Cadila Healthcare nears 52-week low post June quarter results

The stock slipped 5% to Rs 336, extending its 6% decline on Monday, trading close to its 52-week low of Rs 333 touched on July 20, 2018 on the BSE in intra-day trade.

Shares of Cadila Healthcare have slipped 5% to Rs 336 per share, extending their 6% decline on Monday on the BSE, after the company reported a lower-than-expected 30% year on year (YoY) growth in net sales at Rs 28.94 billion in the June quarter (Q1FY19) due to lower US sales.

The company’s net profit grew by 233% YoY to Rs 4.60 billion in Q1FY19 due to other income of Rs 1.01 billion.

Analysts on an average had expected net sales of Rs 31.21 billion and profit of Rs 4.65 billion for the quarter.

The company’s business in the US posted sales of Rs 12.30 billion, up by 27%, while the India formulations business posted sales of Rs 8.93 billion, up by 40% over the previous year quarter.

Motilal Oswal Securities had expected Cadila to report highest 49% YoY growth in revenue at Rs 32.7 billion, led by ongoing strong sales of gLialda and new launches. US formulations business had expected to grow around 70% to Rs 16.4 billion on ramp-up of gLialda and gTamiflu sales.

“Seasonal variability of gTamiflu Suspension and competition from new entrant in gLialda cause lower US generic sales in Q1FY19. India formulation sales grew 40% YoY due to the benefits of lower base,” analysts at Prabhudas Lilladher said in result update. The brokerage firm maintain ‘Accumulate’ recommendation with retain target price at Rs 437.

Analyst at Karvy Stock Broking downgrade revenues by 5.7%/0.4% for FY19E/FY20E primarily due to downgrade in US/Latam business.

“We downgrade our EBDITAM by 440 bps/310 bps for FY19E/FY20E due to lower gross margins and higher other expenses. We downgrade our EPS for FY 19E/FY20E by 27.5%/13.5 % to Rs 16.7/Rs 20.5 for FY19E/FY20E,” the brokerage firm said in result review with ‘buy’ rating on the stock and target price of Rs 431 (previous Rs 498).

At 12:56 pm; the stock was trading 5% lower at Rs 337, close to its 52-week low of Rs 333 touched on July 20, 2018 on the BSE in intra-day trade. The trading volumes on the counter more than doubled with a combined 6.01 million equity shares changed hands on the BSE and NSE so far.