Cadila Healthcare Ltd - Myirisbreport.myiris.com/MR1/CADHEALT_20111119.pdfCadila is a flagship...

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Transcript of Cadila Healthcare Ltd - Myirisbreport.myiris.com/MR1/CADHEALT_20111119.pdfCadila is a flagship...

Page 1: Cadila Healthcare Ltd - Myirisbreport.myiris.com/MR1/CADHEALT_20111119.pdfCadila is a flagship company of Zydus Cadila Group. It was incorporated as Cadila Healthcare Private Ltd on

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Microsec Research19 Nov 2011

Page 2: Cadila Healthcare Ltd - Myirisbreport.myiris.com/MR1/CADHEALT_20111119.pdfCadila is a flagship company of Zydus Cadila Group. It was incorporated as Cadila Healthcare Private Ltd on

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Microsec Research19 Nov 2011

TABLE OF CONTENTS:

Organic and Inorganic Strategies to drive growth ………………………

Employee Cost and Elevated Debt………………………………………

Consumer Wellness………………………………………………………

Peer Group……………………………………………………………………

Business Overview………………………………………………………… 05 - 05

Topic Page Number

Investment Highlights………………………………………………………… 03 - 03

Company Overview…………………………………………………………… 04 - 05

08 - 09

09 - 10

10 - 10

11 - 11

Industry Overview…………………………………………………………… 06 - 06

Investment Thesis……………………………………………………………… 07 - 14

Distribution Channel and competitive research team ………………… 07 - 08

Financials……………………………………………………………………… 13 - 13

Disclaimer……………………………………………………………………… 14 - 16

Valuation……………………………………………………………………… 12 - 12

Risks to the Rating…………………………………………………………… 12 - 12

Page 3: Cadila Healthcare Ltd - Myirisbreport.myiris.com/MR1/CADHEALT_20111119.pdfCadila is a flagship company of Zydus Cadila Group. It was incorporated as Cadila Healthcare Private Ltd on

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Microsec Research19 Nov 2011

Cadila Healthcare Ltd (Cadila) is a leading pharmaceutical company with a strong

presence in domestic and global markets. Cadila expands its market presence through

Joint Venture, acquisition and tie ups with different companies all over the world. With

the investment in R&D and manufacturing facilities, the company is likely to become

research oriented company which has huge opportunities; as global pharmaceutical

companies want to give out their research to India due to cost cutting, going off-patent

and US FDA issues. We expect Cadila has good prospects in the long run. However,

domestic pricing policy and stiff competition in consumer wellness segment from

multinationals, impedes our view for the short term and we give “Hold” rating to the

stock.

Investment Highlights

Distribution Channel along with competitive Research Team increase product

launch to boost top line growth.

Organic and Inorganic Strategies to drive growth.

The rising employee cost and elevated debt impact on margins that makes us

cautious in short run but is likely to be positive for long run as it is due to the

investment in R&D, manufacturing facility and acquisition of Bremer for accessing

the key animal healthcare markets across Europe, South America, Asia, Africa and

Nesher Pharma to distribute and manufacture generic controlled substances in the

American market. Past credibility gives us assurance that the management is

capable to manage properly by expanding product portfolios and market presence.

Cadila focuses on the fast growing affluent, health conscious segment through its

73% subsidiary, Zydus Wellness, but this segment currently faces stiff competition

from the multinationals.

Cadila – Financial Performance at a glance

Particulars(In INR Mn) FY2009 FY2010 FY2011 FY2012E FY2013E

Revenue 29,275.00      36,868.00      46,302.00       53,272.96        65,482.02     

Growth (%) 26.03% 25.94% 25.59% 15.06% 22.92%

EBITDA 6,058.00        8,086.00        10,262.00       11,032.86        14,013.15     

EBITDA Margins (%) 20.69% 21.93% 22.16% 20.71% 21.40%

Net Profit 3,033.00        5,051.00        7,110.00         7,897.04          10,109.35     

