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Buy Cadila Healthcare, target of Rs 350: Angel Broking

Posted on: April 1st, 2009 and is filed under Brokerage Recommendations.

Angel Broking has maintained its buy rating on Cadila Healthcare with a target price of Rs 350 in its March 30, 2009 research report. “We believe Cadila’s R&D collaboration deal with Eli Lilly is a positive as it corroborates Cadila’s capabilities, although material cash flow would come over long term. This is Cadila’s first collaborative agreement with a big Pharma company in the R&D space, which may in the long term, unlock value for it’s R&D business.”

“While overdependence on Nycomed has been a major concern for Cadila, we believe that new client additions in the segment would aid de-risking and reduce the company’s dependence on the same. Further, the Hospira joint venture (JV) is expected to commercialise in April 2009 and start contributing to the company’s Bottom-line from FY2010. Excluding any upsides from the JVs and factoring in a decline in the Profitability of Nycomed, we expect the company to post a CAGR of 24% in Net Profit over FY2008-10E. We maintain a Buy on the stock, with a target price of Rs 350,” says Angel Broking’s research report.

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