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Cadila Healthcare 3QFY2014 performance highlights and results update

February 10, 2014, Monday, 07:45 GMT | 03:45 EST | 13:15 IST | 15:45 SGT
Contributed by Angel Broking


Cadila Healthcare (Cadila)’s 3QFY2014 results came in above our expectations on the net profit front. The company posted sales of Rs.1,838cr (vs our expectation of Rs.1,781cr), registering a yoy growth of 17.7%. The company’s OPM came in at 14.2% (vs an expected 16.0%), expanding by 64bp yoy. The expansion in the OPM came in spite of the lower gross margins, which collapsed by 470bp yoy. The same was on account of rise in employee and other expenses being muted during the quarter. The Adj. net profit growth came in at Rs.189cr (vs an expected Rs.167cr), registering a growth of 84.3% yoy on back of lower tax outgo and reduction in interest expenses. We maintain our Neutral rating on the stock.
 
Net profit better than expectation: Cadila’s 3QFY2014 results came above our expectations on the net profit front. The company posted sales of Rs.1,838cr (vs an expectation of Rs.1,781cr), registering a yoy growth of 17.7%. The growth was mainly lead by exports, which grew by 38.5% yoy, while domestic sales grew by 3.8% yoy. The, company’s OPM came in at 14.2% (vs an expected 16.0%), expanding by 64bp. The expansion in the OPM came in spite of the lower gross margins, which collapsed by 470bp yoy. The same was on back of rise in employee and other expenses being muted during the quarter. Employee expenses rose by 12.8% yoy, while other expenditure rose by 7.4% yoy. Also, R&D expenses as a percentage of sales came in lower at 6.7% for the quarter vs 9.0% during the corresponding period of last year. The Adj. net profit growth came in at Rs.189cr (vs an expected Rs.167cr), registering a growth of 84.3% yoy on back of lower tax outgo and reduction in interest expenses.
 
Outlook and valuation: We expect Cadila’s net sales to post a 16.6% CAGR to Rs.8,367cr and EPS to report an 18.1% CAGR to Rs.44.7 over FY2013–15E. In the recent run up witnessed in the stock price, the valuations have become fair. Hence, we remain Neutral on the stock.

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