february 2, 2015 indoco remedies (indrem)content.icicidirect.com/mailimages/idirect_indoco... ·...

February 2, 2015

ICICI Securities Ltd | Retail Equity Research

Result Update

Future bodes well with full blown Watson execution • Revenues grew 13% YoY to | 213 crore, lower than I-direct estimate

of | 228.8 crore, mainly due to lower-than-expected export formulation sales. Domestic and export formulation sales grew 7% and 24% YoY to | 123 crore and | 78 crore, respectively

• EBITDA margins improved 381 bps to 19.7%, below I-direct estimate of 21.1%. The EBITDA grew 43% to | 42.7 crore vs. I-direct estimate of | 48.3 crore

• The improvement in EBITDA margin and lower tax outgo led to net profit growth of 53.1% YoY to | 21.6 crore, which was marginally below I-direct estimate of | 22.3 crore

MNC deals, US filings core to overall growth Export formulations (~32% of overall sales) have grown at a CAGR of 19.5% in FY09-14 driven by ~22% growth in regulated markets. The growth in regulated markets was driven by growth in the US, UK and South Africa. German Metformin tenders also contributed to regulated market growth. It has filed 28 ANDAs with the USFDA and received approval for nine products. Of the 28 ANDAs, 16 were filed under the Watson deal. The Aspen deal for semi-regulated market is also likely to drive exports. We expect exports to grow at a CAGR of ~41.3% between FY14 and FY17E, driven by 1) growth in regulated market base business and 2) revenues under CRAMS deal with Watson (Actavis). Indian formulations growth yet to peak Domestic formulations (~60% of overall sales) have grown at ~13% CAGR. The subdued growth can be attributed to high concentration of acute therapies, which account for ~90% of overall formulations. With a market share of ~0.8% and overall rank of 31, the company is still a marginal player with some top brands in smaller categories such as stomatologicals. We expect Indian formulations to grow at a CAGR of ~15% between FY14 and FY17E to | 677.4 crore on the back of new launches and new therapeutic forays. Sustainability of margin improvement crucial for further upside After languishing between 13% and 18% for quite some time, Indoco’s EBITDA margins have started showing an improvement. Pricing pressure in some of the geographies (Metformin supplies to Germany) and higher R&D spend were putting pressure on margins. Margins have already hit the management’s comfort level but, going ahead, sustainability will be the key factor to watch. Watson execution major catalyst for earnings, multiple; upgrade to BUY After getting management insights from Q2, Q3 conference calls we have worked out likely offtake from the Watson (Actavis) deal. Accordingly, we expect revenues of | 125 crore and | 209 crore in FY16 and FY17, respectively. The visibility has improved substantially after the recent approvals- EIR for plant II and first time approval for plant III. Other deals such as Aspen and DSN will continue to provide traction for exports. On the domestic formulations front, the management remains confident of delivering above-industry growth. We expect sales, EBITDA and PAT to grow at a CAGR of 24.7%, 37.2% and 49.1%, respectively, during FY14-17E. We have valued the stock at | 375 i.e. 18x FY17E EPS of | 20.8. We have upgraded the stock to BUY to factor in better visibility and management’s track record of timely execution.

Rating matrix Rating : BuyTarget : | 375Target Period : 12 monthsPotential Upside : 15%

What’s Changed? Target Changed from | 274 to | 375EPS FY15E Changed from | 12.7 to | 9.6EPS FY16E Changed from | 14.7 to | 15.4EPS FY17E Changed from 17.1 to 20.8Rating Changed from Hold to Buy

Quarterly Performance

Q3FY15 Q3FY14 YoY (%) Q2FY15 QoQ (%)Revenue 216.7 187.8 15.4 228.4 -5.2EBITDA 42.7 29.9 43.0 48.6 -12.2EBITDA (%) 19.7 15.9 381 bps 21.3 -159 bpsNet Profit 21.6 14.1 53.1 22.4 -3.5

