Multi Baggers
Zydus Life
BSE ID : 532321 NSE ID : ZYDUSLIFE
RECOMMENDED PRICE 316.00
PEAK FROM RECO 673.70 113.20%
CURRENT PRICE 1103.00 Resource id #12
Domestic formulations growth of Cadila Healthcare is likely to rebound in FY08. We estimate net profit to witness revenue CAGR of 32% to Rs 3.5 billion. We maintain BUY with a target price of Rs 417, an upside of 32%.
Cadila Healthcare Ltd. Maintain BUY
We expect CHL to record revenue CAGR of 20% to Rs 24.9 billion over FY06-09 driven by strong growth in the export formulations market.
Domestic formulations growth is likely to rebound in FY08 and would be above industry average growth. We estimate operating margins to expand by 450bps to 21.7% over FY06-09 driven by US contribution, turnaround of Zydus France and strong foothold in the domestic formulations space. Although there are concerns over the patent loss of Pantoprazole, the management is confident of no launch at risk by generic companies considering the complexity of the product.
We estimate net profit to witness revenue CAGR of 32% to Rs 3.5 bn during the same period. At Rs 316, the stock is trading at 17.7x FY07E EPS of Rs17.8, 14.3x FY08E EPS of Rs22.1 and 11.4x FY09E EPS of Rs27.8. We believe CHL should trade at 19x FY08E and 15x FY09E considering increasing visibility in export formulations, strong foothold in the domestic market and return ratios in excess of 22%. We introduce FY09 estimates and maintain BUY with a target price of Rs 417, an upside of 32%.
Nirmal Jain
India Infoline
3200
Powerful mix of technical and commodity packs with timely expert.
Designed especially for traders looking to tap the profit opportunities of volatile markets.
Stay on top of the Indian Commodities Market with commodity trading calls Intraday, and Positional (Short & Long-Term Calls).
