lupin (lupin) | 762content.icicidirect.com/mailimages/idirect_lupin_q4fy18.pdf · icici securities...
TRANSCRIPT
May 16, 2018
ICICI Securities Ltd | Retail Equity Research
Result Update
High base, price erosion continues to weigh
Revenues declined 5% YoY to | 4034 crore (I-direct estimate: | 4030
crore) mainly due to 21% YoY de-growth in the US to | 1499 crore (I-
direct estimate: | 1412 crore). This was on account of the high base
of Metformin sales in Q4FY17. India sales increased 10% to | 965
crore, in line with I-direct estimate of | 967 crore
EBITDA margins declined 80 bps YoY to 17.6% (I-direct estimate:
19.2%). The decline in gross margins (592 bps to 66.2%) was largely
offset by lower other expenditure. EBITDA declined 9% YoY to | 709
crore, below I-direct estimate of | 775 crore
Adjusted net profit (excluding | 1142 crore of impairment provision
and deferred tax assets of Gavis acquisition) declined 4% YoY to
| 365 crore (I-direct estimate: | 344 crore) mainly due to a below
expected operational performance
US main growth engine but cGMP issues, pricing headwinds to the fore
Lupin’s US business (~38% of revenue) has one of the largest ANDA
pipelines comprising 398 filed ANDAs and 163 pending approvals
including ~36 FTFs. However, in line with the US generic woes, this
segment is facing headwinds due to persisting pricing pressure and the
recent warning letter for Goa (oral solid) and Indore (oral solid,
ophthalmic) formulation plants. The company is looking for branded
products and complex generics to overcome this issue. We expect sales
from the US to grow negligibly to | 6050 crore in FY18-20E due to pricing
pressure and competition besides slower offtake from Goa.
Indian formulations growth steady
Lupin ranks seventh in domestic formulations with a market share of
3.6%. The acute: chronic ratio for the company is at 26:74. In terms of MR
productivity, at ~| 58 lakh per MR it has one of the best MR productivity
among large cap peers. Also, tie-ups with Eli Lilly, Boehringer for anti-
diabetics and with MSD for pneumonia vaccines are some steps to
bolster the domestic franchise. We expect sales from India to grow at a
CAGR of 12% in FY17-20E to | 5167 crore.
Core strength in geographical diversification, strong financials
Lupin has established a significant presence in the US by 1) focusing on
limited competition/FTF opportunities, 2) concentration on niche
therapies such as oral contraceptives, dermatology, ophthalmology,
respiratory, etc, and 3) acquiring small but profitable brands at the right
price. It is slowly but surely establishing itself in other geographies like
Japan and Australia. Higher growth, on a fairly consistent basis, along
with a healthy balance sheet (despite Gavis acquisition) are some
differentiators for Lupin besides management pedigree.
US woes continues to impact; new launches, cGMP resolution to hold key
FY18 numbers were impacted by the high base in the US. The warning
letter has compounded Lupin’s woes besides pricing issues. However,
sequential growth suggests that new product launches still hold the key
for Lupin. Hence, going forward, any further price erosion can be offset
by new launches as the company’s pace of product launches still remains
high despite warning letter. However, we believe the overall scenario in
the US will take some time to normalise. We arrive at our target price of
| 760 based on 18x FY20E EPS of | 40.4 and an NPV of | 34 resulting
from Lupin’s Symbiomix acquisition. We maintain HOLD rating as we
believe the US woes are too opaque to be made good by performances in
other geographies.
Rating matrix
Rating : Hold
Target : | 760
Target Period : 15-18 months
Potential Upside : 0%
What’s Changed?
Target Changed from | 850 to | 760
EPS FY18E Changed from | 30.2 to | 13.3
EPS FY19E Changed from | 35.1 to | 34
EPS FY20E Changed from | 45.2 to | 40.4
Rating Unchanged
Quarterly Performance
Q4FY18 Q4FY17 YoY (%) Q3FY18 QoQ (%)
Revenue 4,033.8 4,253.3 -5.2 3,975.7 1.5
EBITDA 710.0 781.4 -9.1 688.4 3.1
EBITDA (%) 17.6 18.4 -77 bps 17.3 29 bps
Net Profit -783.5 380.2 -306.1 221.2 -454.2
Key Financials
(| Crore) FY17 FY18E FY19E FY20E
Revenues 17494.3 15804.2 16612.9 17979.1
EBITDA 4493.1 3154.6 3241.3 3733.2
Net Profit 2561.7 599.2 1535.7 1826.6
EPS (|) 56.7 13.3 34.0 40.4
Valuation summary
FY17 FY18E FY19E FY20E
PE (x) 13.4 134.3 22.4 18.9
Target PE (x) 13.4 57.3 22.4 18.8
EV to EBITDA (x) 8.8 12.6 11.9 10.1
Price to book (x) 2.5 2.6 2.3 2.1
RoNW (%) 19.0 4.4 10.4 11.2
RoCE (%) 16.6 10.6 11.0 12.6
Stock data
Particular
Market Capitalisation
Debt (FY18)
Cash (FY18)
EV
52 week H/L (|) 1327/724
Equity capital
Face value (|) | 2
| 90.4 crore
Amount
| 34455 crore
| 39923 crore
| 6876 crore
| 1408 crore
Price performance (%)
1M 3M 6M 1Y
Lupin -3.7 -8.7 -8.8 -41.2
Dr Reddy's -3.9 -8.5 -13.1 -24.4
Sun Pharma -8.6 -18.6 -7.1 -27.9
Research Analyst