Key Financials (| Crore) FY14 FY15E FY16E FY17ERevenues 727.7 866.2 1137.9 1410.2EBITDA 120.1 174.7 241.6 310.4Net Profit 57.9 88.5 142.1 192.0EPS (|) 6.3 9.6 15.4 20.8

Valuation summary

FY14 FY15E FY16E FY17EPE (x) 51.7 33.8 21.1 15.6Target PE (x) 59.7 39.0 24.3 18.0EV to EBITDA (x) 17.4 11.7 8.3 6.3Price to book (x) 4.4 3.8 3.1 2.4RoNW (%) 12.7 16.7 21.9 23.4RoCE (%) 16.6 21.8 28.1 30.4

a

Stock data `Market Capitalisation Debt (FY14)Cash (FY14)EV 52 week H/L (|) 344/121Equity capital | 18.4 croreFace value | 2MF Holding (%) 11.1FII Holding (%) 5.6

Amount| 2995 crore

| 3072 crore

| 91 crore| 13 crore

Price performance (%)

1M 3M 6M 1YIndoco Remedies 8.1 12.4 67.8 168.4Unichem Labs -8.8 13.6 7.2 6.8Natco Pharma -0.4 -2.2 24.2 76.3

Indoco Remedies (INDREM) | 325

Research Analyst

Siddhant Khandekar [email protected] Mitesh Shah [email protected]

Nandan Kamat [email protected]


Variance analysis Q3FY15 Q3FY15E Q3FY14 Q2FY15 YoY (%) QoQ (%) Comments

Revenue 216.7 228.8 187.8 228.4 15.4 -5.2 Growth was driven by 24% growth in export formulation. Domestic formulation grew just 7% YoY.

Raw Material Expenses 77.7 77.9 72.4 79.7 7.3 -2.5 Improved product mix led to decline in raw material as % of sales by 270 bps to 35.9%

Employee Expenses 34.7 37.8 32.2 36.0 7.7 -3.5R & D Expenditure 5.0 5.0 3.7 4.9 37.1 2.9Other expenditure 56.6 59.8 49.7 59.2 13.9 -4.5Total Expenditure 174.0 180.5 158.0 179.8 10.1 -3.2EBITDA 42.7 48.3 29.9 48.6 43.0 -12.2EBITDA (%) 19.7 21.1 15.9 21.3 381 bps -159 bps The change in product and business mix led to improvement in marginsInterest 2.7 2.0 3.9 2.7 -29.8 1.1Depreciation 12.0 12.4 8.0 13.2 49.4 -8.9Other income 0.2 2.0 0.1 0.6 81.8 -64.3EO 0.0 0.0 0.0 0.0 0.0 0.0PBT 28.2 36.0 18.1 33.4 56.0 -15.5Tax 6.6 6.8 4.0 11.0 66.2 -39.9Effective tax rate (%) 23.3 18.9 21.9 32.8 6.5 -28.9Net Profit 21.6 29.2 14.1 22.4 53.1 -3.5 Higher EBITDA margins led to robust PAT growth despite spike in taxation.Key MetricsDomestic Formulations 122.9 126.4 114.9 137.4 6.9 -10.6 Slow growth in domestic market was mainly due to high base and seasonality factor.

Export formulations 76.8 86.0 62.0 75.1 24.0 2.3 The growth was mainly driven by 27% YoY growth in the regulated markets to | 66.3 crore. Emerging export markets grew 9% YoY to | 10.5 crore

Domestic APIs 6.4 6.5 5.4 6.8 18.7 -6.4Export APIs 6.5 6.9 5.8 6.7 12.1 -2.8

Source: Company, ICICIdirect.com Research Change in estimates

(| Crore) Old New % Change Old New % Change CommentsRevenues 888.9 866.2 -2.5 1,080.2 1,137.9 5.3 Increased FY16 sales growth on the back of improved revenue visibility from Watson

deal.EBITDA 178.0 174.7 -1.9 230.8 241.6 4.7EBITDA Margin (%) 20.0 20.2 14 bps 21.4 21.2 -14 bps

PAT 87.5 88.5 1.2 122.8 142.1 15.7 Increased FY16 PAT assumption on the back alter tax rate as per management guidance.

