PIRAMAL ENTERPRISES LTD

SAPM ASSIGNMENT
FUNDAMENTAL AND TECHNICAL ANALYSIS

VARGHESE JOSE
B2361
OBJECTIVE:
1. First part of the assignment
 Fundamental analysis of the respective company
 Economy, Industry and Company analysis should be done
 Analyze the variables (Economic) based on the applicability of the variable
to your company

2. Second Part of the assignment

 Technical analysis of the company
 Take 1 or 2 years share prices and apply technical analysis tools (charts,
mathematical indicators)
FUNDAMENTAL ANALYSIS
[ECONOMY, INDUSTRY, COMPANY ANALYSIS]
ABOUT THE COMPANY:
Piramal Enterprises Limited is the flagship company of the Piramal Group. Piramal Enterprises
Limited (PEL) is one of India's large diversified companies with presence in Pharma, Financial
Services and Healthcare Information Management. The company generates ~46% of its revenues
from international markets. Driven by both organic as well as inorganic strategy, PEL has steered
dynamic business growth over the three decades of its existence.

Anticipating the potential of financial services in India, PEL built a platform with
innovative financial solutions that cater to the needs of varied industry verticals. It made its foray
into the financial services sector with Piramal Capital & Housing Finance Limited (PCHFL), a
housing finance company registered with the National Housing Bank (NHB) that is engaged in
various financial services businesses. It provides end-to-end financing solutions in both
wholesale and retail funding opportunities across sectors such as real estate and infrastructure,
renewable energy, hospitality, logistics, industrials, auto components etc. Through its group
companies, the platform has strategic partnerships with leading global pension funds such as
Canadian Pension Plan Investment Board (CPPIB), APG and Ivanhoe Cambridge.

India Resurgence Fund (IndiaRF), an equal joint venture by Piramal Enterprises Limited
and Bain Capital Credit, invests capital in the form of both debt and equity in India's distressed
asset space. When the Indian pharmaceutical industry was focused on international generics,
PEL saw an opportunity to expand its pharma business and invested in the domestic formulation
business. Today, its Pharma division, has end-to-end manufacturing capabilities across 13 global
facilities and a large global distribution network in over 100 countries. PEL has a portfolio of
niche differentiated pharma products and provides an entire pool of pharma services (including
the areas of injectables, Highly Potent Active Pharmaceutical Ingredients (HPAPI) etc.). When
the world was talking about critical healthcare, PEL realized the power of data and information
and invested in healthcare analytics.

PEL's Healthcare Insights & Analytics business division is the premier provider of
healthcare analytics, data & insight products and services to the world's leading pharma, biotech
and medical technology companies and enables them to take informed business decisions. PEL's
corporate ethos, a reflection of its core values – Knowledge, Action, Care and Impact, has
enabled the company to develop and consolidate a coveted international business network of
strong partnerships with global market leaders, committed to creating long-term value to all
stakeholders.
 PIRAMAL ENTERPRISES FUNDAMENTAL REPORT
SHARE PRICE
Get to know the company overview of PEL - face value, book value, exchange symbol, 1 year &
lifetime highs/lows, average volume, market cap, PE ratio, 1 month return, % promoter holding
pledged before investing in PEL
Current Price (Rs.) 1748.40
Face Value (Rs.) 2
Book Value (Rs.) 1370.83
52 Week High (Rs.) 3307.95 (31-
Aug-18)

52 Week Low (Rs.) 1705.50 (20-

Jun-19)

Life Time high (Rs.) 3307.95 (31-

Aug-18)

Life Time low (Rs.) 132.36 (27-

Sep-96)

Exchange Symbol PEL (NSE)

Average Daily Movement [ADM] 93.42

Average Volume [20 days](No. of shares) 1293842

Market Cap (Rs. in Cr) 34774.60

(Cr)
1 Month Return (%) -12.22
P/E Ratio (x) 17.44
% of Promoter holding pledged 0.00

SHARE PRICE CHART

PIRAMAL ENTERPRISES, NSE, INDIA – 1 year

QUARTERLY RESULTS
19-Jun 19-Mar 18-Dec 18-Sep 18-Jun 18-Mar 19-Mar
Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Annual

