Aurobindo Pharma (AURPHA) : in Line Results US Driven Growth Continues
Aurobindo Pharma (AURPHA) : in Line Results US Driven Growth Continues
Aurobindo Pharma (AURPHA) : in Line Results US Driven Growth Continues
June 1, 2016
Rating matrix
Rating
Target
Target Period
Potential Upside
:
:
:
:
Buy
| 990
15-18 months
29%
Whats Changed?
Target
EPS FY16P
EPS FY17E
EPS FY18E
Rating
Unchanged
Changed from | 33.0 to | 32.8
Changed from | 37.7 to 38.0
Unchanged
Unchanged
Quarterly Performance
Revenue
EBITDA
EBITDA (%)
Adj. Net Profit
Q4FY16
3,746.8
882.3
23.5
558.3
Q4FY15
3,162.1
656.1
20.7
402.6
YoY (%)
18.5
34.5
280.0
38.7
Q3FY16
3,495.5
823.0
23.5
522.0
QoQ (%)
7.2
7.2
0.4
6.9
FY15
12120.5
2563.6
1575.8
1635.4
27.1
28.1
FY16P
13831.2
3140.7
1915.6
1981.6
32.8
33.9
FY17E
15543.9
3524.3
2200.6
2200.6
37.7
37.7
FY18E
17652.7
4109.8
2627.8
2627.8
45.1
45.1
FY15
28.4
36.6
30.7
8.7
31.7
23.4
FY16E
23.5
30.2
24.8
6.4
28.1
25.0
FY17E
20.4
26.3
22.0
5.0
24.3
24.6
FY18E
17.1
21.9
18.5
3.9
22.9
26.4
Key Financials
(| Crore)
Revenues
EBITDA
Net Profit
Adjusted PAT
EPS (|)
Adjusted EPS (|)
Valuation summary
PE (x)
Target PE (x)
EV to EBITDA (x)
Price to book (x)
RoNW (%)
RoCE (%)
Stock data
Amount
| 45050 crore
| 3867 crore
| 834 crore
| 48082 crore
892/582
Particular
Market Capitalisation
Debt (FY16P)
Cash (FY16P)
EV
52 week H/L
Equity capital
Face value
| 58.5 crore
|1
1M
-0.7
0.1
-8.7
2.6
3M
15.1
-4.9
-16.3
4.4
| 770
6M
-6.8
11.3
-17.9
2.0
1Y
9.8
-15.9
-19.9
-10.3
Research Analyst
Siddhant Khandekar
[email protected]
Mitesh Shah
[email protected]
Nandan Kamat
[email protected]
Variance analysis
Revenue
Q4FY16 Q4FY16E
3,746.8 3,644.7
Q4FY15
3,162.1
Q3FY16
3,495.5
1,627.1
1,606.2
1,373.6
1,553.6
18.5
4.7
Employee Expenses
Other Expenditure
408.8
828.5
425.4
747.2
373.3
759.1
401.0
717.9
9.5
9.1
1.9
15.4
EBITDA
EBITDA (%)
882.3
23.5
865.9
23.8
656.1
20.7
823.0
23.5
34.5
280 bps
7.2
0 bps
Interest
Depreciation
Other Income
25.1
111.3
20.6
22.7
99.5
7.2
22.6
84.7
6.7
22.7
99.5
6.9
11.1
31.4
205.5
10.6
11.9
199.7
766.5
-4.6
771.1
209.7
27.2
561.4
-1.4
562.9
558.3
750.9
0.0
750.9
193.8
25.8
557.1
-0.3
557.4
557.4
555.6
-1.2
556.8
153.4
27.6
403.4
-0.5
403.8
402.6
707.7
-12.9
720.6
186.0
25.8
534.7
-0.3
535.0
522.0
38.0
282.4
38.5
36.7
-36.4
39.2
213.3
39.4
38.7
8.3
-64.8
7.0
12.7
138.0
5.0
370.0
5.2
6.9
1,666.3
1,678.3
1,340.5
1,570.6
24.3
6.1
840.7
175.6
328.4
774.6
824.8
176.0
307.1
696.8
769.1
140.8
267.0
676.5
778.6
182.2
305.4
695.2
9.3
24.7
23.0
14.5
8.0
-3.6
7.5
11.4
Europe
RoW
ARV
API
Comments
YoY growth on account of 24.3% growth in the US led by Natrol acquisation and
incremental product launches
Despite strong sales in the US, muted YoY growth in gross margins due to adverse
segment mix
Sequential increase in other expenses due to higher R&D and selling expenses
YoY expansion mainly due to lower employee cost and other expenditure
Change in estimates
(| Crore)
Revenue
EBITDA
EBITDA Margin (%)
Adj. PAT
EPS (|)
Old
15,639.3
3,546.7
22.7
2,202.2
37.7
FY17E
New % Change
15,543.9
-0.6
3,524.3
-0.6
22.7
-3 bps
2,200.6
-0.1
37.7
0.0
Old
17,912.8
4,169.5
23.3
2,627.4
45.1