EPS (|) 9.5 9.6 0.9 13.3 15.4 15.9

FY16EFY15E

Source: Company, ICICIdirect.com Research Assumptions

Current Earlier Comments(| crore) FY13 FY14 FY15E FY16E FY15E FY16EDomestic Formulations 390.4 438.6 502.9 578.4 512.2 589.1Export formulations 200.9 231.1 300.1 481.9 314.7 413.6 Increased revenue from Watson to | 125 crore from | 50 crore in FY16 due to

improved visibilityDomestic APIs 16.6 22.8 24.7 28.5 24.5 28.2Export APIs 17.8 23.2 27.6 33.1 27.8 33.3

Source: Company, ICICIdirect.com Research


Company Analysis The company was established in 1947. It is a small-sized pharma company engaged in manufacture, marketing and distribution of pharmaceutical products and services in the domestic and international markets. The company, through its eight marketing divisions namely- Indoco, Spade, Warren, Xtend, Excel, Eterna, Indoco CND and Spera serves a range of doctor specialties. The company has signed a supply agreement with companies like Watson, Aspen and DSM to supply formulations for advanced and emerging markets. Domestic formulations account for ~60% of revenues. Major therapies and their respective contribution to domestic formulations - Respiratory- 19%, anti-infectives- 17%, stomatologicals- 16%, gastrointestinals (GI)- 14%. With a market share of 0.77% the company ranks 31st in domestic formulations. The acute-chronic ratio for the company stands at 90:10. Formulation exports account for 32% of the revenues. Of these, exports to regulated markets constitute 87% of the formulation exports while the rest 13% come from emerging markets. Watson (Actavis) deal- The company licenses out technology to US based Watson (now Actavis). Under the terms of profit sharing agreement, Indoco will develop, manufacture and supply a basket of sterile products to Watson for the US market. Currently 23 products are under development. Aspen deal- Under the Aspen (South Africa) deal the company licenses out dossier for marketing its products in emerging markets covering 30 countries, including South Africa, Brazil, Mexico, Venezuela, Russia & Australia. DSM deal – The company has also signed an agreement with Holland based DSM for the commercialisation of eight APIs according to which DSM will market the APIs manufactured by INDOCO. Overall, we expect revenues to grow at a CAGR of 24.7% in FY14-17E to | 1410 crore. Exhibit 1: Revenues to grow at a CAGR of 25% in FY14-17E

354.6 402.8486.5

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Domestic formulations (~60% of overall sales) have grown at a CAGR of 12.8% in the last five years vis-à-vis overall sales growth of 15.5% during the same period. The subdued growth was attributable to high concentration of acute therapies which account for ~90% of overall formulations. With a market share of ~0.8% and overall rank of 31, the company is still a marginal player with some top brands in smaller categories such as Stomatologicals. NLEM blues, distributors issues are likely overhangs in the short-term. We expect Indian formulations to grow at CAGR of 14.9% in FY14-17E to | 665.1crore on the back of new launches. Exhibit 2: Domestic formulations sales to grow at CAGR of 15% in FY14-17E

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Exports formulations ~32% of overall sales) have grown at a CAGR of 20% in FY09-14 driven by ~21.5% growth in the regulated markets. The growth in the regulated markets was driven by growth in the US, UK and South Africa. German Metformin tenders also contributed to regulated markets growth. It has filed 28 ANDAs with the USFDA and received approvals for nine products. Of these, 16 were filed under the Watson deal. The Aspen deal for semi-regulated market is also likely to drive exports. We expect exports to grow at a CAGR of ~41.3% in FY14-17E, driven by 1) growth in regulated market base business and 2) revenues under CRAMS deal with Watson (Actavis). Exhibit 3: Watson deal, own filings to cause healthy exports growth

