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Cadila Healthcare: US Business Impacts Growth - Views on News from Equitymaster
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Cadila Healthcare: US Business Impacts Growth
Mar 14, 2017

Cadila healthcare announced its 3QFY17 results. Sales declined by 0.7% YoY and net profits declined by 34.6% YoY. Here is our analysis of the results.

Performance summary
  • Net sales for the quarter for the quarter were down by 0.7% YoY. The top line was largely impacted due to sharp decline in its US business. This was on the back pricing pressures in its base business, increase in competition for its key products vis buporion and HCQS in US and lack of new approvals for the US market. Domestic formulations segment witnessed growth of 10.7%. Growth excluding the impact of price reduction on NLEM products and the discontinued fixed-dosage combination drugs was 14.1%. YoY.
  • The US business witnessed pricing pressures, which in turn impacted the operating margins. On YoY basis, operating margins declined by 750 bps and stood at 17.1% for the quarter.
  • On the back of poor operating performance, net profits declined by 34.6% YoY.

    Financial performance: A snapshot
    (Rs m) 3QFY16 3QFY17 Change 9MFY16 9MFY17 Change
    Net sales 23,180 23,023 -0.7% 69,391 69,514 0.2%
    Other operating income 909 615 -32.3% 2,908 1,490 -48.8%
    Expenditure 18,171 19,595 7.8% 54,496 56,604 3.9%
    Operating profit (EBDITA) 5,918 4,043 -31.7% 17,803 14,400 -19.1%
    EBDITA margin (%) 24.6% 17.1% 24.6% 20.3%
    Other income 323 166 -48.6% 763 555 -27.3%
    Interest (net) 121 66 -45.5% 370 351 -5.1%
    Depreciation 741 898 21.2% 2,157 2,605 20.8%
    Profit before tax 5,379 3,245 -39.7% 16,039 11,999 -25.2%
    Tax 906 504 -44.4% 2,401 2,538 5.7%
    Minority Int 168 -75 -19 -293
    Profit after tax/(loss) 4,305 2,816 -34.6% 13,657 9,754 -28.6%
    Net profit margin (%) 17.9% 11.9% 18.9% 13.7%
    No. of shares (m) 1,025
    Diluted earnings per share (Rs) 11
    Price to earnings ratio (x)* 39

    *based on trailing 12 months earnings

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