Zydus Lifesciences Ltd. share price target

Maintain BUY rating with a TP of Rs 465 (22x Dec-20E EPS). Cadila (CDH) reported a bumper quarter in 3QFY19 with revenue at Rs 35.9bn, up 11/23% YoY/QoQ (12% beat). Seasonality in the US and several launches over the last 6 months were the key reasons. Although EBITDA margin at 24.2% was up 257bps QoQ (155bps miss) on account of higher operating leverage in the US, there was a 300bps drop in gross margin due to higher AG sales.

ICICI Securities Ltd | Retail Equity Research Q3FY19 results were stronger-than-expected on all fronts due to strong US growth. Revenues grew 9.8% YoY to | 3578 crore (I-direct estimate: | 3222 crore) due to 22.1%, 46.5% YoY, QoQ growth in the US to | 1934 crore (I-direct estimate: | 1563.4 crore) EBITDA margins contracted 234 bps to 23.5% (I-direct estimate: 23.3%), due to an adverse product mix. EBITDA remained flat at | 840 crore but higher than I-direct estimate of | 750.7 crore...

Margins decline on lower domestic revenues and Androgel Ag: Cadila's revenues increased by 9.8% on a YoY basis to Rs 35.8 bn (our estimate ofRs 35.4 bn) during the quarter. Operating margins increased to 23.5% (lower than our estimates of 25.4%) compared to 26.3% in Q3FY19 due to lower gross margins, higher staff cost and R & D expenses.

7 February 2019 Cadila Healthcares (CDH) revenue grew ~10% YoY to INR35.8b (v/s our est. of INR31b), largely led by 22% YoY growth in the US business (55% of sales) and strong ~84% YoY growth in Emerging Markets (~6% of sales). This was partially offset by ~8% YoY decline in domestic business domestic formulations (DF) (~24% of sales). Gross margin declined by ~340bp YoY and ~430bp QoQ to 62.2%, mainly due to change in the product mix and lower DF sales. EBITDA margin also contracted by ~250bp due to lower GM and higher R&D; spend (up ~100bp YoY as % of sales), which was partially offset by lower other expense (~220bp). Absolute EBITDA remained flat YoY at INR8.4b (v/s est. PAT declined by ~6% YoY to INR5.1b (v/s est. of INR4.2b) due to higher interest cost. For 9MFY19, sales stood at INR94.

Profits aided by better margins: Cadila's revenues decreased by 8.1% on a YoY basis to Rs 29.6bn (our estimateof Rs 29.8 bn) during the quarter. Operating margins increased to 23.2% (higher than our estimates of 21.1%) compared to 26.5% in Q2FY19 due to lower revenues, higher staff cost and other expenses.

Cadila's (CDH) Q2FY19 results were below our expectations. Sales/EBITDA/PAT were at Rs28.4bn/Rs5.7bn/Rs4.2bnn respectively. EBITDA margins were at 20.1% Vs. our estimates of 23.9% due to 1) lower off-take of Tamiflu given 7 players, 2) shift of AG to own ANDA in gAsacol not picked up in margins as the refection of only 1 month and 3) overall 2% QoQ price erosion in the US business. We expect domestic growth to be...

Maintain BUY with a revised TP of Rs 475 (22x Sep-20E EPS). Cadila (CDH) reported a muted quarter in 2QFY19 with revenue at Rs 29.6bn, down 8%YoY/ up 2%QoQ (in-line). Despite recovering 7%QoQ, the US business was down 20%YoY as it witnessed competition in gLialda. Margin at 23.2% was down 338bps YoY and up 94 bps QoQ (110bps miss) on account of higher forex loss at Rs 578mn (v/s Rs 135mn in 2QFY18) and increased R&D; spend of Rs 2.7bn, 9% of sales.

Q2FY19 results were stronger-than-expected on the operational front likely due to slower-than-expected price erosion in gLialda (ulcerative colitis). Revenues were in line with I-direct estimates Revenues de-grew 8.4% YoY to | 2961.2 crore (I-direct estimate: | 2986.6 crore) mainly due to high base of gLialda (ulcerative colitis), exclusivity in the US in Q2FY18 EBITDA margins contracted 323 bps to 23.2% (I-direct estimate: 20.5%), mainly on account of higher employee cost. EBITDA de-grew...

4 November 2018 CDHs revenue declined ~8% YoY to INR29.6b (our (-20% YoY) and flat growth in domestic formulation (DF) business. Gross margin expanded by ~50bp YoY/QoQ to 66.5%. EBITDA margin contracted by ~320bp (+100bp QoQ) to 23.2% due to higher employee expense (+340bp as % of sales) and other expenditure (+260bp). PAT declined ~17% YoY to INR4.2b (in-line). For 1HFY19, sales stood at INR56.1b (+6% YoY), EBITDA at INR13.3b (+17% YoY) and PAT at INR8.8b (+37% YoY). (1) CDH launched g-Asacol HD from its in-house manufacturing facility, which drove some improvement in margin. (2) CDH launched authorized generic version (AG) of g-Androgel in October 2018. (3) CDH has been able to maintain g-Lialda sales as competitor was not able to gain market share.

Revenue fell by 12.18% to Rs. 2768.7 Cr in Q1FY19 when compared to the previous quarter. Cadila Healthcare Ltd Q1FY19 results Comment