FY18E
New % Change
17,652.7
-1.5
4,109.8
-1.4
23.3
-2 bps
2,627.8
0.0
45.1
0.1
Assumptions
(| crore)
US
Europe
ARV
RoW
API
FY15
4,831.7
3,194.7
963.9
568.3
2,706.2
FY16P
6,143.8
3,125.3
1,199.9
696.4
2,883.9
Current
FY17E
FY18E
7,422.1 8,906.5
3,239.6 3,498.8
1,293.6 1,423.0
777.2
893.8
3,028.1 3,179.5
Earlier
FY17E
FY18E
7,436.2 8,923.4
3,261.2 3,522.1
1,236.5 1,360.1
769.5
885.0
3,055.4 3,237.1
Page 2
Company Analysis
Aurobindo Pharma was set up by first generation entrepreneurs PV
Ramprasad Reddy and K Nithyananda Reddy in 1986. Based in
Hyderabad, the company is an integrated pharmaceutical company,
which started as an API manufacturer. In 2001, it moved up the value
chain by foraying into formulations while from 2007 onwards it started
scaling up the formulation business. APL's manufacturing facilities are
approved by several leading regulatory agencies like USFDA, UKMHRA,
WHO, Health Canada, MCC South Africa, ANVISA Brazil. The company
owns 19 manufacturing facilities in India and the US. Of these 19 facilities,
eight are for formulations, 10 for APIs while one is for intermediates. The
company owns three R&D centres. The current employee strength is
more than 8000, which includes more than 750 scientists.
In FY16P, the API: formulations ratio was at 22:78. US formulations
constitute 44% of revenues followed by APIs & RoW formulations (26%),
Europe (23%) and ARV formulations (9%).
The company faced a USFDA embargo in 2011 for two of its units for
non-compliance of cGMP. It also went through political turmoil due to
Telangana issue and alleged favours received by the promoters through
political connections.
Aurobindo acquired commercial operations in seven Western European
countries from Actavis. The company has acquired personnel,
commercial infrastructure, products, marketing authorisation and dossier
license rights in these seven countries. The acquisition brought in a
pipeline of approximately 1200 products from different segments and an
additional pipeline of over 200 products under its foray. Net sales for the
acquired businesses were ~320 million. GPMs were ~30%. They were
fetching losses of ~23 million at the EBITDA level.
Aurobindo has acquired the assets of nutritional supplement maker Natrol
Inc for a consideration of ~US$132.5 million. With this acquisition, the
company has forayed into the nutritional OTC business in the US and
other international markets.
Overall, we expect revenues to grow at a CAGR of 13% in FY16P-18E to
| 17653.1 crore on the back of Actavis consolidation and incremental US
launches.
Exhibit 1: Revenues to grow at CAGR of 13% in FY16P-18E
20000
13% CAGR
18000
16000
13831.2
25.8% CAGR
14000
(| crore)
17652.7
15543.9
12120.5
12000
10000
8099.9
8000
6000
4381.5
4627.4
FY11
FY12
5855.3
4000
2000
0
FY13
FY14
FY15
FY16P
FY17E
FY18E
Page 3
After filing an ANDA in the US in 2003, the company has come a long way
as the current ANDA filings are at 398. US revenue run rate has grown
from ~US$100 million in 2009 to ~US$805 million as on 2016. Note that
this was despite the USFDA embargo in FY12-13 on unit VI and unit III.
