Cadila Healthcare (Cadila) is on the largest Pharmaceuticals player both in US & Indian
markets. However, over the last few years, the company has been going through tough
times both in USA & Indian markets. While the Indian formulation market has been
under pressure on back of the pricing norms & GST implementation, USA market has
witnessed tougher times by Cadila Healthcare, on back of its Moriya facility coming
under USFDA warning letter. However, since then the company has taken steps to
mitigate the risk in its business. The stock has given a correction, to account for the
high business risk; however, it still provides very little comfort for investors. We recommend a Hold rating on the stock.

Valuations & Outlook: Over FY2018-21E, the company expects to post a sales
and net profit CAGR of 9.1% and a flat growth during FY2018-21E respectively.
Company’s stock has witnessed a correction & however given the challenges, at
current valuations the stock provides very little upside. Hence, we have factored in
the same to recommend a Hold.

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