Net Profit Margins (%) 10.36% 13.70% 15.36% 14.82% 15.44%

Net Profit Growth (%) 17.74% 66.53% 40.76% 11.07% 28.01%

EPS 22.22              37.00              34.73               38.57               49.37             

BVPS 84.15              104.90            92.80               125.34             169.31           

P/E 8.16                14.86              22.79               18.47               14.43             

P/BV 2.16                5.24                8.53                 5.68                 4.21               

EV/EBITDA 5.80                10.37              16.63               13.42               9.98               

ROE 26.40% 35.28% 37.42% 30.77% 29.16%

Source: Company Data, Microsec Research

Cadila Healthcare Ltd

Initiating Coverage -Hold Sector- Pharmaceuticals

BSE Code 532321

NSE Code CADILAHC

Bloomberg Ticker CDH IB

Reuters Ticker CADI.BO

Face Value (INR) 5.00

Equity Share Capital (In INR Mn) 1,023.74

Average P/E 27.4x

Beta vs Sensex 0.57

Average Daily Volume 15,585

Dividend Yield 0.88%

PEG Ratio 0.84

STOCK SCAN

Current Market Price (INR) 712.55

Target Price (INR) 778.00

Upside (%) 9%

52 Week High/Low (INR) 983.5/703.1

Market Capitalization (In INR Mn) 145,893.19

Market Data

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Company Overview

Cadila is a flagship company of Zydus Cadila Group. It was incorporated as Cadila Healthcare Private Ltd on 15 May, 1995 and

converted into public company along with the name of Cadila Healthcare Ltd in 1996. Headquarter of the company is situated

in Ahmadabad. Cadila is in the business of active pharmaceutical ingredients, formulations; animal health product to life style

products. The company has 12 own manufacturing units which are located in Ankleshwar, Baddi, Goa, Changodar, Dabhasa,

Sikkim, and Moraiya. It is the leading player in cardiovascular, respiratory, gastrointestinal and women healthcare segment.

Exhibit 1. Cadila – Events

Source: Company Data, Microsec Research

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Business Overview

Cadila, a research oriented pharmaceutical company, operates in bulk drugs, human formulations, veterinary formulations,

herbal, diagnostics, skin care and other OTC products. Export of generic drugs contributes over 40% on the top line while 50% of

its revenue comes from domestic market. The company has remarkable presence in respiratory, cardiovascular, gastrointestinal,

female healthcare and anti-infective segments.

Geography-wise Formulation revenue breaks up Segment wise revenue breaks up

Source: Microsec Research, Company Data Source: Microsec Research, Company Data

During Q2 FY12, Cadila showed 36% yoy growth in US market and launched 2 new products in Brazil. In Europe, the company

posted 5% growth on yoy basis. With the launching of 4 product dossiers, the Japanese market grew by 22%. In India, Cadila

launched 20 new products including line extensions. It has good growth opportunities by encouraging generic players to increase

market presence as the healthcare costs borne by the Government or insurance companies.

Therapy wise Branded Formulation revenue Break up in India

Source: Company Data, Microsec Research

Therapies FY2008 FY2009 FY2010 FY2011

Respiratory 10.00% 11.10% 11.10% 10.70%

Nutraceuticals 0.00% 2.70% 2.70% 2.40%

Dermatology 3.00% 2.30% 2.30% 3.10%

Pain Mgnt 6.00% 7.20% 7.20% 7.30%

Neurologicals 2.00% 2.80% 2.80% 3.00%

Gastrointestinals 16.00% 16.40% 16.40% 17.40%

Female Healthcare 11.00% 10.70% 10.70% 10.20%

Diagnostics 3.00% 2.40% 2.40% 2.00%

Cardiovasculars 21.00% 20.80% 20.80% 20.00%

Biologicals 4.00% 3.20% 3.20% 2.90%

Antiinfectives 10.00% 10.70% 10.70% 10.20%

Others 14.00% 9.50% 9.50% 10.80%

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Industry Overview

The top line of Global Pharmaceutical Industry is growing at the rate of 5-7% due to the change in demand patterns, significant

demographic shifts, global regulatory shifts, healthcare reform, 90% of the population covered by public health insurance and

increasing affordability. Currently, the global Pharmaceutical market is dominated by US followed by European nations and

Japan; these three regions together represent nearly 55% of the global market. In the long run, Global Pharmaceutical market

sales is expected to grow at 5-8% CAGR through 2014 and the market value is expected to expand over $1.1 trillion by 2014.