Siddhant Khandekar
Mitesh Shah
Lupin (LUPIN) | 762
ICICI Securities Ltd | Retail Equity Research Page 2
Variance analysis
(| crore) Q4FY18 Q4FY18E Q4FY17 Q3FY18 YoY (%) QoQ (%) Comments
Revenue 4,033.8 4,030.4 4,253.3 3,975.7 -5.2 1.5 YoY decline was mainly due to continued decline in US sales
Raw Material Expenses 1,362.6 1,370.3 1,185.1 1,392.7 15.0 -2.2 A 592 bps YoY contraction in gross margins to 66.2% mainly on the back high
base of Metformin group in Q4FY17
Employee Expenses 728.7 716.2 707.8 693.1 3.0 5.1
Other Expenditure 1,232.5 1,168.8 1,579.1 1,201.5 -21.9 2.6
EBITDA 710.0 775.1 781.4 688.4 -9.1 3.1
EBITDA (%) 17.6 19.2 18.4 17.3 -77 bps 29 bps YoY decline in margin mainly due to high base of Metformin. Miss vis-à-vis I-
direct was mainly due to higher other expenditure
Interest 58.5 63.1 40.6 54.0 44.1 8.4
Depreciation 272.8 280.4 267.4 280.4 2.0 -2.7
Other Income 144.9 28.8 45.3 28.4 219.6 409.9
Less: Exceptional Items 1,142.1 0.0 0.0 0.0 NA NA One-off impairment provision of | 1464.4 crore and deferred tax assets of |
322.3 of Gavis acquisition
PBT -618.5 460.5 518.7 382.5 -219.2 -261.7
Tax 159.1 115.1 136.7 160.8 16.4 -1.1
PAT before MI -777.6 345.4 382.0 221.7 -303.6 -450.8
Minority Interest 5.9 0.8 1.8 0.5 233.7 1,088.0
Net Profit -783.5 344.6 380.2 221.2 -306.1 -454.2
Adjusted PAT 358.6 344.6 380.2 221.2 -5.7 62.1 Delta vis-à-vis EBITDA was mainly due to higher other income
Key Metrics
India 964.7 966.7 878.8 1,068.8 9.8 -9.7
Japan 504.4 573.9 468.7 553.5 7.6 -8.9 Miss vis-à-vis I-direct estimates was mainly due to channel dis-incentivisation
US 1,499.0 1,412.0 1,900.7 1,432.1 -21.1 4.7 YoY decline mainly due to price erosion in Metformin group. Beat vis-à-vis I-
direct estimates was mainly due to better-than-expected branded business
sales and volume gain in existing business
Europe 184.5 155.8 135.5 151.3 36.2 21.9
South Africa 166.8 183.6 165.8 120.8 0.6 38.1
ROW markets 378.3 380.7 331.0 305.9 14.3 23.7
API 280.8 281.5 281.5 268.0 -0.2 4.8
Change in estimates
(| Crore) Old New % Change Old New % Change
Revenue 16,894.3 16,612.9 -1.7 18,579.2 17,979.1 -3.2
EBITDA 3,362.2 3,241.3 -3.6 4,042.2 3,733.2 -7.6
EBITDA Margin (%) 19.9 19.5 -39 bps 21.8 20.8 -99 bps Changed mainly in line with the company's guidance
PAT 1,587.2 1,535.7 -3.2 2,043.1 1,826.6 -10.6
EPS (|) 35.1 34.0 -3.2 45.2 40.4 -10.6 Changed mainly in sync with operational performance
FY19E FY20E
Assumptions
Current Comments
(| crore) FY17 FY18E FY19E FY20E FY19E FY20E
India 3,815.7 4,125.3 4,613.7 5,167.3 4,676.9 5,378.5
Japan 1,779.1 2,059.4 2,163.7 2,271.9 2,289.5 2,575.8 Changed mainly due to lower-than-expected sales in Q4FY18 and continuous price
cut of generic durgs
US 8,262.6 5,893.9 5,761.6 6,049.7 5,835.2 6,177.4
Europe 529.4 603.6 664.0 730.4 624.9 695.6
South Africa 482.2 521.5 596.8 686.3 611.5 706.8
ROW markets 1,084.2 1,263.1 1,452.6 1,670.5 1,455.3 1,673.6
API 1,138.4 1,093.1 1,115.0 1,137.3 1,089.2 1,138.0
Earlier
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 3
Company Analysis
From a global leader in anti-tuberculosis (TB) and other infectious
diseases to one of the fastest growing prescription companies in the US,
Lupin has come a long way to emerge as a leading Indian generic
exporter. Established in 1968, the company adapted well as per the
changed industry dynamics like other peers such as Sun, Dr Reddy’s,
Ranbaxy and Cipla. During this journey, it changed focus in therapies -
from acute to chronic and also geographies, from domestic driven to
export oriented. It received USFDA approvals for two facilities-
Ankaleshwar and Mandideep way back in 1989. Besides this, the
company has been fairly active on the global M&A front. It has acquired
companies in Japan (significant acquisitions), Australia, Philippines and
South Africa. Similarly, the company also acquired small ticket but
lucrative brands in the US (Suprax, Antara, Locoid lotion, Inspira Chamber
and Alinia). Its latest acquisition, however, has been a complex injectable
technology based company (Nanomi) in the Netherlands. Infrastructure -
11 manufacturing facilities including two in Japan – seven formulations
(three USFDA approved) and four APIs (two USFDA approved).
Lupin's US subsidiary expanded into women's heath segment by
acquiring Symbiomix Therapeutics. USFDA approved Symbiomix's lead
candidate, Solosec oral granules to treat gynaecological infection. The
management expects the drug to be commercially available by H2CY18.
The drug has been designated as qualified infectious disease product
(QIDP) and is eligible for at least 10 years of exclusivity in US. The deal
was made for a cash consideration of US$150 million, including US$50
million of upfront payment by Lupin and rest time-bound payments. The
management believes the payback would be less than five to six years for
the product. US has 6 million prescription base for this disease.
