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India Equity Research Reports, IPO and Stock News
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M a r g i n p r e s s u r e p e r s i s t s …
Cadila Healthcare’s Q3FY12 results were a mixed bag. Total revenues
increased 18.5% YoY to | 1383.2 crore slightly above our expectation of |
1321 crore, driven by strong ~45% growth in the US market, ~18%
growth in domestic formulations and a favourable currency impact. The
numbers include around | 61 crore from recent acquisitions like Biochem,
Nesher & Bremer. Excluding these, revenues increased 13.3% YoY. On
the other hand EBITDA margins declined ~300 bps YoY to 18.9%, less
than our expectation of 21.4%. The fall in margins is attributable to 1) rise
in the core expenditure and 2) de-growth in the high margin wellness
business. With the acquisition of Biochem and Nesher, both interest and
depreciation increased sharply. It booked forex losses of | 32.2 crore,
which led to net profit de-growth of 8% to | 149.21. We maintain BUY
although we do envisage pressure on margins and return ratios will
persist for some time due to acquisitions & restructuring.
ƒ Like-to-like sales in domestic formulation grew by 15% YoY
Sales in domestic formulations grew 17.7% YoY to | 469.3 crore.
The sales include | 10 crore (one week sales) from the recently
acquired Biochem Pharmaceuticals. Excluding Biochem, growth was
~15% YoY. It launched the fifth biosimilar product in the quarter.
ƒ Expects USFDA to inspect Sarkhej facility in this month
Cadila has completed corrective measures at its Sarkhej facility,
which got a warning letter in July 2011. It expects USFDA reinspection anytime soon. The management has indicated that the
facility could get approval in the first half of the next fiscal, which
can trigger ANDA approval for additional four or five products.
V a l u a t i o n
Poor performance by the wellness business, among other things, is
weighing on the stock performance. Recent acquisitions are expected to
make good the lost ground but this will take some time. We have reduced
our target price in line with a downward revision of FY13E EPS by ~5%.
Positive outcome from the USFDA re-inspection along with traction from
the recent acquisitions will be key triggers to be watched. Our revised
target is | 797, based on 18x FY13E EPS of | 44.3. We maintain BUY.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
PDF link for report- click here
M a r g i n p r e s s u r e p e r s i s t s …
Cadila Healthcare’s Q3FY12 results were a mixed bag. Total revenues
increased 18.5% YoY to | 1383.2 crore slightly above our expectation of |
1321 crore, driven by strong ~45% growth in the US market, ~18%
growth in domestic formulations and a favourable currency impact. The
numbers include around | 61 crore from recent acquisitions like Biochem,
Nesher & Bremer. Excluding these, revenues increased 13.3% YoY. On
the other hand EBITDA margins declined ~300 bps YoY to 18.9%, less
than our expectation of 21.4%. The fall in margins is attributable to 1) rise
in the core expenditure and 2) de-growth in the high margin wellness
business. With the acquisition of Biochem and Nesher, both interest and
depreciation increased sharply. It booked forex losses of | 32.2 crore,
which led to net profit de-growth of 8% to | 149.21. We maintain BUY
although we do envisage pressure on margins and return ratios will
persist for some time due to acquisitions & restructuring.
ƒ Like-to-like sales in domestic formulation grew by 15% YoY
Sales in domestic formulations grew 17.7% YoY to | 469.3 crore.
The sales include | 10 crore (one week sales) from the recently
acquired Biochem Pharmaceuticals. Excluding Biochem, growth was
~15% YoY. It launched the fifth biosimilar product in the quarter.
ƒ Expects USFDA to inspect Sarkhej facility in this month
Cadila has completed corrective measures at its Sarkhej facility,
which got a warning letter in July 2011. It expects USFDA reinspection anytime soon. The management has indicated that the
facility could get approval in the first half of the next fiscal, which
can trigger ANDA approval for additional four or five products.
V a l u a t i o n
Poor performance by the wellness business, among other things, is
weighing on the stock performance. Recent acquisitions are expected to
make good the lost ground but this will take some time. We have reduced
our target price in line with a downward revision of FY13E EPS by ~5%.
Positive outcome from the USFDA re-inspection along with traction from
the recent acquisitions will be key triggers to be watched. Our revised
target is | 797, based on 18x FY13E EPS of | 44.3. We maintain BUY.
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