According to IMS, “health pharmerging market” is the seven fast growing emerging economies including China, Brazil, India,

Russia, Mexico, Turkey and South Korea which is expected to grow by 13-16% over the next 5 years in aggregate due to the

greater Government spending on healthcare while major developed markets are likely to grow at 3-6%.

During the next 5 years, markets are likely to be impacted by numerous actions including the raising of standards required to

achieve reimbursement of innovative therapies and the use of economic incentives for prescribers and pharmacists to drive a

shift to generic alternatives.

The Indian Pharmaceutical Industry has become the 3rd largest in the world in terms of volume and ranks 14th in terms of value

at $20 billion. It is growing at 9% and is expected to surge to $20 billion by the year of 2015. It has opened vast opportunity for

the global player as cost is 50% lower in India than in western nations while R&D costs are about 10-15% and the clinical trial

expenses are around one tenth of western nations. In addition to that, it is expected that about $96 billion worth drugs go off

patent in US in CY2011-2013. Furthermore, growing domestic sector and increasing penetration on the rural market can be the

reasons for growth of the Indian Pharmaceutical Industry.

Indian drug makers export to 220 countries and formulations accounting for 56%, bulk drugs for 42% and herbals-ayurveda for

2%. USA continues to be the best destination country of Indian exports with 24.16% of the exports.

The new drug pricing policy brings 60% of the available domestic formulation drugs under pricing control. The ceiling price

would be determined by market based pricing from earlier cost based pricing. This is going to hamper revenue and earnings of

the industry but the companies whose export business contributes more in the revenue, are likely to be less impacted than the

others.

Global Pharma market Therapeutic segment growth (In $Bn)

Source: Microsec Research, Industry Data Source: Microsec Research, Industry Data

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Investment Rationale

Cadila Healthcare is a well known player in pharmaceutical as well as life style business. The company has reported 20% and

24% CAGR for revenue as well as EBITDA and net profit showed 29% Compounded Annual Growth. In Q2 FY12, Cadila shows

11% top line growth on annual basis due to the volume contradiction in European market, price erosion of API and slip in the

OTC product from 18% in the Q2 FY11 to 7% currently on account of the stiff competition from the MNC competitors. The

detailed analysis is as follows:

Revenue and EBITDA Margin trends EPS and ROE trends

Source: Microsec Research, Company Data Source: Microsec Research, Company Data

Distribution channel along with competitive research team to boost product launches

Zydus Research Centre was established in the year of 2000 at Ahmedabad. A team of over 1050 research scientists engaged in

medical chemistry, bioinformatics, genomics, biotechnology, toxicology, clinical research, and process and drug delivery

research to do products registration at higher space every year across USA, Europe, Japan and emerging markets. Every year, the

company has invested around 6% of its revenue to R&D. Out of the 1050 scientists, 40% engages in the drug discovery. Cadila

did cumulative filings of 136 ANDA with USFDA, 120 for European market and 68 for Brazil. During Q2 FY12, the company

launched 20 new products in the domestic formulation market and in USA, the number was five. The company is planning to file

20 ANDAs in FY12 with average filing of 15 ANDAs every year thereafter. Moreover, Cadila is likely to get 10 approvals from

USFDA within FY12 that contributes in the growth of FY13. With the several new product introductions and well recognized

brands such as Mifegest kit, Pantodac, Atorva, Aten, Amlodac, Primolut, Cadila has managed to get top line growth of 25%-26%

per annum. During Q2 FY12, the formulation manufacturing plant at Baddi has been approved by US FDA. This facility

currently caters domestic and emerging market requirements; Cadila has filed 4 ANDAs from this new facility to capture the

growing demand of US market.

