Cadila Healthcare - 4QFY2012 Result Update - Angel Broking

Cadila Healthcare (Cadila) reported lower-than-expected numbers for 4QFY2012, except on the sales front. The company's sales for the quarter were mostly in-line at Rs.1,344cr. On the operating front, gross and operating margins reported an improvement. However, a higher interest and tax expense during the quarter resulted in net profit coming in lower than expectations. Overall, net profit came in at Rs.171cr, registering a dip of 4.6% yoy. Management expects the company to be a US$3bn company by 2015. We recommend Buy on the stock.

Sales just in-line with expectations: For 4QFY2012, Cadila reported net sales of Rs.1,344cr, up 15.0% yoy and higher than our estimate of Rs.1,415cr, driven by domestic markets. On the domestic front, net sales grew by 32.5% yoy to Rs.644.3cr. The company's gross margin expanded to 64.7% during the quarter. The company's OPM also expanded to 17.1%, majorly due to improvement in gross margin. Net profit for the quarter, however, declined by 4.6% yoy to Rs.171cr (Rs.179cr), on account of higher interest and tax expense during the quarter.

Outlook and valuation: We expect Cadila's net sales to post a 17.3% CAGR to Rs.7,386cr and EPS to report a 22.3% CAGR to Rs.47.7 over FY2012-14E. We recommend Buy on the stock with a revised target price of Rs.953.

Source : Equity Bulls

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