Dolat Capital: Cadila Healthcare’s Top-Line Driven By API; Pinning Hope On Injectables  

Dolat Capital Report

Cadila Healthcare Ltd.’s Q1 results were higher than our estimates driven by lower opex. The 4% revenue beat was driven by higher active pharmaceutical ingredient (API) sales hydrooxychloroquine (HCQ) while India and U.S. were in-line.

As has been the trend in the sector, lower opex led to 340 basis points beat in Ebitda margins at 22.4% (we saw 19%). Though U.S. sales were lower 28 million U.S. dollar QoQ at 215 million U.S. dollar, higher contribution from Asacol HD aided gross margins at 65% coupled with currency benefit.

In U.S. business, we expect sales erosion in gAsacol HD to be more than offset by new launches including transdermals and injectables (guidance of 45 injectable launches in next two-three years, including partnered products).

While site transfer to Liva facility (first site transfer product approved in May 2020) should aid launches, clearance of warning letters for Moraiya facility is critical. It is in the process of filing complex injectables now which should start contributing from FY23/24 onwards.

Injectables currently contribute sales of 15 million U.S. dollar and is expected to scale upto 150- 200 million U.S. dollar by FY24E in the U.S.

Cadila guided for net debt reduction of Rs 10 billion in FY21.

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