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ANDA filed and approval trends Product Launches in the domestic country

Source: Microsec Research, Company Data Source: Microsec Research, Company Data

The company has supported its product offering through increased field force. Besides domestic market, Cadila presents in US,

France, Spain, Brazil, Mexico, Africa, Sri Lanka, Myanmar and Middle East Asia. Besides the urban areas, Cadila is expanding its

penetration especially in semi-urban and rural areas with the help of 4,500 medical representatives. In addition to that, Cadila is

marketed its products through the specialized field force of 3,000 and reaches to 1, 00,000 chemists. Furthermore, the company is

likely to increase its doctors’ coverage from currently 1,25,000 to 2,00,000 in the next six to nine months.

Organic & inorganic strategies to drive growth

Cadila is focusing on various Joint Ventures, Acquisitions and Collaborations to leverage strong product pipeline, research-

development lab and market presence by entering and expanding into regulated and fragmented markets of US, Europe, Brazil,

Japan and other emerging markets. The company has entered into collaborative research agreements with Prolong

Pharmaceuticals, Karo Bio, and Eli Lilly. Cadila-Prolong Pharma pact increases the productivity in the drug development of the

next generation therapeutic proteins by utilizing PEGylation technology to make PEG-EPO. By this deal, Cadila provides safer

alternatives to the patients with affordable prices. The collaboration with Eli Lilly provides expertise in the development for

cardiovascular drugs.

Through the Joint Venture with Bayer Healthcare, Bayer Zydus Pharma was formed for sales and marketing of pharmaceutical

products in India and strengthens its network with global pharmaceutical players. This Joint Venture is focusing on women’s

healthcare, cardiovascular, diabetic, oncology treatment and diagnostic services. Through the Joint Venture with Bayer Zydus

Pharma, Cadila enhances product portfolios especially in the treatment of women’s healthcare, cardiovascular, diabetic, oncology

treatment and diagnostic services and distribution capabilities to enhance the launch of new products and sales of existing

brands. Furthermore, Cadila has in-licensing agreements with Bayer Schering Pharma, Baxter, Nycomed, Boehringer Ingelheim

and Genzyme Inc.

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Organic & Inorganic Growth Initiatives

Source: Company Data, Microsec Research

Stiff rise in employee cost and elevated debt raise concerns in the short run

During Q2 FY12, the debt increased by 82% to INR 19,852 Mn from INR 10,902 Mn of Q2 FY11. Out of the total debt, 41% are

dollar denominated; in rupee depreciated scenario, that is a great concern for the company. The net debt-to-equity ratio jumped

from 0.41 in Q2 FY10 to 0.55 in Q2 FY11 and the management expects that net debt-to-equity ratio will be maintained at 0.56 at

the end of the financial year. Furthermore, employee cost rose sequentially by 162 basis points due to the inorganic growth and

new facility in wellness at Sikkim. All of these affect the margins of Cadila. The debt has been raised due to capital expenditure

in the R&D, formulation and API facilities to have wide range of product portfolios for catering the growing needs. In addition

to that, acquisition of Bremer Pharma, Nesher Pharma is the reason for the swelling of debt.

Year Name of the Company Events Location Growth Driver

2011 Bremer Pharma GmbH Acquisition Germany Access the key markets such as 

Europe, South America, Asia and 

Africa in Animal Healthcare Business

2011 Nesher Pharmaceuticals Inc Acquisition US Manufacture & distribute generic 

controlled substances in US market

2011 Bayer Zydus Pharma Joint Venture India Sales & marketing of pharmaceutical 

products in India

2010 Abbott Agreement India Commercialising branded generic in 

the emerging markets

2009 Simayla Acquisition S.Africa Entry into the South African market

2009 Eli Lilly Collaboration India Research collaboration to discover & 

develop new cardiovascular medicines

2008 Etna Biotech Acquisition Itly Help to develop Vaccines

2008 Laboratories Combix Acquisition Spain Entry into the Spanish market

2008 Karo Bio Collaboration Sweden Discover & develop drug for the 

treatment of inflammatory disease

2008 Prolong Pharmaceuticals Inc Collaboration US Development of therapeutic protein in 

the treatment of severe anemia

2007 Nikkho Acquisition Brazil Access branded generic market in 

Brazil

2007 Sarabhai Zydus Animal Health 

Ltd

Acquisition India Strengthen Animal Healthcare 

business 

2007 Nippon Universal 

Pharmaceutical Ltd

Acquisition Japan Access manufacturing facility & 

distribution network in Japan 

2007 Liva Healthcare Acquisition India Widen Product portfolio in 

dermatology & respiratory segment

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Though the rising employee cost and debt are negative for the short run but it can be positive for the long run if the company

manages it properly by expanding market presence and product basket.

