Cadila Healthcare - Awaiting US launches - Kotak

Cadila performance was in line albeit on low expectations. The sharp compression in gross margin was offset by better control on staff cost/overheads. The margin pressure is expected to remain for the next few quarters with US launches in 2HFY14 expected to lead the recovery. The delay in US launches and price erosion in JV have significantly impacted the FY2013 margin with lower tax rate providing some relief. We remain positive on the US pipeline but stock triggers are delayed due to US approvals - limited competition opportunities can have a higher relative impact given the lower US base.

Maintain ADD with TP at Rs840.

Source : Equity Bulls

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