CADILA HEALTHCARE LTD - In a Consolidation Phase
CDH’s Q1 FY12 adjusted result (adjusted to the milestone income from Abbott) was below our sales and earnings estimate. Higher base created in FY11 by pushing product sales last year to achieve the $1b sales mark was the main reason for a muted performance in most of the business divisions. While the management remained upbeat of achieving ~15-20% growth in most of the important business divisions, the USFDA warning for their plant may pose challenges to this guidance. The company has launched 3 products in the US and is not expecting to launch any more this year largely due to the impending USFDA warning on its site. We make little adjustments to our estimates and largely accept management’s growth guidance. At a PE of 21.4x on our FY12 earnings, the stock is nearly fully priced. We thus reiterate our Market Perform rating with a target price of Rs.880
COMPANIES MENTIONED
CADILA HEALTHCARE LTD
CADILA HEALTHCARE LTD