Employee Cost Trend on Quarterly Basis Loan Trend on Quarterly Basis

Source: Microsec Research, Company Data Source: Microsec Research, Company Data

Consumer Wellness

Cadila Healthcare through its 73% subsidiary, Zydus Wellness caters increasingly affluent, health conscious people. This segment

contributes 8% of the revenue. It has the products of zero calorie sugar substitute “Sugar Free Natura”, low calorie healthy drink

“Sugar Free D’lite”, diet ice tea “Sugar Free Tea Lito”, cholesterol free table spread “Nutralite” and skincare product “Everyuth”.

With the time, people become more brand conscious and due to the aspiration of leading better life, growing middle and upper

class in the demography, the demand of this segment has been much faster. During Q2 FY12, it grew by 10% on yoy basis. In

spite of high demand, Cadila face tough competition from the multinational companies due to the distribution and price hike

issues that may hamper volume growth of the company. But the new Wellness facility at Sikkim is likely to have positive impact

on EBITDA margin.

Demographic Segment Revenue Trend of the Consumer Wellness Segment

Source: Microsec Research, Company Data Source: Microsec Research, Company Data

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Peer Group

Source: Microsec Research, Company Data, ACE Equity, TTM

Name of the Company Revenue Growth(%) EBITDA EBITDAM Net Profit NP Margin NP Growth EPS BVPS P/E P/BV ROE EV/EBITDA

Cadila Healthcare 47,421.00     21.06% 10,312.30     21.75% 7,492.30     15.80% 28.20% 36.21  106.06    25.39    8.67       39.43% 19.03        

Aurobindo Pharma 45,361.00     24.42% 9,937.30       21.91% 3,891.50     8.58% ‐13.20% 55.90  83.98      3.09      2.05       18.21% 7.29          

Biocon 25,564.10     12.18% 5,820.70       22.77% 3,608.30     14.11% 15.49% 18.28  101.64    19.40    3.49       19.04% 12.00        

Cipla 64,296.40     12.10% 13,563.90     21.10% 9,630.40     14.98% ‐12.27% 12.00  83.02      27.53    3.98       15.31% 19.90        

Dishman 10,615.47     16.47% 1,968.64       18.55% 678.92         6.40% ‐35.63% 5.59    108.95    16.07    0.82       8.16% 7.88          

Divi's Lab 14,181.10     40.24% 5,362.00       37.81% 4,481.30     31.60% 22.53% 33.82  135.51    23.21    5.79       27.03% 19.43        

Dr Reddy 77,644.70     12.44% 16,081.20     20.71% 11,571.90   14.90% 10496.98% 48.40  237.90    31.68    6.45       29.64% 17.28        

Glaxosmithkline 22,736.50     12.43% 7,905.20       34.77% 4,215.10     18.54% ‐21.19% 49.80  230.40    47.27    10.22     22.55% 22.69        

Glenmark 31,257.79     18.03% 6,596.82       21.10% 5,123.97     16.39% 14.34% 15.74  75.36      20.36    4.25       23.33% 15.82        

Ipca Lab 19,930.20     23.65% 4,053.70       20.34% 2,782.00     13.96% 40.32% 17.49  83.65      19.55    4.09       29.03% 11.89        

Lupin 60,654.80     18.94% 12,010.40     19.80% 8,763.30     14.45% 18.77% 19.56  73.52      22.93    6.10       29.97% 17.29        

JB Chemicals 8,260.57       16.37% 1,652.65       20.01% 1,165.50     14.11% 7.36% 13.78  81.72      9.66      1.63       18.50% 7.07          