94.8 109.1141.6

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Exhibit 4: Domestic APIs to grow at CAGR of 12.8% in FY14-17E

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Exhibit 5: Export APIs to grow at CAGR of 19.6% in FY14-17E

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Exhibit 6: EBITDA to grow at CAGR of 37.2% in FY14-17E

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Exhibit 7: Adjusted net profit to grow at CAGR of 49.1% in FY14-17E

31.442.1 51.1 46.3 42.7

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Exhibit 8: Trends in return ratios

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Exhibit 9: Trends in quarterly financials (| Crore) Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 YoY (%) QoQ (%)

Net Sales 147.7 151.2 164.5 150.3 160.5 148.1 195.1 188.4 185.9 198.0 226.4 212.9 13.0 -6.0

Other Operating Income -0.3 4.9 -2.6 3.1 -1.5 5.9 7.3 -0.6 -2.2 0.7 2.0 3.7 LP 85.6

Revenues 147.4 156.1 162.0 153.3 159.0 154.0 202.3 187.8 183.6 198.6 228.4 216.7 15.4 -5.2

RM Cost 64.9 66.1 68.5 63.5 63.9 59.7 75.7 72.4 61.3 72.6 79.7 77.7 7.3 -2.5

% of Revenues 44.0 42.4 42.3 41.4 40.1 38.8 37.4 38.5 33.4 36.5 34.9 35.9 -270 bps 96 bps

Gross Profit 82.6 90.0 93.5 89.8 95.2 94.3 126.6 115.4 122.3 126.1 148.7 139.0 20.4 -6.5

Gross Profit Margin (%) 56.0 57.6 57.7 58.6 59.9 61.2 62.6 61.5 66.6 63.5 65.1 64.1 270 bps -96 bps

Employee Cost 20.9 23.3 26.4 25.6 25.0 26.4 30.5 32.2 34.6 33.7 36.0 34.7 7.7 -3.5


R & D 3.2 3.7 3.2 3.3 2.8 2.7 3.8 3.7 4.2 4.3 4.9 5.0 37.1 2.9

% of Revenues 2.2 2.3 2.0 2.1 1.8 1.8 1.9 2.0 2.3 2.2 2.1 2.3 37 bps 18 bps

Other expenses 37.1 37.4 41.0 41.8 41.9 40.8 59.2 49.7 50.7 51.5 59.2 56.6 13.9 -4.5


Total Expenditure 126.1 130.5 139.1 134.1 133.6 129.6 169.3 158.0 150.8 162.1 179.8 174.0 10.1 -3.2


EBITDA 21.4 25.6 22.8 19.2 25.4 24.4 33.0 29.9 32.9 36.6 48.6 42.7 43.0 -12.2

EBITDA Margin (%) 14.5 16.4 14.1 12.5 16.0 15.8 16.3 15.9 17.9 18.4 21.3 19.7 381 bps -159 bps

Depreciation 5.3 5.8 5.9 5.7 6.3 7.3 7.7 8.0 7.9 9.5 13.2 12.0 49.4 -8.9

Interest 2.8 8.2 3.6 5.0 5.1 6.2 5.3 3.9 3.5 2.7 2.7 2.7 -29.8 1.1

Other Income 0.5 0.2 0.2 0.4 0.2 0.2 0.4 0.1 1.0 0.6 0.6 0.2 81.8 -64.3

PBT 13.7 11.7 13.4 9.0 14.3 11.0 20.5 18.1 22.6 25.0 33.4 28.2 56.0 -15.5

Tax 1.2 1.4 1.4 1.6 1.4 1.8 4.4 4.0 4.0 5.0 11.0 6.6 66.2 -39.9

Tax Rate (%) 8.5 11.5 10.1 17.7 9.9 16.5 21.6 21.9 17.8 19.8 32.8 23.3 143 bps -949 bps

