Cadila Healthcare reported Q4FY18 results in line with our estimates. Revenue grew strong at 30% YoY to Rs 3,230 crore led by generic Lialda and new product launches in US. EBITDA margin improved 560bps YoY to 25.6% vs estimated 25.3%. Margin expansion was driven by strong growth in US market and continued limited competition opportunity in generic Lialda.
Adjusted PAT grew 41.4% YoY to Rs 570 crore vs estimated Rs 590 crore. Lower than expect PAT despite higher EBITDA was on account of increased depreciation and effective tax rate. US business grew 66.7% YoY led by exclusivity of generic Lialda and launch of new products after clearance of Moraiya facility. Not only have the product approvals improved significantly but also received 77 approvals in FY18 post clearance of Moraiya plant.
We expect growth momentum to continue in base US business led by new launches and recovery in India business. Considering lower revenue in EU, ROW and API businesses coupled with higher depreciation and tax rate, we reduce our revenue and earnings estimates by 2-3% and 7-8% respectively for FY19-20. We maintain ADD rating on the stock considering strong US pipeline with 144 ANDAs pending approval, expected pickup in US sales and recovery in India growth.
Revenue grew 30% YoY largely led by US business. US revenue grew 66.7% YoY led by generic Lialda and other new launches including generic Tamiflu. We believe generic Lialda would have contributed $50 mn+ with high margin. India business revenue grew 5.2% YoY. Revenue from Europe dropped 2.9% and emerging markets revenue declined 12%.
Its API biz declined 3.6% and contribution from JV & alliances dropped 19.3% YoY. The company witnessed EBITDA margin (ex-forex) improvement of 560bps YoY to 25.6% due to gross margin improvement (220bps) helped by higher US sales and reduction in R&D spend (340bps). We expect EBITDA margins to stabilize at 22- 24% as contribution of generic Lialda decreases in coming quarters.