The much hyped Pfizer deal, which eventually fell apart, also had an
impact on US sales as the company had to invest in the front-end
network. In rupee term, US sales have grown at a CAGR of 38.9% to
| 6143.8 crore in FY11-16P. US formulations now constitute 44% of the
total turnover, up from 27% in FY11. The US traction has also boosted
investors confidence, which was affected by warning letters, pilling up
debts besides non-business political adversaries. We expect US sales to
grow at 20.4% CAGR on a higher base to | 8906.5 crore in FY16P-18E.
Exhibit 2: US growth on the back of robust pipeline, Natrol acquisition
10000
7422.1
8000
38.9% CAGR
(| crore)
7000
6143.8
6000
4831.7
5000
3446.8
4000
3000
2000
8906.5
20.4% CAGR
9000
1189.7
1183.6
FY11
FY12
1752.6
1000
0
FY13
FY14
FY15
FY16P
FY17E
FY18E
US
Page 4
4000
3194.7
3125.3
3239.6
FY15
FY16P
FY17E
3498.8
3000
(| crore)
41.1% CAGR
2000
1000
559.1
647.48
FY11
FY12
467.9
672.1
0
FY13
FY14
FY18E
Europe
1600
1400
12.3% CAGR
1199.9
1200
963.9
(| crore)
1000
800
1423.0
1293.6
673
766.7
750.3
FY12
FY13
840.2
600
400
200
0
FY11
FY14
FY15
FY16P
FY17E
FY18E
ARV
Exhibit 5: API business to see muted growth due to higher captive consumption
4000
5% CAGR
9.9% CAGR
(| crore)
3000
2000
2536.2
1802.1
2828.9
2706.2
FY14
FY15
2883.9
3028.1
3179.5
2067.6
1000
0
FY11
FY12
FY13
FY16P
FY17E
FY18E
Total API
Page 5
26.3
3500
21.9
3000
(| crore)
2000
1000
3524.3
21.2
2563.6
2500
1500
30
4109.8
15.2
13.2
959.8
3140.7
22.7
23.3
22.7
20
2132.9
15
10
889.2
610.1
25
(%)
4500
500
0
0
FY11
FY12
FY13
FY14
FY15
FY16P
FY17E
FY18E
17.1% CAGR
2500
2200.6
(| crore)
1915.6
27.7% CAGR
2000
1500
1000
2627.8
1575.8
1173.0
563.4
293.9
500
-123.5
0
-500
FY11
FY12
FY13
FY14
FY15
FY16P
FY17E
FY18E
PAT
35
31.7
30
25
(%)
20
15
23.8
21.5
16.3
18.0
23.4
28.1
25.0
24.6
24.3
26.4
22.9
17.6
10.9
10
7.9
5
0
FY11
FY12
FY13
FY14
RoCE (%)
FY15
FY16P
RoNW (%)
FY17E
FY18E
Page 6
Q1FY14
1715.6
891.3
52.0
824.3
48.0
188.9
11.0
327.7
19.1
1407.9
82.1
307.7
17.9
71.9
25.4
3.9
172.4
41.9
24.5
58.3
17.5
-1.1
18.6
0.3
Q2FY14
1914.0
919.2
48.0
994.8
52.0
196.0
10.2
360.3
18.8
1475.5
77.1
438.5
22.9
76.6
24.6
5.1
68.3
274.1
40.1
14.6
234.0
-1.1
235.1
4.0
Q3FY14
2140.6
897.7
41.9
1242.8
58.1
213.4
10.0
385.6
18.0
1496.8
69.9
643.8
30.1
76.0
23.7
3.6
-2.1
549.7
133.6
24.3
416.1
-1.4
417.5
7.1
Q4FY14
2329.8
897.8
38.5
1432.0
61.5
233.6
10.0
455.4
19.5
1586.9
68.1
743.0
31.9
88.0
34.2
10.7
-35.6
666.9
165.3
24.8
501.6
-0.2
501.8
8.6
Q1FY15
2911.1
1380.6
47.4
1530.4
52.6
308.4
10.6
563.9
19.4
2252.9
77.4
658.2
22.6
90.8
18.9
10.8
-1.4
560.7
146.4
26.1
414.3
-1.2
415.4
7.1
Q2FY15
2881.2
1264.7
43.9
1616.5
56.1
337.0
11.7
642.4
22.3
2244.0
77.9
637.2
22.1
89.9
21.0
27.3
42.0
511.7
140.4
27.4
371.2
-1.0
372.2
6.4
Q3FY15
3166.2
1538.5
48.6
1627.6
51.4
368.0
11.6
647.4
20.4
2554.0
80.7
612.2
19.3
67.3
21.9
35.9
20.2
538.7
156.3
29.0
382.4
-2.0
384.4
6.6
Q4FY15
3162.1
1373.6
43.4
1788.5
56.6
373.3
11.8
759.1
24.0
2506.0
79.3
656.1
20.7
84.7
22.6
6.7
-1.2
556.8
153.4
27.6
403.4
-0.5
403.8
6.9
Q1FY16
3255.5
1507.8
46.3
1747.6
53.7
365.1
11.2
722.8
22.2
2595.7
79.7
659.8
