Cadila Healthcare - Q3FY12 Result Update - Emkay

Reco: HOLD
CMP: Rs 660
Target Price: Rs 720

No Earnings Catalyst - Maintain Hold

- Q3FY12 Results - Revenues at Rs13.8bn (up 19% YoY), EBITDA at Rs2.6bn (up 3% YoY) & APAT at Rs1.77bn (up 9% YoY)

- Inorganic growth drives revenues but drags margins - acquired Biochem in India, Nesher in US and Bremer in Animal healthcare segment

- EBITDA margins contracted 288bps YoY and 269bps QoQ to 19.1% due to lower margins in acquired businesses, higher R&D cost and pressure in Wellness business

- Going forward, pressure on margins will continue and earnings momentum will slow down - we maintain Hold on the stock with a target price of Rs720 (18xFY13 EPS of Rs40).

Source : Equity Bulls

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