Exhibit 1: Return ratios to improve further
25.4 25.4
19.0
21.9 21.6
17.8
29.8
22.5
26.527.1
20.3
26.3
26.6
35.7 35.1
16.6
0
5
10
15
20
25
30
35
40
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(%
)
RoNW RoCE
Source: Company, ICICI Direct Research
Exhibit 2: R&D spend likely to remain at elevated level
466.0 500.6
681.8
929.4
1099
16041686
1825
5.3
6.56.3
10.1 10.1 10.1
4.8
4.4
0
300
600
900
1200
1500
1800
2100
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
3
5
7
9
11
R & D cost (| crore) R & D cost % revenues
Source: Company, ICICI Direct Research
The current financial health of the company is the culmination of prudent
business decisions in the past. Over the last 10 years, revenues, EBITDA
and PAT have grown at a CAGR of 20%, 26% and 21%, respectively.
Considering more recent numbers, in FY12-17, the revenue, EBITDA and
PAT have grown at a CAGR of 20%, 17% and 13% to | 14466 crore,
| 4333 crore and | 2551 crore, respectively. Similarly, the R&D spend as a
percentage of sales, has gone up from 6.6% in FY12 to 12% in FY18.
Going ahead, in the near term, we expect revenues, EBITDA and PAT to
grow at a CAGR of 7%, 9% and 75%, respectively, in FY18-20E. However,
from a long term perspective, we believe the company is well poised to
grow at a healthy rate. This is given the strong US pipeline, vast
experience and good understanding of the US market, continued traction
in Indian branded formulations with higher chronic focus and
improvement in the Japanese market, which is perhaps the only
ICICI Securities Ltd | Retail Equity Research Page 4
geography where there is a scope for improvement. On the R&D front, we
see the composition spend tilting towards NDDS, NCEs, biosimilars from
the current ANDA/NDA albeit gradually to prepare for the scenario
beyond 2020.
Exhibit 3: Revenues to grow at CAGR of 6.7% in FY18-20E
9641.3
11286.6
12770.0
14255.5
17494.3
15804.216612.9
17979.1
0
3000
6000
9000
12000
15000
18000
21000
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(|
crore)
Source: Company, ICICI Direct Research
Exhibit 4: US base business pricing pressure, higher base to percolate into negative CAGR
2079.8
4887.1
5659.35913.2
8262.6
5893.9 5761.66049.7
0.0
2000.0
4000.0
6000.0
8000.0
10000.0
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
US (| crore)
Source: Company, ICICI Direct Research
Exhibit 5: Indian formulation sales to grow at CAGR of 12% in FY18-20E
1350.01573.5
2968.0
3406.4
3815.7
4125.3
4613.7
5167.3
0.0
1100.0
2200.0
3300.0
4400.0
5500.0
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
India (| crore)
Source: Company, ICICI Direct Research
Revenues to grow at a CAGR of 8% in FY18-20E to
| 17979 crore driven by 12% growth in the India business,
and ~15% each in south Africa and RoW markets
Lupin’s US business (~38% of revenue) has one of the
largest ANDA pipelines comprising 398 filed ANDAs and
163 pending approvals including ~36 FTFs. However, in
line with the US generic woes, this segment is facing
headwinds due to persisting pricing pressure and the
recent warning letter for Goa (oral solid) and Indore (oral
solid, ophthalmic) formulation plants. The company is
looking for branded products and complex generics to
overcome this issue. We expect sales from the US to
grow negligibly to | 6050 crore in FY18-20E due to
pricing pressure and competition besides slower offtake
from Goa
Lupin ranks seventh in domestic formulations with a
market share of 3.3%. The acute: chronic ratio for the
company is at 26:74. In terms of MR productivity, at
~| 58 lakh per MR it has one of the best MR productivity
among large cap peers. Also, tie-ups with Eli Lilly,
Boehringer for anti-diabetics and with MSD for pneumonia
vaccines are some steps to bolster the domestic franchise.
We expect sales from India to grow at a CAGR of 12% in
FY17-20E to | 5378 crore
10.4% CAGR
6.7% CAGR
23.2% CAGR
1.3% CAGR
25.0% CAGR
11.9% CAGR
ICICI Securities Ltd | Retail Equity Research Page 5
Exhibit 6: Japanese revenue to grow at CAGR of 12% in FY18-20E
1304.0 1295.4 1323.9 1364.2
1779.1
2080.5
2289.5
2518.4
0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Japan (| crore)
Source: Company, ICICI Direct Research
Exhibit 7: EBITDA to de-grow at CAGR of 8.8% in FY18-20E
2270
2899
3620 3685
4493
3155 3241
3733
23.5
25.7
28.3
25.9 25.7
20.0
19.5
20.8
0
1000
2000
3000
4000
5000
6000
7000
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(|
crore)
15
17
19
21
23
25
27
29
(%
)
EBITDA EBITDA Margins (%)
Source: Company, ICICI Direct Research
Exhibit 8: Net profit to grow at CAGR of 75% in FY18-19E
1314.1
1836.4
2403.2
2260.7
2561.7
599.2
1826.61535.7
13.6
16.3
18.8
15.9
9.2
10.2
14.6
0
500
1000
1500
2000
2500
3000
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
5
7
9
11
13
15
17
19
Adjusted PAT Net Profit Margins (%)
Source: Company, ICICI Direct Research
The Japanese acquisitions i.e. Kyowa and I’rom are yet to
achieve expected critical mass both in terms of
scalability and profitability. While Kyowa profitability is
expected to improve on the back of back-ended
integration by sourcing of APIs from Goa, the I’rom
business remains challenging due to the lumpy nature of
the CRAMS business. Kyowa has acquired 21 branded
products from Shionogi. Recently acquired 21 products
from Shionogi will add to the company’s overall growth.