20.3
89.1
20.9
29.1
25.6
553.3
186.5
33.7
366.8
0.8
366.1
6.3
Q2FY16
3333.5
1469.0
44.1
1864.4
55.9
375.9
11.3
712.9
21.4
2557.9
76.7
775.6
23.3
92.8
24.1
11.7
57.9
612.5
162.2
26.5
450.3
-1.5
451.8
7.7
Q3FY16
3495.5
1553.6
44.4
1942.0
55.6
401.0
11.5
717.9
20.5
2672.5
76.5
823.0
23.5
99.5
22.7
6.9
-12.9
720.6
186.0
25.8
534.7
-0.3
535.0
9.2
SWOT Analysis
Page 7
The company received EIR for Unit III (January 2016 inspection),
Unit VII, Auronext, Unit XI (API facility) and Unit VIII (API facility).
Unit XII (July 2015 inspection) is pending EIR. Unit IV (September
2014 inspection) is expected to be inspected within the next 12
months
Aurobindos cumulative filings were at 398 ANDAs including 215
final approvals, 36 tentative approvals and 147 pending approvals.
Tentative approvals include 21 ANDAs approved under PEPFAR,
not for commercialisation in the US market
In FY16, it received nine tentative approvals and 49 final USFDA
approvals including 20 injectable approvals. The company has
filed 78 ANDAs with USFDA under injectables segment (including
ophthalmic) of which 29 have received approvals. In Q4FY16, the
company received USFDA approvals for 23 ANDAs
The company plans to start filing oncology and hormonal
products in the US in the next four quarters while injectable filings
are expected to be same as FY16
The company launched 28 products in the US during FY16. It
expects 30-40 launches in FY17
Auromedics garnered sales of US$36.3 million registering growth
of 98% YoY on account of new product launches
The company expects Nexium launch in H2FY17 though traction
from the product is expected to be low
The company is planning expansion of its injectable capacity and
de-bottlenecking of capacity at unit VII
For the Natrol business, the company guided for 15% YoY
revenue growth with margin expansion. Natrols current margins
are higher than the companys consolidated margins. Natrol
recorded revenue growth of ~15% in FY16 to US$110 million
The company is now net profit positive in Europe. It has guided
for high single digit EBITDA margins for Europe
The R&D cost for Q4FY16 was 4.3% of turnover at | 160 crore
while for FY16 it was 3.4% of turnover at | 477 crore. The
company guided 4-4.5% of R&D spending in FY17E
Net debt was US$584 million in FY16 with cash of ~US$127
million
Capex for FY16 was US$212 million (US$18 million intangible and
US$194 million tangible). The company has guided for | 1200
crore of capex in FY17E and | 500 crore in FY18E. On account of
low capex deployment in FY18, it plans to utilise funds for debt
reduction
Therapies
Oral non-betalactam products
Oral non-betalactam products
Oral non-betalactam products
General Injectables and Ophthalmic
Semisynthetic penicillin
Cephalosporin
Penem injectable products
Filings
124
148
26
67
19
11
3
398
Approvals
112
69
10
30
19
11
251
Pending
12
79
16
37
0
0
3
147
Page 8
Segment
Formulations
Approvals
USFDA
Type
Oral Dosages
Location
USA
Unit-I
India
Unit-II
India
Unit-III
Formulations
USFDA
Oral dosage
India
Unit-IV
Formulations
USFDA
India
Unit-VI
Formulations
USFDA
Cephalosporins Orals
