Zydus Lifesciences Ltd. share price target

US (44% of revenues) grew at ~12% CAGR in FY16-20 backed by aggressive filings, product launches. Launches of authorised generics also contributed to overall growth. US pipeline (cumulative) consists of 390 filed ANDAs, 99 pending final approvals. However, resurfacing of cGMP issues at Moraiya and an imminent slowdown in base are main near term headwinds. We expect US sales to grow at ~9.5% CAGR in FY20-22E to | 7502 crore. Our growth assumptions model near term Hydroxychloroquine opportunity in the US but besides this no significant meaningful launches....

20 June 2020 by regrouping it into the Mass and Specialty segments and b) differentiated launches in US Generics. We maintain our EPS estimates for FY21/FY22E and continue to value CDH at 21x 12M forward earnings to arrive at TP of INR420. We remain positive on CDH on account of better prospects in DF (encouraged by changed strategy), a healthy ANDA pipeline (including injectables and transdermals) in the US market, and regulatory works at Moraiya nearing completion. Maintain Buy. CDHs sales at INR37.5b (in-line) for 4QFY20 stood largely flat YoY. US sales (47% of sales) fell 1.9% YoY to INR17.6b. The India Branded Formulations business (24% of sales) was INR8.9b, almost flat YoY. EM and LATAM (5% of sales) revenue was down 17% YoY to INR1.7b, while API registered strong growth of 21% YoY, with sales of INR1.2b. The Consumer Wellness business grew 21.

The Q4FY20 results of Cadila Healthcare Limited (Cadila) were a mixed bag and reflected the impact of Covid-19. The sales at Rs 3752 cr were flat on a y-o-y basis, but missed estimates. Revenues amounting to Rs 250 cr were deferred due to supply chain / logistics issues, which the management expects to recoup in the current quarter. The gross margins for the quarter improved by 350 bps y-o-y but an increase in the employee cost and higher other expenses wiped out the gains, leading to a 60 bps y-o-y contraction in Operating Margins. OPM's stood at 21.1% while operating profit stood at Rs 791 crdeclining by 2.4% y-o-y,...

On the business front, despite the nationwide lockdown, domestic growth is expected to remain more or less stable. Exports growth, barring for one or two months due to congestion in all major ports globally, is also expected to remain strong due to 1) currency benefit, 2) slowdown in competition due to delay in new approvals that will be beneficial for existing players and 3) expected demand continuum across the world despite Covid-19. Some windfall is also expected in some critical productsa case in point is Hydroxychloroquine, a malaria drug that is likely to be repurposed as a prophylaxis for Covid-19 treatment in some cases....

Cadila Heathcare (Cadila HC) post its reorganization and productivity initiatives indomestic formulations space

Cadila Healthcare is India's leading vertically integrated pharmaceutical company. With its presence across the value chain, it manufactures finished dosage forms, active pharmaceutical ingredients, animal healthcare...

Q3FY20 revenues grew 1.7% YoY to | 3638.1 crore (I-direct estimate: | 3439.7 crore). Consolidation of Craft Portfolio was largely offset by 13.4% YoY decline in the US to | 1675.3 crore. Domestic formulations grew 7.6% YoY to | 910.3 crore. EBITDA margins contracted 441 bps YoY to 19.1% (Idirect estimate: 18.8%), mainly on account of higher employee and other expenditure. EBITDA de-grew 17.4% YoY to | 693.2 crore (I-direct estimate: | 646.7 crore). PAT de-grew 26.5% YoY to | 375.2 crore (I-direct estimates:...

We upgrade our Revenues by 1.8%/2.8% in FY20E/FY21E due to upgrade in USand EM business. We downgrade our EBITDAM by 40bps to 18.9% for FY20Ewhile we maintain our EBITDAM for FY21E.

5 February 2020 Cadila Healthcares (CDH) renewed strategy is aiding growth in the domestic formulation (DF) segment. Also, its ANDA launch engine remains strong, which in turn is improving growth prospects for the US market. We maintain our EPS estimates for FY20/FY21/FY22E. We remain positive on CDH on the back of (a) robust ANDA pipeline including complex products like transdermals, and (b) its changed strategy, which is delivering steady pick-up in DF growth. 3QFY20 sales grew 1.7% YoY to INR36.4b (v/s est. INR34b), led by (a) US sales growth of 16% QoQ to INR16.7b (46% of sales), and (b) India branded formulation growth of 9.6% YoY. Gross margin stood at 65.8% and expanded 360bp YoY. EBITDA margin came in at 19.1% and contracted 440bp YoY.

Cadila Healthcare is India's leading vertically integrated pharmaceutical company. With its presence across the value chain, it manufactures finished dosage forms, active pharmaceutical ingredients, animal healthcare...