation of | 180 crore. With a sharp correction in the share price,
we maintain our BUY rating on the stock.
ƒ Domestic formulation clocks 6.6% YoY
Domestic formulations grew by 6.6% YoY to | 470 crore on the back
of de-growth in some of large brands in gastro intestinal (GI) and
respiratory therapies. It also took inventory correction, which
affected growth in the business. We expect a marginal recovery in
the second half on the back of a strong product pipeline.
ƒ Like to like US sales grow 26% YoY
Sales from the US regions posted strong growth of 36% YoY to |
307 crore on the back of growth in existing products and addition of
Nesher Pharmaceuticals. Excluding sales of Nesher (~| 22 crore),
the like to like sales grew by 26% to | 285 crore.
V a l u a t i o n
We have cut our target price from | 953 to | 839 on short-term concerns
like (i) slowdown in domestic formulation business growth due to
pressure in some of its key brands, (ii) increased competition in Ever
Youth (wellness brands) segment from MNCs and lower growth
anticipated in sugar free segment across India and (iii) fewer product
launches in the US market. However, in the last two months the stock has
corrected ahead of valuation. Hence, we ascribe a value of | 839 based on
18x FY13RE EPS | 46.6 with a BUY rating. We believe the stock will still
trade at just ~ 5-10% discount to larger peers among pharma large caps
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