We expect sales from Japan to grow at a CAGR of just
5% in FY18-20E to | 2272 crore. mainly due to continuous
price cut in the generic portfolio
9.6% CAGR
5.0% CAGR
ICICI Securities Ltd | Retail Equity Research Page 6
Exhibit 9: Trends in quarterly financial performance
(| crore) Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 YoY (%) QoQ (%)
US 1377.9 1190.6 1155 1380.5 2187.1 2188.6 1997.8 2175.5 1900.7 1601.8 1361.1 1432.1 1499 -21.1 4.7
Europe 89.1 100.3 115.8 113.9 125.4 128.0 123.1 142.8 135.5 123.8 144.0 151.3 184.5 36.2 21.9
Japan 294.3 323.1 323.4 373.5 344.2 424.4 436.8 449.2 468.7 498.4 503.0 553.5 504.4 7.6 -8.9
India 663.7 885.1 873.8 886.0 761.5 949.9 995.8 991.2 878.8 932.4 1159.3 1068.8 964.7 9.8 -9.7
South Africa 122.2 81.6 99.8 104.8 113.5 91.4 112.4 112.7 165.8 102.1 131.8 120.8 166.8 0.6 38.1
RoW 199.3 174.5 288.6 208.1 275.8 234.7 253.4 265.1 331.0 269.0 310.0 305.9 378.3 14.3 23.7
API 307.5 325.7 321.9 283.5 283.8 296.6 291.9 268.4 281.5 279.3 265.0 268.0 280.8 -0.2 4.8
Net Sales 3054.0 3080.9 3192.6 3357.7 4082.3 4341.8 4211.2 4404.9 4161.9 3806.8 3874.2 3900.4 3978.5 -4.4 2.0
OOI 24.1 75.2 137.1 198.2 88.4 125.9 79.3 77.9 91.4 62.8 77.8 75.3 55.3 -39.5 -26.5
Revenues 3078.2 3156.1 3329.7 3555.8 4170.7 4467.7 4290.5 4482.9 4253.3 3869.6 3952.0 3975.7 4033.8 -5.2 1.5
RM Cost 956.4 983.5 1124.9 1123.0 1101.0 1271.9 1242.9 1301.6 1185.1 1232.6 1286.5 1392.7 1362.6 15.0 -2.2
% of Revenue 31.1 31.2 33.8 31.6 26.4 28.5 29.0 29.0 27.9 31.9 32.6 35.0 33.8
Gross Profit 2121.8 2172.6 2204.8 2432.8 3069.8 3195.7 3047.7 3181.3 3068.2 2637.0 2665.5 2583.0 2671.3 -12.9 3.4
GPM (%) 68.9 68.8 66.2 68.4 73.6 71.5 71.0 71.0 72.1 68.1 67.4 65.0 66.2 -592 125
Employee Cost 482.2 497.3 532.8 528.4 577.9 703.2 712.4 731.2 707.8 718.0 725.0 693.1 728.7 3.0 5.1
% of Revenue 15.7 15.8 16.0 14.9 13.9 15.7 16.6 16.3 16.6 18.6 18.3 17.4 18.1 142.4 63.2
Other expenditure 850.2 850.5 1009.4 1027.3 1186.8 1181.8 1307.2 1234.3 1579.1 1150.6 1087.4 1201.5 1232.5 -21.9 2.6
% of Revenue 27.6 26.9 30.3 28.9 28.5 26.5 30.5 27.5 37.1 29.7 27.5 30.2 30.6
Total Expenditure 2288.8 2331.2 2667.1 2678.7 2865.7 3156.9 3262.4 3267.0 3471.9 3101.2 3098.9 3287.3 3323.8 -4.3 1.1
% of Revenue 74.4 73.9 80.1 75.3 68.7 70.7 76.0 72.9 81.6 80.1 78.4 82.7 82.4 77.0 -28.7
EBITDA 789.4 824.8 662.6 877.2 1305.0 1310.8 1028.1 1215.8 781.4 768.4 853.1 688.4 710.0 -9.1 3.1
EBITDA Margin (%) 25.6 26.1 19.9 24.7 31.3 29.3 24.0 27.1 18.4 19.9 21.6 17.3 17.6 -77.0 28.7
Other income 17.2 75.7 57.8 65.3 34.9 82.6 27.1 103.6 45.3 32.0 74.0 28.4 144.9 219.6 409.9
Interest 2.5 7.0 24.1 9.2 21.3 34.7 26.3 45.9 40.6 43.9 47.9 54.0 58.5 44.1 8.4
Depreciation 107.2 101.4 115.5 111.4 148.7 202.7 211.2 230.9 267.4 260.5 272.2 280.4 272.8 2.0 -2.7
PBT 696.0 791.1 579.9 820.9 1168.9 1155.0 816.7 1041.6 517.7 494.9 606.0 381.5 522.6 0.9 37.0
Tax 136.2 225.8 159.1 290.9 418.8 273.4 158.9 409.5 136.7 136.8 154.1 160.8 159.1 16.4 -1.1
Tax rate (%) 19.6 28.5 27.4 35.4 35.8 23.7 19.5 39.3 26.4 27.6 25.4 42.1 30.4
PAT 559.7 565.3 420.8 530.0 750.1 881.6 657.8 632.1 381.0 358.1 452.0 220.7 363.5 -4.6 64.7
PAT Margin (%) 18.2 17.9 12.6 14.9 18.0 19.7 15.3 14.1 9.0 9.3 11.4 5.6 9.0 5.4 346.1
Minority Interest 13.7 -2.2 2.7 1.3 3.3 0.6 0.8 2.4 1.8 -1.2 1.9 0.5 5.9 233.7 1088.0
PAT After MI 546.0 567.6 418.1 528.8 746.9 881.0 657.0 629.7 379.2 359.3 450.1 220.2 357.6 -5.7 62.4
Source: Company, ICICI Direct Research
Lupin - SWOT Analysis
Strengths – A prudent geographical mix covering high opportunity
emerging markets as well as developed markets. Formidable US presence
with highest rank among Indian peers in the US generic prescriptions
space. One of the best working capital management in the industry with
strong return ratios and ever improving margins.
