Cadila Healthcare - Q2FY21 Result Update - ICICI Securities

Q2FY21 revenues grew 13.5% YoY to Rs. 3820 crore (I-direct estimate: Rs. 3567 crore) vs. Rs. 3367 crore in Q2FY20. US sales grew a robust 18% YoY to Rs. 1709 crore. Domestic formulations grew 11.2% YoY to Rs. 1087 crore. Wellness segment grew 5.7% YoY to Rs. 335 crore. Emerging markets grew 7.9% YoY to Rs. 236 crore. API segment grew 52.2% YoY to Rs. 160 crore. EBITDA margins expanded 402 bps YoY to 22.6% (I-direct estimate: 20.7%) due to lower employee & other expenses. Subsequently, EBITDA grew 38.0% YoY to Rs. 863 crore (I-direct estimate: Rs. 740 crore). Adjusting for exceptional items PAT grew 82.3% YoY to Rs. 578 crore (I-direct estimates: Rs. 400 crore). Delta vis-à-vis EBITDA was mainly due to lower interest cost.

Valuation & Outlook

Q2 revenues were above I-direct estimates on all fronts due to better than expected operational performance and lower interest expense. On the US front, the company plans to venture into complex injectables (69 filed ANDAs), which is likely to provide meaningful traction from FY23-24 onwards. Similarly, addition of biosimilars (like Trastuzumab, Adalimumab, Pegfilgrastim, Bevacizumab, etc) for Emerging markets (like LatAm, MENA markets and South East Asia) are expected to provide growth impetus, going ahead. The wellness segment performance hinges upon Cadila's marketing & distribution prowess besides effective product positioning. India formulations business, after recent restructuring, is likely to stabilise. However, more importantly, it has significantly improved net debt position in H1FY21 (down 40% from FY20) utilising proceeds from QIP of consumer wellness business and through internal accruals amid better working capital control. Overall, continued b/s reduction, Moraiya warning letter resolution, US base business performance in tough times are some important aspects to watch. We arrive at our TP of Rs. 555 based on 22x FY23E EPS of Rs. 25.2.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Cadila_Q2FY21.pdf

Shares of CADILA HEALTHCARE LTD. was last trading in BSE at Rs.437.45 as compared to the previous close of Rs. 410.15. The total number of shares traded during the day was 750634 in over 13204 trades.

The stock hit an intraday high of Rs. 451.15 and intraday low of 418.55. The net turnover during the day was Rs. 331571482.

Source : Equity Bulls

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