Cadila Healthcare - Result Update - ICICI Securities

Q4 revenues stayed flat YoY at Rs. 3752 crore (I-direct estimate: Rs. 4099 crore) due to high base of AndroGel AG and Covid-19 related disruptions. Consolidation of Craft portfolio in wellness segment, which grew 21.8% YoY to Rs. 490 crore was offset by 17.1% YoY fall in Emerging markets to Rs. 172 crore. US sales fell 1.9% YoY to Rs. 1761 crore. Domestic formulations also de-grew 1.1% YoY to Rs. 892 crore. EBITDA margins contracted 36 bps YoY to 21.1% (I-direct estimate: 19.5%) as higher gross margins were offset by increase in employee and other expenses. Subsequently, EBITDA de-grew 1.1% YoY to Rs. 791.2 crore (I-direct estimate: Rs. 799.4 crore). Adjusted PAT de-grew 5.8% YoY to Rs. 433.5 crore (I-direct estimate: Rs. 467.2 crore). Delta vis-à-vis EBITDA was mainly due to higher depreciation.

Valuation & Outlook

Q4 results were a mixed bag. While revenues and profitability were below our estimates, higher gross margins due to change in product mix and volume expansion in US contributed to better than expected EBITDA margins. The wellness segment (post acquisition) will be keenly watched as the company ventures into slightly unchartered territory with high amount of seasonality aspect. That said, it looks beneficial from an overall revenue point of view with India focused FMCG addition in the overall portfolio mix. Overall, the balance sheet reduction, Moraiya warning letter resolution and US base business performance in tough times are some important aspects to watch. We arrive at our target price of Rs. 420 based on 20x FY22E EPS of Rs. 20.9.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Cadila_Q4FY20.pdf

Shares of CADILA HEALTHCARE LTD. was last trading in BSE at Rs.362.85 as compared to the previous close of Rs. 366.95. The total number of shares traded during the day was 130711 in over 2291 trades.

The stock hit an intraday high of Rs. 373.35 and intraday low of 361.7. The net turnover during the day was Rs. 48032202.

Source : Equity Bulls

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