Weakness - The Japanese market still remains a low margin business.
Opportunities - In the US generics space, a lot of opportunities are
panning out in the oral contraceptives and respiratory space.
Industry Threats - Increased USFDA scrutiny across the globe regarding
cGMP issues and pricing pressure due to client consolidation in the US.
Gavis like costly acquisitions can stretch the balance sheet further if the
product pipeline fails to deliver the expected payback. Appreciation of
rupee against US$ is likely to impact the financial performance
ICICI Securities Ltd | Retail Equity Research Page 7
Conference call highlights
The company has guided for low single digit revenue growth with
19-21% EBITDA margins (including other income) in FY19
In the US, the company expects marginal revenue growth in FY19
on the back of key launches like gRanexa (chest pain),
minocycline (antibiotic) and levothyroxine (Thyroid). It still
expects single digit price erosion in the US generic space
On the US branded portfolio (10% of US sales) front the company
expects generic competition in the Methergine (gynaecology)
brand (US$80 million sales in FY18) in FY19. Solosec
(gynaecology) is expected to be launched in June 2018. The
company is looking to develop its US branded business in the
woman’s health segment. In Japan and Europe, the company is
looking at the CNS segment for its branded franchise
As per the management, R&D cost is likely to remain at current
level of ~| 1850 crore (FY18) in FY19. The company is spending
~20% of its R&D in biosimilar development
The company is likely to invite USFDA for re-inspection in June
2018 for Goa and Pithampur Unit 2 plants. Lupin expects a delay
in plant resolution post Q1FY19 that is likely to further impact the
company’s growth and margins
Albuterol (Inhaler) is expected to be launched in FY20
Exhibit 10: Major Facilities
Location Segment Regulatory Approvals Type
Inspection
Date Outcome
Goa (India) Formulations USFDA, TGA Australia, WHO GMP, MCC SA Tablets, Capsules, Liquids Jan-16 483 with 3 observations
Ankaleshwar (India) APIs UKMHRA, WHO GMP, ANVISA Brazil, EDQM, KFDA Intermediates and APIs
Mandideep (India) Formulations / APIs USFDA, UKMHRA,WHO GMP, TGA Auatralia APIs- CVS and Ciphalosporins Feb-16 483 with 4 observations
Tarapur (India) APIs USFDA, UKMHRA, WHO GMP APIs Aug-16 No observations
Goa (India) Formulations USFDA, UKMHRA, WHO GMP Solid orals Mar-16 Received EIR
Jammu (India) Formulations WHO GMP, ANVISA Brazil Formulations
Vadodara (India) APIs WHO GMP Intermediates and APIs
Indore (India) Formulations / APIs USFDA, UKMHRA,TGA Auatralia APIs and Formulations Jan-16 483 with 6 observations
Nagpur (India) Formulations WHO and USFDA Formulations
Kyowa (Japan) Formulations PMDA Orals
I' rom (Japan) Formulations PMDA Injectables
Vishakapatnam, AP APIs Under Initiation
Pune (India) R&D Aug-16 No observations
Oldenzaal, Netherlands R&D
Coral Springs, FL R&D
Somerset, NJ Formulations & R&D
Mexico City, Mexico Formulations & R&D
Minas Gerias, Brazil Formulations & R&D
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 8
Valuation
Q2 witnessed incremental pressure on the US front mainly due to
increased pricing pressure on the gGlumetza sales led by competitive
scenario, ClarusONE negotiation impact and ending of Minastrin
exclusivity. The US franchise is not out of the woods yet as the acute
pricing pressure still looms large on the back of channel consolidation
and increased competition. However, the management believes generics
woes will bottom out by the end of FY18. However, simultaneously, the
company is also on the prowl for brand acquisition (recent Solosec
acquisition). We reduce our FY18, FY19 EPS estimates by 11% and 19%,
respectively, taking into account lower growth prospects in the US in the
near term and introduce our FY20 estimates. Accordingly, we arrive at
our new target price of | 1105 based on 20x FY20E EPS of | 53.5 and an
NPV of | 34 resulting from Lupin’s Symbiomix acquisition. We maintain
HOLD recommendation as we believe the US woes are too opaque to be
made good by performances in other geographies.
