Hold Cadila Healthcare, target Rs 380: Emkay Global Financial Services

Emkay Global Financial Services has a hold call on Cadila Healthcare Ltd. with a target price of Rs 380. The current market price of Cadila Healthcare Ltd. is Rs 349.0 Time period given by analyst is year when Cadila Healthcare Ltd. price can reach defined target.

Cadila Healthcare Ltd., incorporated in 1995, is a largecap company with a market cap of Rs 35692.79 crore.

Invest rationale by Emkay Global


 Stronger Q4 driven by Tamiflu which has benefitted from the strongest flu season in recent times, sequential quarters should be weaker as benefit of both gTamiflu and gLialda fade

 Despite the gTamiflu driven US revenue beat, Q4 shows signs of underlying margins erosion in both gLialda and US base business

 CDH has guided to maintain US revenue runrate in FY19 at around same levels as FY18, however the challenge would be sustaining the same runrate when US revenues come off a high base

 Cut estimates by 11% for weak FY20 launch visibility and a high US base from FY19.
Maintain HOLD rating with target price of Rs380/share valuing CDH at 18x PE, in line with similar sized peers