Cadila Healthcare a market performer: Karvy Stock Broking

Cadila Healthcare with a target of Rs 726 in its October 20, 2010 research report.

Cadila Healthcare Q2FY11 net revenues grew 21.2% y-o-y to Rs 11.1 billion higher than our estimates of Rs 10.5 billion. Domestic Formulations (DF) business witnessed 18.6% y-o-y increase to Rs 4668 million higher than our estimate of Rs 4516 million. US business increased 40.8% y-o-y to Rs 2258 million during Q2FY11 on the back of higher market share gains in existing products in the US market. Revenues in the US business were significantly higher than our estimates.?

?Cadila's EBITDA margins of 21.9% were lower than our estimates during Q2FY11 primarily due to other operating income reported at Rs 103.7 million vis-a-vis our expectation of Rs 290 million. Lower depreciation and tax expenses led to higher than expected net profit of Rs 1708.4 million (our estimate Rs 1579.7 million).?

?We have upgraded our revenues by 2.5 % for FY 2011E to Rs 44.5 billion and by 3.2 % to Rs 52.2 billion for FY 12E on back of better performance in domestic formulations, US revenues and consumer business. We ugrade our FY 2011E EPS estimates by 5.1 % to Rs 31 and our FY 2012E estimates by 5.2 % to Rs 38.2. We upgrade our price target by 6.6 % to Rs 726 based on 19x FY 2012E. We maintain our Marketperformer rating on the stock with a target of Rs 726,? Karvy Stock Broking research report.

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