Exhibit 11: One year forward PE
0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
3500.0
2/7/2011
8/7/2011
2/7/2012
8/7/2012
2/7/2013
8/7/2013
2/7/2014
8/7/2014
2/7/2015
8/7/2015
2/7/2016
8/7/2016
2/7/2017
8/7/2017
2/7/2018
Series1 56.0x 42.7x 38.2x 20.4x 11.5x
[
Source: Company, ICICI Direct Research
Exhibit 12: One year forward PE of company vs. CNX Pharma
0.00
20.00
40.00
60.00
80.00
100.00
120.00
2/7/2011
8/7/2011
2/7/2012
8/7/2012
2/7/2013
8/7/2013
2/7/2014
8/7/2014
2/7/2015
8/7/2015
2/7/2016
8/7/2016
2/7/2017
8/7/2017
2/7/2018
(x)
Lupin CNX Pharma
8% Discount
Source: Company, ICICI Direct Research
Exhibit 13: Valuation
Revenues Growth EPS Growth P/E EV/EBITDA RoNW RoCE
(| crore) (%) (|) (%) (x) (X) (%) (%)
FY17 17494 22.7 56.7 13.3 13.4 8.8 19.0 16.6
FY18E 15804 -9.7 13.3 -76.6 134.3 12.6 4.4 10.6
FY19E 16613 5.1 34.0 156.3 22.4 11.9 10.4 11.0
FY20E 17979 8.2 40.4 18.9 18.9 10.1 11.2 12.6
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 9
Recommendation history vs. Consensus
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
0
500
1,000
1,500
2,000
2,500
May-18Feb-18Dec-17Oct-17Jul-17May-17Feb-17Dec-16Oct-16Jul-16May-16Feb-16Dec-15Sep-15Jul-15May-15
(%
)(|)
Price Idirect target Consensus Target Mean % Consensus with HOLD
Source: Reuters, Company, ICICI Direct Research
Key events
Date Event
Aug-13 Signs an agreement with Romark Lab for exclusive rights to promote, distribute and market Alinia (nitazoxanide) oral suspension brand in the US
Feb-14 Acquires Dutch firm Nanomi B.V. for an undisclosed amount, foraying into the technology intensive complex injectables space.
Mar-14 Acquires Mexico-based ophthalmic drugs maker Laboratories Grin
Apr-15 Consolidated Pharma Dynamics business in South Africa
May-15 Lupin acquires Brazil's Medquimica Industria Farmaceutica SA
Jul-15 Lupin's Goa facility recieves nine Form 483 observations
Jul-15 Lupin acquires Gavis Pharmaceuticals for US$ 880 million to strengthen its US portfolio
Jul-15 Closes Temmler acquisition in Germany
Mar-16 Completes Gavis acquisition
Jul-16 Goa facility receives establishment inspection report (EIR) from USFDA for July 2015 inspectation
Aug-16 Acquires 21 generic brands from Japan’s Shionogi for $150 million
Nov-16 Goa facility receives establishment inspection report (EIR) from USFDA for March 2016 inspectation
Apr-17 Lupin's Goa facility receives three Form 483 observations from USFDA
May-17 Lupin's Aurangabad facility receives nine Form 483 observations from USFDA
May-17 Opens 100,000 square foot expansion of its manufacturing facilities in Somerset, New Jersey
May-17 Indore facility receives six Form 483 observations from USFDA
Sep-17 Lupin's US subsidiary expands into women's heath segment by acquiring Symbiomix Therapeutics for cash consideration of $150 million
Nov-17 USFDA issues warning letter to Lupin’s Goa and Pithampur unit 2 facilities
Apr-18 Receives EIR from USFDA for Pithampur unit 1 facilities
Source: Company, ICICI Direct Research
Top 10 Shareholders Shareholding Pattern
Rank Investor Name Latest Filing Date % O/S Position Position Change
1 Lupin Investments Pvt. Ltd. 31-Dec-17 45.48 205.6m 0.4m
2 Life Insurance Corporation of India 31-Dec-17 2.68 12.1m 2.1m
3 ICICI Prudential Asset Management Co. Ltd. 30-Sep-17 2.32 10.5m 5.4m
4 Jhunjhunwala (Rakesh Radheshyam) 31-Dec-17 1.92 8.7m 0.2m
5 Comgest S.A. 28-Feb-18 1.72 7.8m -0.1m
6 The Vanguard Group, Inc. 31-Mar-18 1.70 7.7m -0.1m
7 BlackRock Institutional Trust Company, N.A. 31-Mar-18 1.57 7.1m 0.0m
8 Norges Bank Investment Management (NBIM) 31-Dec-17 1.23 5.6m 4.2m
9 Fidelity Management & Research Company 28-Feb-18 1.08 4.9m 0.0m
10 Comgesh Growt PLC. 31-Dec-17 1.00 4.5m 0.0m
(in %) Mar-17 Jun-17 Sep-17 Dec-17 Mar-18
Promoter 46.7 46.7 46.8 47.0 47.0
Others 53.3 53.3 53.2 53.0 53.0
Source: Reuters, ICICI Direct Research
Recent Activity
Investor name Value ($) Shares Investor name Value ($) Shares
ICICI Prudential Asset Management Co. Ltd. 83.2m 5.4m Franklin Advisers, Inc. -57.5m -3.7m
Norges Bank Investment Management (NBIM) 58.9m 4.2m Capital International, Inc. -29.6m -2.1m
Gupta (Manju Deshbandhu) 49.1m 3.9m Capital International Investors -21.8m -1.4m
Life Insurance Corporation of India 29.4m 2.1m Capital Research Global Investors -19.2m -1.2m
Gupta (Anuja) 9.2m 0.7m BlackRock Investment Management (UK) Ltd. -13.2m -1.0m
Buys Sells
Source: Reuters, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 10
.
