Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Expect some revival in domestic formulation growth
We pencil in growth of 10.9% y-y in domestic formulation sales (excluding the portfolio
allocated to the Bayer JV) vs. 6.6% y-y growth reported in 2QFY12. We believe that the
impact of the channel fill done at the end of FY11 has subsided during the quarter.
Recent AIOCD data suggests some pickup in growth for Oct-Nov 2011 as the growth in
acute segments for Cadila overtook growth in chronic segments.
Building in consumer product, animal health business growth at 12-13%
We expect consumer products and animal health business to record 12-13% growth y-y
during the quarter. We believe the consumer business of Zydus Wellness is under
pressure owing to: a) slower growth in the Sugar free category, which is currently
growing at 6-7%; b) increased competition from MNCs in the face wash segment; and c)
an increase in Neutralite prices has impacted volume growth.
US growth likely to remain robust despite no new launches
We believe the sequential increase in US sales will be driven by full quarter impact of
Nesher acquisition. Nesher contributed for two months in the previous quarter, as per
company. In addition, there are some volume gains on older products. There are no new
launches in the US during the quarter. The US sales growth is projected at 38% y-y in
our estimates.
MTM losses could drag down profit growth
We expect Cadila to report 15.9% y-y growth in revenues and -38.6% growth in net
profit. We expect EBITDA to grow 7.1% y-y. The expected margin pressure can be
largely attributed to rising overhead costs and lower profits from JVs, including the
Hospira JV that markets Taxotere in the US. We have factored in forex losses of
INR900mn, similar to what was recorded in the previous quarter. However, the
introduction of Rule 46A, which allows companies to amortise losses over March 2020,
could help reduce the losses on forex loans. The company had outstanding forex loans
of ~USD160mn as of September 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Expect some revival in domestic formulation growth
We pencil in growth of 10.9% y-y in domestic formulation sales (excluding the portfolio
allocated to the Bayer JV) vs. 6.6% y-y growth reported in 2QFY12. We believe that the
impact of the channel fill done at the end of FY11 has subsided during the quarter.
Recent AIOCD data suggests some pickup in growth for Oct-Nov 2011 as the growth in
acute segments for Cadila overtook growth in chronic segments.
Building in consumer product, animal health business growth at 12-13%
We expect consumer products and animal health business to record 12-13% growth y-y
during the quarter. We believe the consumer business of Zydus Wellness is under
pressure owing to: a) slower growth in the Sugar free category, which is currently
growing at 6-7%; b) increased competition from MNCs in the face wash segment; and c)
an increase in Neutralite prices has impacted volume growth.
US growth likely to remain robust despite no new launches
We believe the sequential increase in US sales will be driven by full quarter impact of
Nesher acquisition. Nesher contributed for two months in the previous quarter, as per
company. In addition, there are some volume gains on older products. There are no new
launches in the US during the quarter. The US sales growth is projected at 38% y-y in
our estimates.
MTM losses could drag down profit growth
We expect Cadila to report 15.9% y-y growth in revenues and -38.6% growth in net
profit. We expect EBITDA to grow 7.1% y-y. The expected margin pressure can be
largely attributed to rising overhead costs and lower profits from JVs, including the
Hospira JV that markets Taxotere in the US. We have factored in forex losses of
INR900mn, similar to what was recorded in the previous quarter. However, the
introduction of Rule 46A, which allows companies to amortise losses over March 2020,
could help reduce the losses on forex loans. The company had outstanding forex loans
of ~USD160mn as of September 2011.
No comments:
Post a Comment