Buy Cadila Healthcare - TP Rs.850 - Emkay

Buy, Target Price Rs 850 On the path to recovery

Domestic business to grow above industry rate: We expect domestic business to clock 18% revenue CAGR over FY12-14E led by new launches and Biochem acquisition. The company has launched 23 products in Q2FY12, 15 in Q3FY12 and 19 products in Q4FY12, which will ramp up in FY13.

New launches to drive US business: US business is expected to grow by 20%+ in FY13 and FY14 on back of 10-15 new launches every year. The company expects Nesher to achieve USD100 mn in revenues from 6 launches over the next 3 years. Two new launches by Nesher is expected in FY13.

USFDA clearance for Moraiya facility to boost company performance: Re-inspection of the Moraiya Injectable facility already over in March. USFDA clearance will provide strong impetus to the stock as Cadila has 17 Injectable filings from this facility.Earnings to grow at 16% CAGR over FY12-14E: We expect strong top-line performance coupled with 19% CAGR in Ebidta will lead to 16% earnings CAGR over FY12-14E.

Near term catalyst and earnings performance: We expect Cadila to report 18% revenue growth in FY13 and 15% growth in FY14. We expect EBIDTA margins to move from 20.6% in FY12 to 21.3% in FY13 and 21.5% in FY14. Earnings will grow by 16% CAGR over FY12-14E. We value the company at 18x FY14 EPS with a target price of Rs850 and positive bias.

Source : Equity Bulls

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