Financial summary
Profit and loss statement | Crore
(Year-end March) FY17 FY18E FY19E FY20E
Total Operating Income 17,494.3 15,804.2 16,612.9 17,979.1
Growth (%) 22.7 -9.7 5.1 8.2
Raw Material Expenses 5,001.4 5,274.4 5,648.4 6,066.4
Employee Expenses 2,849.5 2,864.7 3,050.5 3,236.2
Other expenditure 5,150.2 4,510.4 4,672.8 4,943.2
Total Operating Expenditure 13,001.2 12,649.6 13,371.6 14,245.9
EBITDA 4,493.1 3,154.6 3,241.3 3,733.2
Growth (%) 21.9 -29.8 2.7 15.2
Depreciation 912.2 1,085.9 1,022.6 1,112.6
Interest 152.5 204.4 200.3 161.0
Other Income 114.8 150.4 114.6 77.4
PBT 3,543.1 2,014.7 2,133.0 2,537.0
EO 0.0 1142.1 0.0 0.0
Total Tax 978.5 610.8 554.6 659.6
PAT before MI 2,564.6 261.9 1,578.4 1,877.4
Minority Interest 7.2 7.1 42.7 50.8
Adjusted PAT 2,561.7 599.2 1,535.7 1,826.6
Growth (%) 13.3 -76.6 156.3 18.9
EPS (Adjusted) 56.7 13.3 34.0 40.4
Source: Company, ICICI Direct Research
Cash flow statement | Crore
(Year-end March) FY17 FY18E FY19E FY20E
Profit/(Loss) after taxation 2561.7 256.5 1535.7 1826.6
Depreciation 912.2 1085.9 1022.6 1112.6
Other operating Activities 302.5 204.4 200.3 161.0
(inc)/dec in Current Assets -49.3 -1456.9 -630.8 -954.3
Inc/ (dec) in Current Liabilities 530.3 929.0 340.5 450.3
CF from Operating Activities 4107.5 1018.7 2468.3 2596.2
Purchase of Fixed Assets -2569.3 -741.8 -1000.0 -1000.0
(Inc)/Dec in Investments -2119.8 1874.6 0.0 0.0
Other Investing Activities 230.3 94.8 17.1 18.8
CF from Investing Activities -4458.8 1227.5 -982.9 -981.2
Inc / (Dec) in Loan Funds 788.7 -1084.9 -1000.0 -1500.0
Inc / (Dec) in Equity Capital 0.0 0.1 0.0 0.0
Dividend and dividend tax -407 -249 -261 -310
Other Financing Activities -152.5 -204.4 -200.3 -161.0
CF from Financing Activities 229.0 -1537.8 -1461.3 -1971.5
Net Cash Flow -122 708 24 -357
Opening Cash 822 699 1,408 1,432
Closing Cash 699.4 1,407.9 1,431.9 1,075.4
Free Cash flow 1,538.1 276.9 1,468.3 1,596.2
Source: Company, ICICI Direct Research
Balance sheet | Crore
(Year-end March) FY17 FY18E FY19E FY20E
Equity Capital 90.3 90.4 90.4 90.4
Reserve and Surplus 13,407.3 13,415.1 14,689.7 16,205.7
Total Shareholders funds 13,497.6 13,505.5 14,780.1 16,296.2
Total Debt 7,961.1 6,876.3 5,876.3 4,376.3
Deferred Tax Liability 492.9 285.5 314.1 345.5
Minority Interest 34.5 40.1 44.1 48.5
Other NCL & LT Provisions 906.1 954.2 1,049.7 1,154.6
Total Liabilities 22,892.1 21,661.6 22,064.2 22,221.0
Gross Block - Fixed Assets 10,085.3 10,362.0 11,362.0 12,362.0
Accumulated Depreciation 1,362.7 2,448.5 3,471.1 4,583.7
Net Block 8,722.6 7,913.5 7,890.9 7,778.3
Capital WIP 2,133.1 2,598.2 2,598.2 2,598.2
Total Fixed Assets 10,855.7 10,511.7 10,489.1 10,376.5
Investments 2,136.1 261.6 261.6 261.6
Goodwill on Consolidation 2,310.0 2,448.5 2,448.5 2,448.5
Inventory 3,642.3 3,662.5 3,852.6 4,169.4
Debtors 4,307.3 5,192.2 5,461.7 5,910.8
Loans and Advances 15.9 19.9 21.9 24.1
Other Current Assets 1,144.3 1,692.1 1,861.3 2,047.4
Cash 699.4 1,407.9 1,431.9 1,075.4
Total Current Assets 9,809.2 11,974.6 12,629.3 13,227.1
Creditors 2,594.8 2,575.4 2,709.1 2,931.9
Provisions & Other CL 1,120.0 2,068.4 2,275.2 2,502.8
Total Current Liabilities 3,714.8 4,643.8 4,984.3 5,434.6
Net Current Assets 6,094.3 7,330.8 7,645.0 7,792.5
Deferred Tax Assets 643.4 716.6 788.2 867.0
Long term Loans and advances 76.5 82.9 91.2 100.3
Other Non current assets 776.1 309.6 340.6 374.7
Application of Funds 22,892.1 21,661.6 22,064.2 22,221.0
Source: Company, ICICI Direct Research
Key ratios
(Year-end March) FY17 FY18E FY19E FY20E
Per Share data (|)
Reported EPS 56.7 5.7 34.0 40.4
BV per share 298.9 298.7 326.9 360.5
Dividend per share 9.0 5.5 5.8 6.9
Cash per Share 15.5 31.1 31.7 23.8
Operating Ratios (%)
Gross Margin 71.4 66.6 66.0 66.3
EBITDA margin 25.7 20.0 19.5 20.8
PAT Margin 14.6 3.8 9.2 10.2
Inventory Days 76.0 84.6 84.6 84.6
Debtor Days 89.9 119.9 120.0 120.0
Creditor Days 54.1 59.5 59.5 59.5
Asset Turnover 1.7 1.5 1.5 1.5
EBITDA conversion Rate 91.4 32.3 76.2 69.5
Return Ratio (%)
RoE 19.0 4.4 10.4 11.2
RoCE 16.6 10.6 11.0 12.6
RoIC 20.7 12.4 13.0 15.0
Valuation Ratios (x)
P/E 13.4 134.3 22.4 18.9
EV / EBITDA 8.8 12.6 11.9 10.1
EV / Net Sales 2.3 2.5 2.3 2.1
Market Cap / Sales 2.0 2.2 2.1 1.9
Price to Book Value 2.5 2.6 2.3 2.1
Solvency Ratios
Debt / EBITDA 1.8 2.2 1.8 1.2
Debt / Equity 0.6 0.5 0.4 0.3
Current Ratio 2.5 2.3 2.2 2.2
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 11
ICICI Direct coverage universe (Healthcare)
Company I-Direct CMP TP Rating M Cap
Code (|) (|) (| Cr) FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E
Ajanta Pharma AJAPHA 1058 1,190 Hold 9312.8 57.4 53.0 46.4 59.6 18.4 19.9 22.8 17.8 42.3 31.0 23.3 24.8 33.7 23.8 18.0 19.7
Alembic Pharma ALEMPHA 481 570 Hold 9064.8 21.2 23.7 23.0 28.6 22.7 20.3 20.9 16.8 25.3 19.6 17.6 19.7 21.0 19.9 16.8 18.0
Apollo Hospitals APOHOS 1029 1,230 Hold 14311.8 15.9 10.3 23.8 31.6 64.8 100.0 43.2 32.6 6.1 6.8 9.3 10.8 6.0 3.8 8.2 10.0
Aurobindo Pharma AURPHA 608 665 Hold 35617.3 38.8 42.6 38.0 41.5 15.7 14.3 16.0 14.6 24.4 23.5 18.4 17.9 24.2 21.3 16.1 15.2
Biocon BIOCON 643 740 Buy 38592.0 8.5 6.2 9.3 14.0 75.9 103.6 69.1 46.0 9.6 8.4 11.3 14.7 10.5 7.2 9.8 13.0
