Cadila Healthcare rallies 9% on strong September quarter results

Shares of Cadila Healthcare rallied 9 per cent to Rs 445.60 on the BSE on Tuesday as the company reported strong results in the September quarter (Q2FY21), with net profit after adjusting for exceptional items jumping 73 per cent year-on-year (YoY) at Rs 562 crore, on the back of healthy revenue. The pharmaceutical company's stock was trading close its 52-week high level of Rs 447.95, touched on October 9, 2020.

The company’s consolidated revenues during the quarter grew 13.5 per cent YoY to Rs 3,820 crore against Rs 3,367 crore in Q2FY20. US sales grew a robust 18 per cent YoY to Rs 1,709 crore, while domestic formulations grew 11.2 per cent YoY to Rs 1,087 crore.

In Q2FY21, the Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins stood at 22.6 per cent during the quarter, which improved significantly by 370 basis points compared to 18.9 per cent registered in Q2FY20. The margins improvement was due to lower employee and other expenses.

During the quarter, the company launched 6 new products in the US. The Company received approval for 10 new products (incl. 2 tentative approvals) and filed 5 additional Abbreviated New Drug Applications (ANDAs) with the U.S. Food and Drug Administration (USFDA) during the quarter.

“Q2 revenues were above estimates on all fronts due to better than expected operational performance, lower interest expense. On the US front, Cadila plans to venture into complex injectables, which is likely to provide meaningful traction from FY23-24 onwards. Similarly, addition of biosimilars for Emerging markets is expected to provide growth impetus, going ahead. The wellness segment performance hinges upon its marketing & distribution prowess besides effective product positioning. India formulations business, after recent restructuring, may stabilize,” ICICI Securities said in a note.

However, more importantly, Cadila has significantly improved net debt position in H1FY21 (down 40 per cent from FY20) utilising proceeds from QIP of consumer wellness business and through internal accruals amid better working capital control. Overall, continued b/s reduction, Moraiya warning letter resolution, US base business performance in tough times are some important aspects to watch, it said.

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