Net Profit 12.5 10.4 12.1 7.4 12.9 9.2 16.0 14.1 18.6 20.0 22.4 21.6 53.1 -3.5

PAT Margin (%) 8.5 6.6 7.5 4.8 8.1 6.0 7.9 7.5 10.1 10.1 9.8 10.0 246 bps 17 bps

EPS (|) 1.4 1.1 1.3 0.8 1.4 1.0 1.7 1.5 2.0 2.2 2.4 2.3 53.1 -3.5



SWOT Analysis Strengths - Tie-ups with the MNCs. Leader in Stomatologicals in domestic formulations. Weakness - Higher acute composition in the domestic formulations and one off the least productive sales force (MR productivity- | 19.5 lakh). Opportunities - The US Generics space in which the company intends to launch products via Watson tie-up and on its own. Threats - Increased USFDA scrutiny across the globe regarding cGMP issues and consolidation in the US pharmacy space. Intense competition in acute therapies in the domestic formulations. Any alteration or cancellation of Watson deal altogether could adversely impact earnings as well as multiple. Conference call highlights

• The company has launched 17 products in the domestic market in YTD FY15 including three products launches in Q3FY15

• Till date, the company has filed 28 ANDAs (Including seven own and 16 under Watson deals) out of which 19 are pending. It also has 16 ANDAs in the pipeline

• Acquisition of Allergan by its partner Watson (Actavis), has created new opportunities for Indoco in Ophthalmic segment. Allergen’s four products which overlap with Indoco’s products signed will be commercialized only post 2020, hence there will be no immediate impact on sales in US through Watson.

• Total ~45% of the company’s domestic portfolio normally gets impacted by seasonality.

• In Q4FY15, It plans to file four ANDAs and three dossiers in Europe

• It guided for 25-26% tax rate for FY16 • Capex would be | 30 crore for FY15 and |40-45 crore for FY16 • NLEM products constitute~11-12% of domestic portfolio as per

extended NLEM • Indoco’s newly launched anti-obesity formulations under four

different brands have already crossed | 2 crore in a span of four months

• The company plans to add 250 MRs on the current strength of 2300

• It has received | 5 crore under Aspen in Q3FY15. The company has started supplying two products in Q3FY15, which would further enhance its revenue from Aspen


Valuation The Q2 numbers have demonstrated marked improvement on the margins front. The domestic formulations business is back on the growth trajectory and the new anti-obesity foray reflect Indoco’s endeavour to push for more chronic and lifestyle products. On the exports front, the visibility has substantially after the recent approvals- EIR for plant II and first time approval for plant III. We expect product launches under the Watson deal as well as on own account to get momentum from H2FY15 onwards. Other deals such as Aspen and DSN will continue to provide traction for exports. We expect sales, EBITDA and PAT to grow at a CAGR of 24.7%, 37.2% and 49.1% respectively during FY14-17E. We have valued the stock at | 375 i.e. 18x FY17E EPS of | 20.8. Exhibit 10: One year forward PE

04080

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Price 13.3x 10.4x 9.7x 7.6x 6.1x

[


Exhibit 11: One year forward PE of company vs. BSE Healthcare Index

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Exhibit 12: Valuation

Revenues Growth EPS Growth P/E EV/EBITDA RoNW RoCE(| crore) (%) (|) (%) (x) (X) (%) (%)

FY14 728 29 6.3 24.9 34.7 17.4 12.7 16.6FY15E 866 19 9.6 52.9 22.7 11.7 16.7 21.8FY16E 1138 31 15.4 60.5 14.1 8.3 21.9 28.1FY17E 1410 24 20.8 35.1 10.5 6.3 23.4 30.4



Company snapshot

Target Price:| 375

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Source: Bloomberg, Company, ICICIdirect.com Research Key events Date EventFeb-09 Signs agreement with Watson Pharmaceuticals to manufacture and supply sterile products for the US market

Mar-10 Enters into a long term drug supply agreement with Aspen Pharmaceuticals for emerging markets

