Cadila Healthcare - March 2013 Results Preview - Motilal Oswal

- We expect Cadila Healthcare's (CDH) 4QFY13E top line to grow 16.3% YoY to INR16.25b, led by 18% YoY growth in domestic formulations business. Export formulations will grow 15% YoY dented by a likely slowdown in JV sales.

- We estimate EBITDA would decline 3% YoY to INR2.75b, with margin likely to shrink by 330bp YoY to 16.9%.

- Adjusted PAT would decline 22% YoY to INR1.34b, impacted by higher depreciation, interest costs and taxes.

We estimate a strong 22% EPS CAGR for FY12-15E for the core operations, excluding one-offs. RoCE and RoE will decline to ~18-19% in FY13E and recover to 25-26% in FY14E/15E. Most of the cost pressures witnessed in 2Q/3QFY13 will be absorbed with new launches in the US (20-22 guided for CY13), normalization of operations in Brazil and stable growth in domestic formulations. Though we estimate a 290bp YoY decline in EBITDA margin for FY13E, we believe they will be close to FY12 level of 21.4% by FY15E. Stock trades at 18.4x FY14E and 14.7x FY15E consolidated EPS. Maintain Buy.

Source : Equity Bulls

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