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Post its IPO in 2000, Zydus Cadila or Cadila Healthcare has catapulted itself into the top rung pharma companies in the Indian market through a series of mergers and acquisitions. After acquiring German Remedies, the company now stands at fourth position in the domestic market with a broad therapeutic portfolio including faster growing categories like gynaecology, respiratory and oncology. Its strategic alliance with Kopran which includes acquiring the Rs 400 mn brand- Aten will strengthen its presence in the important cardiovascular segment. These acquisitions will help the company recover from its earlier sluggish performance. At the current market price of Rs 131, the stock is trading at 9.6x FY02E EPS (half year results annualised), which is at a discount to its peers. These results do not take into account German Remedies and Aten and thus, on a consolidated basis, valuations are even better. The company is not yet in the league of Dr. Reddys and Ranbaxy, and there are concerns (which they have outlined below), but the current valuations are attractive especially considering the size and marketing strengths of the company.
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