India
Unit-VII (SEZ)
Formulations
USFDA
Oral dosage
India
Unit-V
India
Unit-VIII
India
Unit-IX
India
Unit-X *
Unit-XI
Unit-XII
India
India
Formulations
USFDA
India
India
Unit-XVI *
India
Unit-XVII *
India
APLRC-I @
India
APLRC-II @
India
Penem Injecables
India
Unit-XIV *
Unit-XV
Bhiwadi Unit
India
Formulations
USFDA
Page 9
Valuation
FY16 numbers have been largely driven by strong US sales on the back of
extensive product launches even as the base business declined
marginally (3%). The company continues to thrive in the US, backed by a
robust product pipeline and niche launches. Despite a sharp increase in
approvals in FY16 (49 final approvals and nine tentative approvals), the
filing to final approval gap (147 at present) still bodes well for future US
growth. We expect initial margin pressure on account of Actavis and now
Natrol, to ease further on the back of incremental high margin US
launches. With the USFDA expected to hasten the approval process (90%
of approvals by September 2017) companies like Aurobindo will stand to
benefit the most. We maintain our target price of | 990, based on 22x
FY18E EPS of | 45.1.
Exhibit 12: One year forward PE
1000
800
600
400
200
Price
16.6x
13.6x
7.7x
Feb-16
Jul-15
Dec-14
May-14
Oct-13
Mar-13
Aug-12
Jan-12
Jun-11
Nov-10
Apr-10
Sep-09
Feb-09
Jul-08
Dec-07
May-07
Oct-06
Mar-06
4.7x
30
25
20
15
10
5
Aurobindo
Feb-16
Jul-15
Dec-14
May-14
Oct-13
Mar-13
Aug-12
Jan-12
Jun-11
Nov-10
Apr-10
Sep-09
Feb-09
Jul-08
Dec-07
May-07
Oct-06
Mar-06
CNX Pharma
FY15
FY16P
FY17E
FY18E
Revenues
(| crore)
12121
13831
15544
17653
Growth
(%)
50
14
12
14
Adj. EPS
(|)
27.1
32.8
37.7
45.1
Growth
(%)
19
21
11
19
P/E EV/EBITDA
(x)
(X)
28.4
30.7
23.5
24.8
20.4
22.0
17.1
18.5
RoNW
(%)
31.7
28.1
24.3
22.9
Page 10
RoCE
(%)
23.4
25.0
24.6
26.4
Company snapshot
1,200
Target Price: | 990
1,000
800
600
400
200
May-17
Jan-17
Sep-16
May-16
Jan-16
Sep-15
May-15
Jan-15
Sep-14
May-14
Jan-14
Sep-13
May-13
Jan-13
Sep-12
May-12
Jan-12
Sep-11
May-11
Jan-11
May-10
Sep-10
Key events
Date
Mar-10
Event
Starts contract manufacturing business Aurolife
Sep-10
Signs an agreement with AstraZeneca to supply generic drugs for emerging markets
Jan-11
Feb-11
May-11
May-11
Receives warning letter for Unit VI & concerns on packing division of Unit III
Apr-12
May-12
Ramprasad Reddy & Nithyananda Reddy step down from CEO and MD posts. Govindarajan appointed Managing Director
Mar-13
Jan-14
Nov-14
Highest bidder for US nutritional supplement market Natrol with a bid of US$ 132.5 million
Dec-14
Acquires manufacturing assets, personnel, commercial infrastructure including the well established nutraceuticals brands in USA of Natrol along with an agreement to
take on certain liabilities, with a bid of $ 132.5 million
Gets approval for setting up JV with Tergene Biotech Pvt Ltd for development of Pneumococcal Conjugate Vaccine with a global market of more than US$5 billion. The
company holds majority stake in the JV
The USFDA inspected Unit III and Unit VII facilities of the company. There was no 483 issued to Unit III. There were certain observations with regard to Unit VII.
