Broking firm, Motilal Oswal is bullish on the stock of Cadila Heatlhcare for 23% returns from the current levels of Rs 541. The firm has set a target price of Rs 670, thus giving potential returns of 23% from the current levels.
Vaccine opportunity for Cadila Healthcare
Cadila Healthcare has received emergency use authorization (EUA) for its plasmid DNA COVID- 19 vaccine ZyCoV-D. The latter is the first COVID-19 vaccine approved in India for adolescents in the 12-18 years age group.
"The management expects to start supplying the vaccine in India from Oct'21.
Based on our conservative estimates, we expect CDH to ramp-up production to
40 million doses from Oct'21. We expect a 75:25 split between the government and
private channel and a blended price of Rs 320 per dose for FY22," Motilal Oswal Institutional Equities has said.
Cadila Healthcare expects to begin supplies of 100-120m doses of ZyCoV-D per annum starting mid-Sep'21. It is in discussions with the Government of India (GoI) with regard to its pricing and supply.
Cadila Healthcare is the only company manufacturing the drug substance for its vaccine. "Demand for the vaccine would be driven by requirement of an additional booster dose of other vaccines, scope for improvement in immunogenicity, and ability to protect from new COVID-19 variants. The management expects monthly sales of Rs 2-2.5 billion from Oct'21, which can be scaled up to a run-rate of Rs 5 billion per month. It has a marketing plan in place to drive demand through pediatricians/state government," Motilal Oswal Institutional Equities has said in its report.
Valuation and view on Cadila Healthcare stock
"We arrive at an NPV of Rs 12 per share for the opportunity arising from the COVID-19 vaccine. We continue to value Cadila Healthcare base business at 25 times its 12-month forward earnings to arrive at our target price of Rs 658. We arrive at a target price of Rs 670, including the vaccine opportunity and maintain our Buy rating on the stock," the brokerage has said.
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