Cadila Healthcare posted poor set of numbers for 1QFY2018. Sales came in at `2,136cr (`2,216cr expected) v/s. `2,500cr in 1QFY2017, a yoy de-growth of 3.6%, mainly driven by the dip in sales of Indian formulations. Indian formulation sales registered (`637cr) a yoy dip of 18.9%. Its key market USA registered (`965cr), 13.8% yoy growth. On operating front, the EBITDA margins came in at 10.1% (18.4% expected) v/s. 20.4% in 1QFY2017, mainly on the back of lower than expected sales during the quarter and a 20.0% and 25.3% rise in the employee and R&D expenses respectively. Thus, the PAT came in at ` 138cr V/s `492cr expected. We maintain our reduce rating with a price target of `426.

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