Zydus Lifesciences Ltd. share price target

While the Gross margins have risen to 65.1% Vs 63.9% in Q2FY17, given the strong launches it looked a bit muted. EBITDA margins were at 24.7% We reduce our FY18E/19E estimates and TP (Rs505, 22x FY19E EPS). Key Highlights and Investment Rationale...

attributed to strong growth in the US and a recovery in domestic business sales. PAT rose 49% YoY to INR5b (5% beat). Strong growth in US driven by key launches: US business rose 66% YoY (+70% QoQ) to INR16.4b, led by Lialda launch. Lialda sales are likely to decline due to AG launch, but ramp-up of Tamiflu suspension and other key launches (incl. Asacol HD, Toprol XL, Prevacid ODT) should help maintain strong growth. Post successful resolution of Moraiya facility, we expect ~80 ANDA approvals until FY19 for CDH. ~50% of these are expected to come...

Cadila Healthcare posted poor set of numbers for 1QFY2018. Sales came in at `2,136cr (`2,216cr expected) v/s. `2,500cr in 1QFY2017, a yoy de-growth of 3.6%, mainly driven by the dip in sales of Indian formulations. Indian formulation sales registered (`637cr) a yoy dip of 18.9%. Its key market USA registered (`965cr), 13.8% yoy growth. On..

Q1FY18 EBITDA margin declined 1,000 bps YoY/ 590 bps QoQ to 12.4% on negative operating leverage, as India sales declined 19% YoY. EBITDA margin adj. for GST stood at ~18%. US sales grew 3% QoQ in USD terms aided by full quarter consolidation of Sentynl.

Cadila results were below our estimates, sales were at Rs21.4bn (est. Rs25.4bn) taking into account higher than expected de-stocking on account of GST implementation. Management guided the EBITDA margins at 18% for Q1FY18 post adjustment of GST impact at the similar levels as of Q4FY17. PAT was at Rs1.4bn 66% down YoY and 64.7% down QoQ. While the Gross margins have fallen from 65.1% in Q1FY17 to 61.2% in Q1FY18, which were lower than our estimates as we had accounted for some gLialda inventory push during the quarter. However, with the management guiding the...

Maintain BUY with a revised TP of Rs 590 (24x on June19E). With GST impeding sales in the domestic segment, Cadilas (CDH) 1Q performance was uninspiring. The top-line came down by 4% YoY, EBITDA margin shrunk ~1000bps YoY to 12.6% and earnings plummeted ~61% YoY to Rs 1.3bn. On the positive side, the US business held its ground and remained flat QoQ. Growth was 14%YoY.

Cadila has received approval for its generic version of Lialda(Mesalaminedelayed release tablets) in the US (market size of USD 1.15 bn as per IMS)from its Moraiya facility. We expect this to be meaningful limited competition contributor (USD 130-140 mn in FY18/19 sales with ~80-85% gross margin)

Most awaited approvals start to roll out, giving us confidence in the future pipeline getting launched. After getting a green chit from US FDA for the Moraiya facility, and first approval of Levofloxacin injection was received on June 2, post which Cadila received FTF of gLialda...

Cadila's (CDH) Q4 revenue at Rs 25.2 bn (up 6% YoY) and EBITDA at Rs 4.6 bn (down 16% YoY) were in line with estimates. PAT at Rs 3.85 bn was aided by higher other income and lower tax expense.