Feb-12 Enters into a strategic business alliance with DSM Pharmaceutical to supply eight active pharma ingredients to be marketed in Europe

Mar-12 Proposes stock split and bonus issue (1:2)

Apr-13 Receives approval for its first ANDA of anti-diabetic product Glimepride tablets from the USFDA

Jul-14 Receives EIR from the USFDA for sterile manufacturing facility (plant II) and approval for solid dosage manufacturing facility (plant III) at Goa

Source: Company, ICICIdirect.com Research Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m)n Change (m)1 SPA Holdings Pvt. Ltd. 31-Dec-14 19.90 18.3 0.02 Shanteri Investment Pvt. Ltd. 31-Dec-14 17.12 15.8 0.03 Panandikar (Aditi Milind) 31-Dec-14 6.03 5.6 0.04 Ramani (Madhura Anup) 31-Dec-14 5.63 5.2 0.05 Kare (Aruna Suresh) 31-Dec-14 5.18 4.8 0.06 Kare (Suresh Govind) 31-Dec-14 4.70 4.3 0.07 Baring Private Equity Asia Ltd. 31-Dec-14 4.02 3.7 0.08 DSP BlackRock Investment Managers Pvt. Ltd. 31-Dec-14 3.43 3.2 0.09 SBI Funds Management Pvt. Ltd. 31-Dec-14 2.19 2.0 0.310 UTI Asset Management Co. Ltd. 31-Dec-14 1.96 1.8 -1.6

(in %) Dec-13 Mar-14 Jun-14 Sep-14 Dec-14Promoter 59.2 59.2 59.2 59.3 59.3FII 5.6 5.7 6.0 7.7 7.7DII 11.1 12.0 12.5 10.8 11.2Others 24.1 23.1 22.4 22.2 21.9

Source: Reuters, ICICIdirect.com Research Recent Activity

Investor name Value Shares Investor name Value SharesFirst State Investment Management (UK) Limited 4.92m 1.05m UTI Asset Management Co. Ltd. -7.94m -1.61m Goldman Sachs Asset Management International 3.28m 0.70m Reliance Capital Asset Management Ltd. -0.45m -0.09m SBI Funds Management Pvt. Ltd. 1.61m 0.32m ING Investment Management India Private Ltd. -0.17m -0.07m L&T Investment Management Limited 1.31m 0.26m 0 0 0Dimensional Fund Advisors, L.P. 0.62m 0.13m 0 0 0

Buys Sells

Source: Reuters, ICICIdirect.com Research


.

Financial summary

Profit and loss statement | Crore (Year-end March) FY14 FY15E FY16E FY17ERevenues 727.7 866.2 1137.9 1410.2Growth (%) 28.9 19.0 31.4 23.9Raw Material Expenses 269.1 306.8 396.8 476.1Employee Expenses 123.7 140.0 187.7 225.6R & D expenditure 14.4 19.3 25.7 48.7Other expenses 200.4 225.4 286.1 349.3Total Operating Expenditure 607.6 691.5 896.3 1,099.7EBITDA 120.1 174.7 241.6 310.4Growth (%) 56.1 45.5 38.3 28.5Depreciation 30.9 44.3 46.5 50.4Interest 18.8 10.1 5.6 4.0Other Income 1.7 3.4 12.0 16.0PBT 68.7 116.9 177.5 240.0EO 0.0 0.0 0.0 0.0Total Tax 14.2 31.8 47.4 64.0PAT 57.9 88.5 142.1 192.0Growth (%) 24.9 52.9 60.5 35.1EPS (|) 6.3 9.6 15.4 20.8


