Cadila Healthcare - 3QFY13 results expectation - Ambit

(CDH IN, mcap US$3.1bn, BUY, TP Rs973, 20% upside)

Analyst: Jatin Kotian, jatinkotian@ambitcapital.com, Tel: +91 22 3043 3261

Cadila Healthcare will announce its 3QFY13 results today. We expect the company's revenues to increase by 17% YoY to Rs16.1bn, in line with consensus estimates. Revenue growth is likely to be driven by 20% YoY growth in the exports formulations business. We expect the domestic formulations business to record a revenue growth of 15% YoY aided by sales from the acquired entity Biochem. Revenue from the US formulations business is likely to increase by 16% YoY mainly on the back of the INR depreciation. Whilst gross margins are likely to decline marginally, we expect Cadila to report EBITDA of Rs3.2bn (up 20% YoY and 4% below consensus). We do not expect any significant QoQ improvement in EBITDA margins, and our margin estimates remain about 80bps below consensus expectations. We expect Cadila to report PAT of Rs1.8bn (up 23% YoY and 2% below consensus).

We reiterate our BUY stance, because we believe that the company is well placed to gain market share in the domestic segment owing to its strong competitive positioning. Also, Cadila has made significant investments in its US business to ensure that the high revenue contribution of this business sustains. Our one-year forward fair valuation of Rs973 implies an FY14 P/E of 20.5x and EV/EBITDA of 13.8x.

Source : Equity Bulls

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