Orchid Chemicals 17,209.35     35.17% 4,166.02       24.21% 1,534.11     8.91% ‐59.91% 10.70  151.79    25.31    1.78       15.29% 8.50          

Ranbaxy 83,173.00     ‐8.05% 10,409.78     12.52% 7,580.75     9.11% ‐54.24% 18.57  133.01    29.10    4.06       15.24% 22.90        

Strides Arcolab 20,116.60     26.44% 4,223.29       20.99% 1,464.58     7.28% 2.40% 20.58  221.08    16.32    1.52       13.86% 8.57          

Sterling Biotech 17,338.98     14.08% 7,755.19       44.73% 1,362.15     7.86% ‐43.37% 4.64    92.24      18.36    0.92       6.00% 6.59          

Sun Pharma 60,701.40     30.51% 18,986.30     31.28% 17,975.50   29.61% 2.63% 36.80  91.57      13.50    5.43       20.77% 26.17        

Torrent Pharma 23,329.70     18.07% 4,502.10       19.30% 2,984.64     12.79% 2.81% 35.27  120.84    18.01    5.26       32.21% 12.15        

Wockhardt 38,828.10     7.69% 9,922.10       25.55% 4,007.80     10.32% 143.71% 36.63  86.18      10.01    4.25       49.64% 7.44          

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Valuation

We adopted Discounted Cash Flow (DCF) technique to value the stock of Cadila Healthcare Ltd. With the calculation of 8.84%

Risk Free Rate, 2.55% Market Risk Premium and 0.57x of Beta, the company’s cost of equity stood at 10.29% in Capital Asset

Pricing Model (CAPM). With the post tax debt cost of 6.24%, debt to equity ratio of ~0.05x for FY2012E and cost of equity of

10.29%, we arrived at WACC of 10.10%. In addition to that, we assumed terminal growth rate of 2.00% for the stock post

FY2016. With all of these, we arrived at a target price of `778 which is 9% upside of its current stock price of `712.55. The

sensitivity of our target Price towards various levels of WACC and terminal growth rate is as follows:

Cadila Healthcare: P/E Bands Cadila Healthcare: P/BV Bands

Source: Microsec Research, Company Data Source: Microsec Research, Company Data

Risks to the Rating

1. Regulation risks such as policy changes, USFDA warning letters, and products litigation may change our rating.

2. Price erosion, higher marketing and R&D expenditure is likely to affect margins of the company.

3. Cadila faces stiff competition from Multinationals in Consumer Wellness segment. Furthermore, price hike, cutting margins of

dealers and paying fewer bonuses may hamper the volume growth.

Cadila –Sensitivity Analysis

1% 1.50% 2% 2.50% 3%

8.10% 920.84       982.14       1,053.48    1,137.57     1,238.15     

9.10% 799.17       844.56       896.34       955.97        1,025.37     

10.10% 704.39       739.13       778.16       822.33        872.71        

11.10% 628.52       655.81       686.10       719.91        757.89        

12.10% 566.44       588.33       612.39       638.96        668.44        

Terminal Growth

WACC

Source: Company Data, Microsec Research

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Microsec Research19 Nov 2011

Financials (All numbers in INR Mn unless specified)

Income Statement (In INR Mn) FY2009 FY2010 FY2011 FY2012E FY2013E

Revenue 29,275.00        36,868.00      46,302.00      53,272.96        65,482.02     

Gross Profit 18,145.00        23,424.00      29,046.00      32,869.42        40,729.82     

EBITDA 6,058.00          8,086.00        10,262.00      11,032.86        14,013.15     

Dep 1,118.00          1,339.00        1,269.00        1,348.97          2,206.05       

EBIT 4,940.00          6,747.00        8,993.00        9,683.89          11,807.10     

Interest 1,205.00          821.00            699.00            797.66              719.53           

Other Income 204.00             159.00            131.00            372.91              458.37           

PBT 3,698.00          6,039.00        8,425.00        9,259.13          11,545.95     

Tax 666.00             741.00            1,064.00        1,111.10          1,154.59       