Cash flow statement | Crore (Year-end March) FY14 FY15E FY16E FY17EProfit after Tax 57.9 88.5 142.1 192.0Add: Depreciation 30.9 44.3 46.5 50.4(Inc)/dec in Current Assets 16.4 40.7 51.1 51.3Inc/(dec) in CL and Provisions -26.8 -51.8 -133.1 -151.7CF from operating activities 78.4 121.7 106.7 142.0(Inc)/dec in Investments 0.0 0.0 0.0 0.0(Inc)/dec in Fixed Assets -41.1 -41.0 -51.0 -44.0Inc/(dec) deff tax lia. & Other 6.8 -16.6 -11.0 -11.1CF from investing activities -34.3 -57.6 -62.0 -55.1Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0Inc/(dec) in loan funds -27.8 -23.2 -23.5 -8.2Dividend paid & dividend tax -15.1 -17.3 -21.6 -21.6Inc/(dec) in Sec. premium 0.0 0.0 0.0 0.0Others 0.1 1.4 0.0 0.0CF from financing activities -42.8 -39.1 -45.1 -29.8Net Cash flow 1.3 25.0 -0.4 57.2Opening Cash 11.8 13.1 38.2 37.7Closing Cash 13.1 38.2 37.7 94.9


Balance sheet | Crore (Year-end March) FY14 FY15E FY16E FY17EEquity Capital 18.4 18.4 18.4 18.4Reserve and Surplus 438.5 511.2 631.7 802.2Total Shareholders funds 457.0 529.6 650.2 820.6Total Debt 90.6 67.4 43.9 35.6Deferred Tax Liability 30.5 35.5 40.5 45.5Long Term Provisions 16.34 6.93 9.10 11.28Other Long Term Liabilites 9.19 15.59 20.48 25.38Total Liabilities 603.6 655.1 764.1 938.5Gross Block 481.4 517.4 558.4 592.4Less: Acc Depreciation 156.1 200.5 247.0 297.4Net Block 325.3 316.9 311.4 295.0Capital WIP 44.1 49.1 59.1 69.1Total Fixed Assets 369.4 366.1 370.6 364.1Investments 0.4 0.4 0.4 0.4LT Loans & Advances 55.04 73.63 96.72 119.86Other Non current assets 0.00 0.00 0.00 0.00Inventory 108.3 130.5 187.0 251.1Debtors 137.3 166.1 218.2 289.8Loans and Advances 42.2 42.8 67.3 83.4Other Current Assets 0.4 0.4 0.4 0.4Cash 13.1 38.2 37.7 94.9Total Current Assets 301.2 378.0 510.7 719.5Creditors 69.1 106.8 140.3 173.9Provisions 19.7 21.7 28.4 35.3Other current Liabilities 33.64 34.65 45.52 56.41Total Current Liabilities 122.4 163.1 214.2 265.5Net Current Assets 178.8 214.9 296.4 454.0Application of Funds 603.6 655.1 764.1 938.5


Key ratios (Year-end March) FY14 FY15E FY16E FY17EPer share data (|)EPS 6.3 9.6 15.4 20.8Cash EPS 9.6 14.4 20.5 26.3BV 49.6 57.5 70.6 89.1DPS 1.4 1.6 2.0 2.0Cash Per Share 1.4 4.1 4.1 10.3Operating Ratios (%)EBITDA margins 16.5 20.2 21.2 22.0PBT margins 9.4 13.5 15.6 17.0Net Profit margins 8.0 10.2 12.5 13.6Inventory days 54 55 60 65Debtor days 69 70 70 75Creditor days 35 45 45 45Return Ratios (%)RoE 12.7 16.7 21.9 23.4RoCE 16.6 21.8 28.1 30.4RoIC 13.6 17.7 23.2 26.9Valuation Ratios (x)P/E 34.7 22.7 14.1 10.5EV / EBITDA 17.4 11.7 8.3 6.3EV / Revenues 2.9 2.4 1.8 1.4Market Cap / Revenues 2.8 2.3 1.8 1.4Price to Book Value 4.4 3.8 3.1 2.4Solvency RatiosDebt/EBITDA 1.3 0.8 0.4 0.2Debt / Equity 0.3 0.2 0.1 0.1Current Ratio 2.6 2.5 2.3 2.4Quick Ratio 1.7 1.6 1.5 1.5



