Buy Cadila Healthcare; target of Rs 370: ICICI Direct

ICICI Direct’s research report on Cadila Healthcare

Q3FY19 results were stronger-than-expected on all fronts due to strong US growth. Revenues grew 9.8% YoY to Rs 3578 crore (I-direct estimate: Rs 3222 crore) due to 22.1%, 46.5% YoY, QoQ growth in the US to Rs 1934 crore (I-direct estimate: Rs 1563.4 crore) EBITDA margins contracted 234 bps to 23.5% (I-direct estimate: 23.3%), due to an adverse product mix. EBITDA remained flat at Rs 840 crore but higher than I-direct estimate of Rs 750.7 crore PAT de-grew 6.1% YoY to Rs 510.4 crore (I-direct estimate: Rs 375.4 crore). Delta vis-à-vis EBITDA was due to higher interest cost and lower other income.

Outlook

The balance sheet expansion, nonetheless, is likely to have major bearing on the sentiment in the near term. Our new target price is Rs 370 based on 18x FY21E EPS of Rs 20.6.

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First Published on Feb 27, 2019 03:24 pm

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