Feb-15
Feb-16
Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10
Investor Name
Rani (Suneela P)
Reddy (Nityananda K)
HDFC Asset Management Co., Ltd.
Kambam (Kirthi Reddy)
Reddy (Ramaprasad P V)
Sivakumaran (M)
Trident Chemphar, Ltd.
Invest AD
Kambam (Spoorthi)
APG Asset Management
Shareholding Pattern
Latest Filing Date % O/S Position (%) Position Chan
31-Mar-16 35.0
205.04m
0.00m
31-Mar-16
4.7
27.52m
0.00m
31-Mar-16
4.0
23.18m
1.40m
31-Mar-16
3.5
20.70m
0.00m
31-Mar-16
3.1
18.00m
0.00m
31-Mar-16
2.5
14.69m
0.00m
31-Mar-16
2.1
12.15m
0.00m
31-Mar-16
1.6
9.26m
1.44m
31-Mar-16
1.3
7.60m
0.00m
31-Mar-16
1.3
7.45m
(1.64)m
(in %)
Promoter
FII
DII
Others
Recent Activity
Buys
Investor name
Invest AD
HDFC Asset Management Co., Ltd.
Norges Bank Investment Management (NBIM)
Govindarajan (N)
BlackRock Institutional Trust Company, N.A.
Value ($)
16.2m
15.8m
14.5m
6.1m
5.5m
Shares
1.4m
1.4m
1.1m
0.5m
0.5m
Sells
Investor name
APG Asset Management
Principal Global Investors (Equity)
IDFC Asset Management Company Private Limited
PGGM Vermogensbeheer B.V.
UTI Asset Management Co. Ltd.
Value ($)
-18.4m
-6.3m
-6.2m
-5.1m
-2.8m
Shares
-1.6m
-0.6m
-0.6m
-0.4m
-0.3m
Page 11
Financial summary
Profit and loss statement
(Year-end March)
Revenues
Growth (%)
Raw Material Expenses
Employee Expenses
Other Manufacturing Expenses
Total Operating Expenditure
EBITDA
Growth (%)
Interest
Depreciation
Other Income
PBT before Exceptional Items
Less: Forex & Exceptional Items
PBT
Total Tax
PAT before MI
Minority Interest
PAT
Adjusted PAT
Growth (%)
EPS (Diluted)
| Crore
FY15
12,120.5
49.6
5,557.5
1,386.7
2,612.8
9,556.9
2,563.6
20.2
84.3
332.6
80.8
2,227.5
59.6
2,167.9
596.6
1,571.3
-4.5
1,575.8
1,635.4
18.8
27.1
FY16P
13,831.2
14.1
6,157.5
1,550.8
2,982.1
10,690.5
3,140.7
22.5
92.7
392.6
68.2
2,723.6
66.0
2,657.6
744.4
1,913.2
-2.4
1,915.6
1,981.6
21.2
32.8
FY17E
15,543.9
12.4
6,967.8
1,865.3
3,186.5
12,019.6
3,524.3
12.2
66.2
484.0
78.9
3,053.0
0.0
3,053.0
855.1
2,197.9
-2.8
2,200.6
2,200.6
11.1
37.7
FY18E
17,652.7
13.6
7,805.8
2,118.3
3,618.8
13,542.9
4,109.8
16.6
43.7
510.0
89.6
3,645.7
0.0
3,645.7
1,021.1
2,624.5
-3.3
2,627.8
2,627.8
19.4
45.1
| Crore
(Year-end March)
Profit/(Loss) after taxation
Add: Depreciation & Amortization
Net Increase in Current Assets
Net Increase in Current Liabilities
CF from operating activities
FY15
1,575.8
332.6
-2,357.5
1,316.5
867.4
FY16E
1,915.6
392.6
-1,357.0
