Cadila Healthcare Ltd. (CHL) is an innovative global pharmaceutical company that discovers, develops, manufactures and markets a broad range of healthcare products. The group’s operations range from API to formulations, animal health products and cosmeceuticals. Headquartered in the city of Ahmedabad in India, the group has global operations in four continents spread across USA, Europe, Japan, Brazil, South Africa and 25 other emerging markets. Considering expansion in EBITDA margins, visibility in US pipeline and launches, bottoming out of domestic market growth and improvement in return ratios, we expect re-rating of the stock to its previous level of 18-20x of forward P/E multiple. We value stock at 17x of FY16E and upgrade target price to Rs 1,044 (earlier target price was Rs 913) recommend strong BUY, with ~20% upside potential from current level. At CMP of Rs 887, the stock is trading at P/E multiple of 18.5x of FY15E & 14.4x of FY16E.
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