KR Choksey has given Accumulate recommendation for Cadila Healthcare with a target price of Rs. 445 in its research report issued on Feb 07, 2022
KR Choksey’s research report on Cadila Healthcare
The company posted a 3.7% YoY (-3.4% QoQ) decline in revenue to INR 36.55 bn. It was due to 5.6% YoY (-3.9% QoQ) decline in revenue from operations (97% of revenue) and a 164.0% YoY (+13.1% QoQ) rise in other operating revenue (3% of revenue) • Cadila’s Gross Profit Margin (GPM) declined 278 bps YoY (-34 bps QoQ) to 63.1% in Q3FY22 • Adjusted net profits declined 5.1% YoY (-40.6% QoQ) to INR 5,004 mn due to fall in margins and 16.0% YoY (+3.3% QoQ) rise in interest expenses; partially offset by 121.1% YoY (+14.1% QoQ) increase in other income in Q3FY22 • The company plans to a scale up the US segments revenue with high value launches from FY24; however, before that weakness in the US market is expected to lead to slowdown in the US revenue in FY23E.
We apply an 18.0x PE multiple to FY24E EPS of INR 24.7 and reduce our target price (TP) to INR 445 (earlier 563/share), which gives an upside potential of 9.0% from its CMP of INR 409. Accordingly, we maintain ACCUMULATE on the shares of Cadila Healthcare. .