Zydus Lifesciences Ltd. share price target

With a revised TP of 495 (24x on FY20E EPS), we maintain BUY. Cadila (CDH) continues to be at pace with double-digit YoY growth which started in 2QFY18. In 1QFY19, CDH reported revenue at Rs 28.9bn showing a growth of 32%YoY. EBITDA at Rs 6.4bn and PAT at Rs 4.6bn were up 133% and 233% YoY respectively. EBITDA margin came in at 22.3%, improving ~1000bpsYoY. This growth was primarily driven by the US and India businesses which were up 27% and 40% YoY respectively. Other major segments including LATAM and ROW markets and consumer wellness, animal health, and API businesses also saw double digit growth.

Cadila's (CDH) Q1FY19 results were mixed, sales were below by 3.4% while APAT was 9.8% above our expectations. We believe the miss at the margins were purely due to the erosion at gLialda and less off-take of Tamiflu. Sales grew by 29.6% YoY backed by strong growth in US formulations, India and LATAM regions. EBITDA margins were at 18.8% vs our estimates of 22% due to the sales mix. We expect domestic growth to be ahead of industry at 14-15%, while continuous launches in the US business to support growth. CDH plans to acquire 51% stake in Dehradunbased Windlas Healthcare Private Limited (WHPL) which will help ramp up the operations and increase our...

ff Acquisition: CDH has acquired 51% stake in Dehradun-based Windlas Healthcare, which gives access to a USFDA-approved facility (oral solid; plain vanilla and niche products). CDH expects this facility to help in commercialisation of 20-30 products over next 2-3 years,...

Revenues grew 29.8% YoY to | 2893.7 crore (I-direct estimate: | 3221.9 crore) due to 40.1% YoY growth in domestic formulations to | 893 crore (I-direct estimate: | 905 crore) and 27.5% growth in US revenues to | 1230 crore (I-direct estimate: | 1594.9 crore) EBITDA margins improved 985 bps to 22.3% (I-direct estimate: 21.5%), on account of gLialda exclusivity and base effect of GST...

Profits aided by Operating income and Other Income: Cadila's revenues increased by 29.5% on a YoY basis to Rs 28.9 bn (our estimate of Rs 29.8 bn) during the quarter. Key outperformer was US. Operatingmargins increased to 22.3% (lower than our estimates of 24.0%) compared to12.8% in Q1FY18 due to higher revenues, operating income and lower R & D.

Margins Outperform: Cadila's revenues increased by 29.3% on a YoY basis to Rs 32.5 bn (our estimate of Rs 32.0 bn) during the quarter. Key outperformer was US. Operating margins increased to 27.6% (higher than our estimates of 23.3%) compared to 18.9% in Q4FY17 due to higher revenue, better gross margin and lower R & D.

Revenues grew 28.7% YoY to | 3250 crore (I-direct estimate: | 3204 crore) mainly due to 66.7% rise in US sales to | 1642 crore (I-direct estimate: | 1464 crore) led by gLialda (ulcerative colitis) exclusivity & favourable seasonality impact on gTamiflu (anti-infective) EBITDA margins improved 870 bps to 25.8% (I-direct estimate: 25.0%), due to limited competition launches in the US. EBITDA increased 87.7% YoY to | 870 crore (I-direct estimate: | 801 crore) PAT increased 58% YoY to | 607 crore (I-direct estimate: | 496 crore)...

Maintain BUY with a revised TP of Rs 525 (24x on FY20E EPS). Cadila (CDH) reported superlative numbers in 4QFY18. Top line grew 31%YoY; EBITDA margin was at 26.0% (up 623bps YoY) and reported PAT came in at Rs 6bn (up 57%YoY). The US revenues jumped 67%YoY, led by one-time sales of gLialda and gTamiflu under limited competition. The company has filed 26 products in FY18 and has 144 ANDAs pending with US FDA. Approval momentum continues to remain strong with 77 ANDA approvals received in FY18. However, CDH is yet to launch many of these products and has guided for 50+ launches in FY19 for the US market.

Strong Traction in US Biz to Continue; Maintain BUY Led by strong growth in US business, Cadila Healthcare (CDH) has delivered a better-thanexpected performance in 4QFY18 with its revenue growing by 31.8% YoY to Rs32.5bn. Its EBITDA grew by 87.4% to Rs8.7bn, while EBITDA margin expanded by ~795bps YoY to 26.8% due to better product-mix (gross margin up 409bps YoY) and 340bps YoY decline in R&D; cost to 5.6%. Despite higher depreciation/interest/tax cost and lower other income, PAT grew by 56.8% YoY to Rs6.1bn led by strong sales and operating performance. While its US business grew by 66.7% YoY to Rs16.4bn on the back of higher sales of gLialda and gTamiflu, India business witnessed a moderate 5.2% YoY growth led by weak growth in CVS and diabetes segment. Expecting...

26 May 2017 Cadilas (CDH) 4QFY18 revenue increased significantly by 31% YoY to INR32.5b (est. Gross margin improved ~410bp YoY to 66.7% (65.5% in 3QFY18). EBITDA rose ~88% YoY to INR8.7b (est. of INR7.3b), with margin expansion of ~810bp YoY to 26.8%. Improvement in the gross margin, along with a decrease in employee cost by ~100bp (as % of sales) and in R&D; cost by ~340bp, led to overall margin improvement. Strong revenue growth, coupled with better margins, led to robust ~57% YoY growth in PAT to INR6.1b (est.