The share price of Cadila Health surged 10 percent on Tuesday after the company's net profit jumped over four-fold to Rs 473.4 crore in the September quarter. The company had posted a net profit of Rs 107.2 crore for the corresponding period of the previous financial year.
The stock rose as much as 10 percent to the day's high of Rs 451.15 per share on BSE. On a year-to-date basis as well, the stock has risen over 73 percent, making it the top gainer of the Nifty Pharma index. In comparison, the Nifty Pharma index is up 40 percent and the benchmark Nifty is down 3 percent in this period.
The company’s consolidated revenues during the quarter grew 13.5 percent YoY to Rs 3,820 crore against Rs 3,367 crore in Q2FY20. The company also significantly reduced its net debt by Rs 2,709 crore in the first six months of FY21, which is a 40 percent reduction from net debt reported in March 2020.
The net debt as of September 30, 2020, stood at Rs 4,031 crore against Rs 6,740 crore as of March 31, 2020, the filing said.
During the quarter, the company launched 6 new products in the US and received approval for 10 new products.
Brokerage houses were also optimistic on the stock after the stellar numbers in Q2. Q2 revenues were above estimates on all fronts due to better than expected operational performance, lower interest expense, they said.
CLSA maintained a 'buy' call on the stock and raised the target to Rs 540 per share from Rs 525 earlier.
"In the near term, seasonally strong US business and improving profitability in India prescription and consumer businesses should drive margins while R&D initiatives in areas such as novel research, biologics, vaccines and complex generics should drive long-term growth," the brokerage said in a results review report. It also increased FY21-23 EPS estimates for the firm by 3-8 percent.
HDFC Securities, meanwhile, initiated coverage on Cadila with an 'add' rating with a target at Rs 445 per share.
It further noted that recovery in India business, high product concentration risk in the US, and R&D investments in vaccines, biosimilars adds potential upside opportunities. Moraiya resolution and further debt reduction will be the key catalysts to monitor in the near to medium term, it added.