Cadila Healthcare CADHEA 383 405 Hold 39229.8 14.5 16.6 18.1 20.3 26.4 23.0 21.2 18.9 13.1 17.6 16.7 17.3 21.4 20.7 19.2 18.6
Cipla CIPLA 556 640 Hold 44724.4 12.5 19.6 26.8 32.1 44.3 28.4 20.7 17.3 7.7 9.7 14.5 16.0 8.0 11.4 13.9 14.7
Divi's Lab DIVLAB 1166 1,070 Hold 30958.9 39.9 32.7 40.7 48.7 29.2 35.6 28.7 24.0 25.3 19.3 21.2 22.2 19.8 14.7 16.2 16.9
Dr Reddy's Labs DRREDD 1998 2,520 Hold 33132.5 78.0 59.4 93.4 140.2 25.6 33.6 21.4 14.3 7.3 6.8 9.5 12.1 10.5 7.5 10.8 14.2
Glenmark Pharma GLEPHA 515 535 Hold 14528.8 42.2 33.4 31.5 38.2 12.2 15.4 16.3 13.5 19.5 16.2 14.3 15.5 26.5 17.5 14.3 14.9
Indoco Remedies INDREM 184 280 Hold 1696.5 8.4 4.8 12.2 15.4 22.0 38.1 15.1 12.0 8.7 5.4 11.2 13.8 11.8 6.5 14.5 16.0
Ipca Laboratories IPCLAB 626 715 Buy 8894.5 15.4 21.4 37.6 44.7 40.6 29.2 16.7 14.0 8.7 9.6 15.5 16.7 7.9 10.1 15.4 15.9
Jubilant Life JUBLIF 820 1,090 Buy 13061.1 36.9 41.3 61.2 77.0 22.2 19.9 13.4 10.7 13.8 14.9 18.9 21.1 16.8 16.0 19.4 19.8
Lupin LUPIN 762 760 Hold 34454.8 56.7 13.3 34.0 40.4 13.4 57.5 22.4 18.9 16.6 10.6 11.0 12.6 19.0 4.4 10.4 11.2
Narayana Hrudalaya NARHRU 259 360 Buy 5292.9 4.1 3.8 6.4 9.7 62.7 68.5 40.2 26.7 12.5 10.5 14.1 18.4 8.8 7.4 11.2 14.5
Natco Pharma NATPHA 787 910 Hold 14518.7 26.3 34.8 41.5 26.7 29.9 22.6 19.0 29.4 33.6 26.7 28.1 16.7 29.5 21.4 21.9 12.9
Sun Pharma SUNPHA 466 530 Hold 111853.7 29.0 12.2 18.6 22.4 16.1 38.2 25.0 20.8 20.3 10.5 12.4 13.7 19.0 7.6 10.7 11.6
Syngene Int. SYNINT 620 715 Buy 12400.0 14.4 15.3 18.6 20.4 43.2 43.2 33.4 30.4 16.8 16.6 18.5 18.7 20.3 18.0 18.1 16.7
Torrent Pharma TORPHA 1356 1,390 Hold 22938.0 55.2 38.8 51.1 69.6 24.6 34.9 26.5 19.5 18.9 12.6 14.2 17.4 21.5 13.6 15.7 18.5
RoE (%)EPS (|) PE(x) RoCE (%)
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 12
RATING RATIONALE
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assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
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Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
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ICICIdirect.com Research
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assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
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Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
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assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
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Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
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assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
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RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless
specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
m
ICICIdirect.com Research
Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
RATING RATIONALE
ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorises them as Strong
Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is
defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
ICICI Securities Ltd | Retail Equity Research Page 13
ANALYST CERTIFICATION
We /I, Siddhant Khandekar CA-INTER, Mitesh Shah MS (Finance) Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report
accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s)
in this report.
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Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its
various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are
available on www.icicibank.com.
ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and
other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their
relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant
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there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and
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The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial
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respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.
ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in
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ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any
compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts
and their relatives have any material conflict of interest at the time of publication of this report.
It is confirmed that Siddhant Khandekar CA-INTER, Mitesh Shah MS (Finance) Research Analysts of this report have not received any compensation from the companies mentioned in the report in the
preceding twelve months.
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month
preceding the publication of the research report.
Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject
company/companies mentioned in this report.
It is confirmed that Siddhant Khandekar CA-INTER, Mitesh Shah MS (Finance) Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.
We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.
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observe such restriction.