Cadila Healthcare share price cracks due to THIS reason; brokerages skeptical on this share- Check target price here

Cadila Healthcare shares slumped around 4 per cent to Rs 542.5 per share on the BSE intraday trade on Thursday, as the company in its first quarter results mentioned that it expects high single-digit price erosion in the US business for the next two quarters.

The pharma major on Wednesday reported over 29 per cent rise in consolidated net profit to Rs 587.2 crore in the June-ended quarter of the financial year 2021-22, mainly on account of robust sales in the Indian market. It posted a net profit of Rs 454 crore in the year-ago quarter, Cadila said in its filing.

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While the drugmaker posted Rs 4,025.4 crore as consolidated total revenue from operations in Q1 FY22 as compared to Rs 3,514.6 crore for the same period a year ago, the company added.

Besides Lupin, Cadila is the second weakest stock in the pharma pack and has been dragging the sector. Nifty Pharma index is down over 1 per cent minutes before the market closes on Thursday.

Meanwhile even, the brokerages are skeptical on the shares of Cadila, as the majority of them give either sell/underperform rating in a near-term outlook. In this regard, CITI says Q1 was COVID-driven for the pharma company, adding further, the near-term outlook remains tough unless the vaccine scales up.

The brokerage maintains a 'Sell' rating, by downgrading the target to Rs 490 per share. It said, Cadila’s Q1 EBITDA was 4 per cent below estimates, which was adjusted for forex gains.

Similarly, Credit Suisse maintains an Underperform stance on Cadila Health after Q1 earnings and says 30 per cent of the market cap is already being attributed to the company’s COVID vaccine but the opportunity may be shrinking. It reduces the price target to Rs 380 per share.

On the contrary, Cadila Health’s stock lacks major near-term triggers, says CLSA while slashing the FY22-24 by 4-10 per cent, as stock lacks major near-term triggers. Maintaining an Outperform call, CLSA says, long-term growth story intact given R&D initiatives and sets a price target of Rs 640 apiece.