1,409.3
2,360.5
FY17E
2,200.6
484.0
-400.3
-710.8
1,573.6
FY18E
2,627.8
510.0
-1,215.5
376.7
2,299.0
-1,373.1
0.0
337.7
-1,035.4
-1,530.9
19.6
114.9
-1,396.4
-1,200.0
-200.0
2.8
-1,397.2
-500.0
-200.0
3.3
-696.7
0.1
681.9
-136.3
-87.3
458.4
0.0
-584.1
-165.4
0.0
-598.9
0.0
-557.8
-190.0
0.0
-747.8
0.0
-1,122.0
-217.7
0.0
-1,339.7
290.4
178.7
469.1
-505.6
365.3
469.1
834.3
829.6
-571.4
834.3
262.9
373.6
262.5
262.9
525.5
1,799.0
FY15
FY16E
FY17E
FY18E
2.3
88.6
2.3
8.1
2.8
120.8
2.8
14.3
3.3
155.3
3.3
4.5
3.7
197.1
3.7
9.0
54.1
21.2
13.5
108.8
106.6
61.8
1.2
33.8
55.5
22.7
14.3
107.9
110.1
66.7
1.2
75.2
55.2
22.7
14.2
100.0
100.0
60.0
1.2
44.6
55.8
23.3
14.9
100.0
100.0
60.0
1.3
55.9
31.7
23.4
24.9
28.1
25.0
29.4
24.3
24.6
27.4
22.9
26.4
30.5
28.4
30.7
6.5
6.2
8.7
23.5
24.8
5.6
5.4
6.4
20.4
22.0
5.0
4.8
5.0
17.1
18.5
4.3
4.2
3.9
0.9
1.7
2.6
0.5
1.2
2.1
0.4
0.9
2.6
0.2
0.5
2.6
Balance sheet
| Crore
(Year-end March)
Equity Capital
Reserve and Surplus
Total Shareholders funds
Total Debt
Deferred Tax Liability
Minority Interest
Long term Provisions
Source of Funds
FY15
29.2
5,126.7
5,155.9
4,451.1
210.5
25.8
24.4
9,867.7
FY16E
58.5
6,998.2
7,056.7
3,867.0
236.5
59.6
23.5
11,243.3
FY17E
58.5
9,008.9
9,067.4
3,309.2
236.5
62.3
23.5
12,698.9
FY18E
58.5
11,419.0
11,477.5
2,187.2
236.5
65.6
23.5
13,990.3
4,401.9
1,536.9
2,865.0
407.2
3,272.2
853.1
19.8
3,611.3
469.1
3,539.2
659.6
8,279.2
2,051.1
995.7
3,046.8
5,232.4
485.5
4.8
9,867.7
5,251.9
1,861.8
3,390.0
949.4
4,339.5
924.1
0.2
4,088.1
834.4
4,171.9
907.0
10,001.5
2,526.8
1,929.4
4,456.1
5,545.3
434.1
0.1
11,243.3
6,301.9
2,271.5
4,030.4
1,049.4
5,079.9
899.7
200.1
4,258.6
262.9
4,258.6
1,050.1
9,830.2
2,555.2
1,190.2
3,745.3
6,084.9
434.1
0.1
12,698.9
6,651.9
2,703.8
3,948.1
1,149.4
5,097.5
872.1
400.1
4,836.3
525.5
4,836.3
1,110.1
11,308.3
2,901.8
1,220.2
4,122.0
7,186.3
434.1
0.1
13,990.3
Key ratios
(Year-end March)
Per share data (|)
Adjusted EPS (Diluted)
BV per share
Dividend per share
Cash Per Share
Operating Ratios (%)
Gross Profit Margins
EBITDA margins
Net Profit margins
Inventory days
Debtor days
Creditor days
Asset Turnover
EBITDA Conversion Rate
Return Ratios (%)
RoE
RoCE
RoIC
Valuation Ratios (x)
P/E
EV / EBITDA
EV / Net Sales
Market Cap / Sales
Price to Book Value
Solvency Ratios
Debt / Equity
Debt / EBITDA
Current Ratio
Page 12
I-Direct
Code
CMP
(|)
TP
(|)
Ajanta Pharma
AJAPHA
1529 1,780
Apollo Hospitals