ICICIdirect.com coverage universe (Healthcare) ICICIdirect Healthcare coverage Universe

I-Direct CMP TP Rating M CapCode (|) (|) (| Cr) FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E

Ajanta Pharma AJAPHA 2555 3220 BUY 9108.7 66.2 75.0 85.6 38.6 34.1 29.9 24.7 21.5 17.8 44.9 40.6 38.1 39.4 32.8 28.9

Apollo Hospitals APOHOS 1314 1075 HOLD 19050.0 22.8 27.5 35.1 57.7 47.8 37.4 29.7 25.4 19.4 11.6 12.7 14.9 10.6 11.8 13.6

Aurobindo Pharma AURPHA 1248 1111 HOLD 35904.5 43.6 36.8 49.7 28.6 33.9 25.1 19.8 20.7 16.5 24.2 19.1 21.7 28.9 23.5 24.5

Biocon BIOCON 414.8 410 HOLD 8256.8 20.7 20.0 22.6 20.0 20.7 18.3 12.2 12.2 10.7 13.4 11.6 12.9 13.7 12.3 12.9

Cadila Healthcare CADHEA 1640 1538 HOLD 34243.6 39.2 51.1 66.2 41.8 32.1 24.8 30.3 22.6 17.6 15.9 19.0 21.7 23.4 24.6 25.4

Cipla CIPLA 695.8 585 HOLD 56411.3 17.3 15.9 21.7 40.2 43.7 32.0 26.8 24.3 19.5 15.5 14.8 17.2 13.8 11.5 13.7

Divi's Laboratories DIVLAB 1742 1633 HOLD 23642.7 56.0 62.4 81.7 31.1 27.9 21.3 23.2 19.7 16.3 29.6 28.1 29.7 26.1 23.2 25.1

Dr Reddy's Labs DRREDD 3237 3332 HOLD 57722.1 126.7 128.3 151.0 25.5 25.2 21.4 17.4 16.2 14.2 19.2 18.7 20.1 23.7 19.9 19.5

Glenmark Pharma GLEPHA 719.2 775 HOLD 19649.1 20.0 28.0 33.4 35.9 25.7 21.5 16.9 15.0 11.6 16.0 21.0 22.7 18.3 21.8 22.2

Indoco Remedies INDREM 325.5 375 BUY 2975.9 6.3 9.6 15.4 51.8 33.9 21.1 25.2 17.2 12.3 16.6 21.8 28.1 12.7 16.7 21.9

Ipca Laboratories IPCLAB 638.3 655 HOLD 8102.7 37.9 40.5 50.7 16.8 15.7 12.6 10.6 10.4 9.9 27.6 23.1 24.7 24.4 21.4 21.7

Jubilant Life Sciences VAMORG 172.7 123 SELL 2823.0 6.8 -6.5 20.0 25.2 -26.7 8.6 6.7 12.1 5.9 10.1 3.4 10.6 4.2 -4.2 12.1

Lupin LUPIN 1585 1590 BUY 70345.2 41.0 49.1 58.6 38.7 32.3 27.1 24.2 18.2 16.1 34.5 36.0 34.1 26.5 25.4 24.4

Sun Pharma SUNPHA 917.8 1036 BUY 191896.3 29.0 34.8 39.9 31.6 26.4 23.0 19.6 18.9 16.1 32.4 31.2 28.8 27.0 25.3 23.1

Torrent Pharma TORPHA 1100 1165 HOLD 19404.9 39.2 47.2 50.4 28.0 23.3 21.8 20.6 18.3 14.7 28.5 21.4 26.7 34.9 32.4 28.0

Unichem Laboratories UNILAB 223 206 HOLD 2029.5 18.7 6.4 13.2 11.9 35.0 16.9 11.3 18.6 11.5 15.7 6.5 12.8 20.7 7.1 14.0

RoNW (%)Company

EPS (|) PE(x) EV/EBITDA (x) RoCE (%)



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Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093

[email protected]


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