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Research
Cadila Healthcare - US launches to hold key... - ICICIdirect
Posted On : 2013-06-02 21:06:03( TIMEZONE : IST )
Cadila reported an in-line set of Q4FY13 numbers. Revenues grew 15% YoY to Rs. 1612 crore, (I-direct estimate: Rs. 1588 crore) driven by export formulations, which grew 20% YoY. With 14.4% growth, domestic formulations also contributed to overall growth. EBITDA margins declined 240 bps YoY to 17.8% (I-direct estimate: 17.5%) as expected due to pricing pressure in the JV business and higher growth in low margin businesses such as export APIs. PAT grew 52% to Rs. 275 crore on account of utilisation of MAT credit to the tune of Rs. 98 crore. Adjusting the same, PAT remained flat YoY at Rs. 178 crore against I-direct estimate of Rs. 135 crore. We maintain BUY as we see some head start towards US launches and focus on margin improvement in the coming quarters.
Domestic business maintains growth trajectory
The domestic business registered sound growth of 15% YoY to Rs. 741 crore, driven by 1) 26% growth in wellness business and 2) 14.4% growth in branded formulations to Rs. 571 crore. The growth in branded formulations was on the back of 30 new product launches including line extensions (three for the first time).
Formulations drive overall exports growth
Exports grew 19.7% to Rs. 743 crore driven by 20.3% growth in formulations. Europe and emerging markets led formulation exports growth by registering growth of 36% and 86%, respectively. The US business, however, grew just 10% YoY to Rs. 388 crore for want of launches as was the case in Q3. For the entire FY13, the company filled 33 ANDAs with the USFDA and received approval for 15 products. So far, it has launched only seven products including four in Q4 itself.
Management envisages gradual improvement in margins; maintain BUY
The management hopes a gradual margin improvement takes place on the back of incremental product launches, especially in the US, and the cost rationalisation exercise or the so called Prism programme. We expect sales, EBITDA and PAT to grow at a CAGR of 18%, 19% and 19%, respectively, in FY13-15E. We expect ~170 bps improvement in EBITDA margins by FY15 and our assumption is based on incremental US launches. Strong domestic franchise is also expected to complement the overall growth. We have maintained the target price at Rs. 976 based on 17x FY15E EPS of Rs. 57.4.
