Cadila Healthcare - Q4FY13 Result Update - Sushil Finance

Cadila Healthcare Limited. (Cadila) reported decent set of numbers on the revenue front which were in-line with our estimates. Revenues stood at Rs.16119 mn, a growth of 15.3%, whereas on the operating front, margins disappointed. Q4FY13 PAT came in at Rs.2625 mn, a growth of 53.6% on account of tax write back taken during the quarter. The following are the key highlights of the results:

Key Highlights of Q4FY13

Revenues grew by 15.3% YoY from Rs.13980 mn in Q4FY12 to Rs.16119 mn in Q4FY13. The company registered a growth of 15% in its domestic business whereas Export business including JVs registered a growth of 16.8%.

Domestic formulation business registered a growth of 14.4% from Rs.4989 mn in Q4FY12 to Rs. 5708 mn in Q4FY13 driven by 21 new product launches. In the consumer wellness segment, Cadila recorded a strong growth of 26.5% led by robust growth in Everyuth, Sugar free & Nutralite. Animal healthcare on the other hand grew 6.8% YoY.

Export formulations business registered a growth of 20.3% to Rs.6600 mn on the back of 36% growth witnessed in Europe & 86% growth in Emerging Markets. However, the company witnessed a single digit growth in the remaining markets such as US (9.9%), Brazil (5.4%) & Japan (3.7%). Cadila's JV business came in at Rs.1153 mn (1.1%).

On the EBITDA front, it witnessed a flattish growth of mere 1.3% on a YoY basis to stand at Rs.2863.9 mn. EBIDTA margins came in at 17.8% v/s 20.2% in Q4FY12.

Net Profit however grew by a strong 53.6% YoY from Rs.1708.8 mn to Rs.2624.6 mn in Q4FY13 on account of tax write back taken by the company during the quarter.

Key Highlights of FY13

Revenues grew by 13.7% YoY from Rs.52633 mn in FY12 to Rs.62849 mn in FY13. The company registered a growth of 21.7% in its domestic business whereas Export business registered a growth of 21.0%.

Domestic formulation business registered a strong growth of 22.6% from Rs.18955 mn in FY12 to Rs.23232 mn in FY13. The Consumer wellness segment which contributes ~13.7% of domestic sales, posted a strong growth of 19.0% during the year.

Export formulations business registered a growth of 22.6% to Rs. 24886 mn on the back of strong growth witnessed in US (21.2%), Europe (23.9%) & Emerging markets (65.9%). However, the company witnessed a de-growth in Brazil (-3.6%). Cadila registered a robust 19.7% growth in its JV business to Rs. 5070 mn.

Operating profit reported a growth of 3.9% from Rs.10839 mn in FY12 to Rs.11257 mn in FY13 with margins at 17.7% v/s 20.6% in FY12.

Net Profit came in flat at Rs.6554 mn as compared to Rs.6526 mn in FY12. PAT margins were at 10.3%.

OUTLOOK & VALUATION

FY13 was a challenging year for Cadila with pressure on the margins on account of slow approvals in the US, declining profitability from JVs and moderate growth in high margin geographies like Brazil. However, we believe the growth momentum in the domestic formulation space, consumer business & exports markets such as US (with increased approvals, 22 expected in FY14), Europe (driven by new product launches coupled with product transfer to Indian facilities), Emerging markets etc. is likely to pick up going forward. On the other hand, the key to margin expansion would be from increased traction in US, Brazil & cost containment measures (Prisim 2 initiatives) bearing fruit. Even though the near term would remain challenging for the company, we believe FY15E will be a significant year of margin expansion. We thereby introduce FY15E numbers & rollover our target to Rs.955 (20x its FY15E EPS of Rs.47.8) recommending a BUY.

Source : Equity Bulls

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