Net Profit 3,033.00          5,051.00        7,110.00        7,897.04          10,109.35     

Adj EPS 22.22               37.00              34.73              38.57                49.37             

Balance Sheet (In INR Mn) FY2009 FY2010 FY2011 FY2012E FY2013E

Share Capital 682.00             682.00            1,024.00        1,023.74          1,023.74       

Reserves & Surplus 11,670.00       15,603.00      20,691.00      28,588.04        38,697.39     

Shareholders' Funds 12,352.00       16,285.00      21,715.00      29,611.78        39,721.13     

Secured Loan 10,684.00       9,782.00        9,341.00        8,666.00          8,666.00       

Unsecured Loan 1,989.00         1,123.00        1,632.00        1,632.00          1,594.00       

Loan Funds 12,673.00       10,905.00      10,973.00      10,298.00        10,260.00     

SOURCES OF FUNDS 26,569.00       28,723.00      34,484.00      41,956.78        52,310.13     

Gross Block 22,870.00       25,578.00      28,320.00      30,210.00        32,820.00     

Dep,Amor & Impairment 7,572.00         8,734.00        9,994.00        11,342.97        13,549.02     

Net Block 15,298.00       16,844.00      18,326.00      18,867.03        19,270.98     

Capital Work in Progress 1,555.00         2,111.00        3,441.00        3,441.00          3,441.00       

Inventories 6,012.00         7,504.00        8,119.00        9,948.13          11,362.66     

Sundry Debtors 4,549.00         4,668.00        7,652.00        8,804.04          10,821.74     

Cash & Bank Balances 2,517.00         2,507.00        2,952.00        9,046.85          17,502.45     

Loans & Advances 2,533.00         3,070.00        4,106.00        4,596.07          5,644.01       

Current Assets, Loans & Advances 15,611.00       17,749.00      22,829.00      32,395.09        45,330.86     

Current Liability & Provisions 6,916.00         8,661.00        11,188.00      12,746.34        15,732.71     

Net Current assets 8,695.00         9,088.00        11,641.00      19,648.75        29,598.15     

APPLICATION OF FUNDS 26,569.00       28,723.00      34,484.00      41,956.78        52,310.13     

Cash Flow Statement (In INR Mn) FY2009 FY2010 FY2011 FY2012E FY2013E

Net Profir Before Tax 3,698.00         6,039.00        8,425.00        9,259.13          11,545.95     

Dep 1,118.00         1,339.00        1,269.00        1,348.97          2,206.05       

Interest 858.00             716.00            587.00            797.66              719.53           

Operating Profit before WC Changes 5,701.00         8,320.00        10,436.00      11,405.77        14,471.53     

Operating Cash Flow 2,186.00         6,954.00        6,696.00        8,381.78          11,823.13     

Investing Cash Flow (4,095.00)        (3,716.00)       (4,530.00)       (814.00)            (2,610.00)      

Financing Cash Flow 3,496.00         (3,248.00)       (1,721.00)       (1,472.92)         (757.53)         

Net Change in Cash 1,587.00         (10.00)             445.00            6,094.85          8,455.60       

Opening Balance 926.00             2,517.00        2,507.00        2,952.00          9,046.85       

Closing Balance 2,517.00         2,507.00        2,952.00        9,046.85          17,502.45     

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Recommendation

Strong Buy >20%

Buy between 10% and 20%

Hold between 0% and 10%

Underperform between 0% and -10%

Sell < -10%

Expected absolute returns (%) over 12 months

Page 15: Cadila Healthcare Ltd - Myirisbreport.myiris.com/MR1/CADHEALT_20111119.pdfCadila is a flagship company of Zydus Cadila Group. It was incorporated as Cadila Healthcare Private Ltd on
Page 16: Cadila Healthcare Ltd - Myirisbreport.myiris.com/MR1/CADHEALT_20111119.pdfCadila is a flagship company of Zydus Cadila Group. It was incorporated as Cadila Healthcare Private Ltd on

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[email protected]

Microsec Research19 Nov 2011