Aurobindo Pharma
AURPHA
764
990
Alembic Pharma
ALEMPHA 543
EPS (|)
FY15 FY16E FY17E FY15
PE(x)
EV/EBITDA (x)
RoCE (%)
RoE (%)
FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E
Rating
M Cap
(| Cr)
Buy
13456.4
36.0
45.7
52.4
42.4
33.5
29.2
26.8
23.3
19.9
50.3
43.7
37.9
37.8
34.4
18724.9
23.7
22.2
35.0
56.7
60.6
38.5
27.5
26.7
19.3
9.9
8.2
10.9
10.4
8.9
12.6
44704.0
28.1
33.9
37.7
27.2
22.5
20.3
30.7
24.8
22.0
23.4
25.0
24.6
31.7
28.1
24.3
Buy
30.0
620
Hold
10243.1
15.1
38.2
19.6
36.0
14.2
27.7
32.2
12.6
23.9
30.7
58.0
24.8
32.1
51.5
22.3
Biocon
BIOCON
699.4 560
Hold
13987.0
20.4
22.1
28.3
34.2
31.7
24.7
8.3
7.6
6.4
10.4
9.1
10.9
12.5
10.9
12.7
Cadila Healthcare
Cipla
Buy
Hold
33512.2
38055.7
11.2
14.7
15.0
18.8
15.5
19.9
29.2
32.2
21.9
25.3
21.1
23.8
20.3
17.8
14.5
16.7
14.4
14.8
20.7
13.8
27.9
12.1
24.6
13.1
27.0
10.9
28.6
12.7
24.4
12.1
Divi's Laboratories
DIVLAB
1083 1,320
Buy
28762.2
32.1
40.2
46.7
33.8
27.0
23.2
22.3
18.7
15.9
29.4
31.3
31.1
24.4
25.6
25.1
Dr Reddy's Labs
DRREDD
2974 3,480
Buy
53103.3
23.0
20.9
21.4
14.4
12.6
12.3
16.7
15.1
15.1
22.3
18.9
16.1
Glenmark Pharma
GLEPHA
858 1,000
Buy
24678.3
23.1
37.1
26.7
20.7
22.2
16.8
13.8
13.3
16.2
18.8
21.7
21.2
21.7
Indoco Remedies
Buy
2674.2
9.0
9.3
15.1
32.3
31.2
19.2
16.7
16.2
11.7
16.4
13.2
19.7
16.0
14.7
20.9
Ipca Laboratories
IPCLAB
Hold
5501.7
19.9
10.0
24.0
21.9
43.5
18.2
12.1
18.0
11.2
11.5
5.8
12.3
11.4
5.5
11.9
436
470
1481 1,850
32.2
41.4
Buy
5525.3
-0.6
26.0
41.6
NA
13.3
8.3
14.3
7.5
6.1
5.8
12.0
15.1
NA
14.2
18.9
Buy
66734.7
53.6
50.4
66.0
27.6
29.4
22.4
18.3
19.8
13.8
35.1
18.6
22.5
27.1
20.7
22.1
Natco Pharma
Buy
8068.6
8.3
8.9
10.9
55.7
52.0
42.3
39.2
30.0
26.9
15.4
16.1
16.4
17.9
12.0
13.0
Sun Pharma
SUNPHA
770
785
Hold
184677.6
19.8
23.4
25.9
38.9
32.8
29.7
23.1
20.6
17.8
18.8
18.6
19.3
18.6
18.0
17.1
Syngene International
SYNINT
399
445
Buy
7971.0
8.8
11.1
15.6
43.3
34.2
24.3
26.6
20.9
17.0
19.5
13.3
16.7
20.7
21.2
23.5
Torrent Pharma
TORPHA
1381 1,650
Buy
23363.4
44.4
115.5
67.8
31.1
12.0
20.4
23.7
8.0
13.5
20.1
51.1
27.0
30.2
57.7
27.0
Unichem Laboratories
UNILAB
263
Buy
2389.6
8.3
12.3
15.5
31.7
21.4
16.9
23.3
14.7
11.7
8.5
13.8
16.2
8.7
11.7
13.4
310
Page 13
RATING RATIONALE
Pankaj Pandey
Head Research
Page 14
ANALYST CERTIFICATION
We /I, Siddhant Khandekar, CA INTER and Mitesh Shah, MS (finance), Nandan Kamat MBA 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.
Page 15