Q3FY21 Result Update - Cadila Healthcare - ICICI Direct

Q3FY21 revenues grew 4.3% YoY to Rs. 3796 crore (I-direct estimate: Rs. 3906 crore). Domestic formulations posted strong growth of 21.2% YoY to Rs. 1104 crore. However, US sales declined 4.3% YoY to Rs. 1603 crore. Wellness segment also grew a robust 15.8% YoY to Rs. 376 crore. Emerging markets grew 10.9% YoY to Rs. 293 crore. API segment de-grew 18.8% YoY to Rs. 132 crore. Animal health segment grew 17.0% YoY to Rs. 163 crore. EBITDA margins expanded 220 bps YoY to 21.3% (I-direct estimate: 21.2%) due to a better overall operational performance. Subsequently, EBITDA grew 16.4% YoY to Rs. 807 crore (I-direct estimate: Rs. 828 crore). Adjusted PAT grew 40.5% YoY to Rs. 527 crore (I-direct estimates: Rs. 495 crore).

Valuation & Outlook

Q3 operational performance was mostly in line with I-direct estimates (albeit skewed) led by strong domestic formulations growth, whereas profitability was higher due to lower interest cost and tax rate. On the US front, the company plans to venture into complex injectables (71 filed ANDAs), which is likely to provide meaningful traction from FY23-24 onwards. Similarly, addition of biosimilars (like Trastuzumab, Adalimumab, Pegfilgrastim, Bevacizumab, etc) for Emerging markets (like LatAm, MENA markets, South East Asia) are expected to provide growth impetus, going ahead. The wellness segment performance hinges upon Cadila's marketing & distribution prowess besides effective product positioning. India formulations business, after recent restructuring, is likely to stabilise. However, more importantly, it has significantly improved net debt position in 9MFY21 (down ~44% from FY20) utilising proceeds from QIP of consumer wellness business and through internal accruals amid better working capital control. Overall, continued b/s reduction, Moraiya warning letter resolution, US base business performance in tough times are some important aspects to watch. We maintain BUY and arrive at our TP of Rs. 555 (unchanged) based on 22x FY23E EPS of Rs. 25.2.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Cadila_Q3FY21.pdf

Shares of CADILA HEALTHCARE LTD. was last trading in BSE at Rs.473.4 as compared to the previous close of Rs. 475.4. The total number of shares traded during the day was 249693 in over 3652 trades.

The stock hit an intraday high of Rs. 479.85 and intraday low of 472.6. The net turnover during the day was Rs. 118705290.

Source : Equity Bulls

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