Net Sales/Income 3,506.25 3,679.67 3,489.08 3,144.10 2,902.49 2,991.06 13,138.67

from operations
Other Operating -- -- -- -- -- -- 76.67
Income
Total Income 3,506.25 3,679.67 3,489.08 3,144.10 2,902.49 2,991.06 13215.34
From
Operations
Increase/Decrease -80.56 122.31 0.24 -112.01 -5.45 105.28 5.09
in Stocks
Consumption of 270.22 358.7 262.75 312.36 282.95 334.84 1,216.76
Raw Materials
Purchase of 139.35 30.43 86.32 136.64 53.97 74.15 307.36
Traded Goods
Employees Cost 585.85 564.52 595.57 554.81 535.45 558.69 2,250.35
Depreciation 158.21 135.43 132.57 123.36 128.79 115.1 520.15
Other Expenses 485.57 662.07 516.92 599.26 508.9 537.31 2,341.18
Total 1,558.64 1,873.46 1,594.37 1,614.42 1,504.61 1,725.37 6,640.89
Expenditure
Operating Profit 1,947.61 1,806.21 1,894.71 1,529.68 1,397.88 1,265.69 6,574.45

Other Income 66.9 85.23 102.8 56.31 14.43 36.51 312.8

P/L Before Int., 2,014.51 1,891.44 1,997.51 1,585.99 1,412.31 1,302.20 6,887.25
Excpt. Items &
Tax
 Interest 1,408.49 1,315.65 1,168.83 1,016.18 909.08 830.64 4,409.74
P/L Before 606.02 575.79 828.68 569.81 503.23 471.56 2,477.51
Exceptional Items
& Tax
Exceptional Item -11.32 -13.39 -- -- -452.25 -- -465.64
P/L Before Tax 594.7 562.4 828.68 569.81 50.98 471.56 2,011.87
Tax 217.56 224.29 293.04 162.78 181.02 -3,380.01 861.13
P/L After Tax 377.14 338.11 535.64 407.03 -130.04 3,851.57 1,150.74
from Ordinary
Activities
PAT 377.14 338.11 535.64 407.03 -130.04 3,851.57 1,150.74
Minority Interest 0.86 0.62 0.71 0.77 0.87 -0.03 2.97
Share Of P/L Of 72.89 118.13 67.63 73.39 60.23 92.41 319.38
Associates
Net Profit/(Loss) 450.89 456.86 603.98 481.19 -68.94 3,943.95 1,473.09
For the Period
Equity Share 39.77 36.89 36.68 36.2 36.12 36.05 36.89
Capital
Reserves -- -- -- -- -- -- 27,216.14
EPS (Rs.) [After 22.69 23 30.41 24.23 -3.47 203.65 74.16
Extraordinary
items]
EPS (Rs.) 22.69 23 30.41 24.23 -3.47 203.65 73.86
[Before
Extraordinary
items]

RATIO ANALYSIS
Among all the ratios these are the most important ratios to look before investing in a company.
Get the latest key Financial Ratios and the Ratio Analysis of to gauge the overall financial health
of a company before investing.

Name Ratio Description

3.06 A liquidity ratio that measures a companys ability to pay short-term
Current Ratio
obligations. The higher the current ratio, the more capable the
(x)
company is of paying its obligations.
2.75 The quick ratio measures a company's ability to meet its short-term
Quick Ratio (x) obligations with its most liquid assets. For this reason, the ratio
excludes inventories from current assets
1.6 A financial ratio that shows how much a company pays out in
Dividend Yield
dividends each year relative to its share price. Dividend yield is
(%)
calculated as annual dividends per share divided by market price per
 share.
Interest 1.68 It is used to determine how easily a company can pay interest on
Coverage Ratio outstanding debt. It is calculated by dividing a companys EBIT by the
(x) interest expenses.
1.56 A measure of a companys financial leverage calculated by dividing its
Debt Equity
total liabilities by stockholders equity. The debt/equity ratio also
Ratio (x)
depends on the industry in which the company operates.
3.85 An indicator of how efficient management is at using its assets to
Return On
generate earnings. Calculated by dividing a companys annual earnings
Asset (%)
by its total assets
5.4 Also called Return on net worth, it measures a company’s profitability
by revealing how much profit a company generates with the money
Return On shareholders have invested, it is calculated by dividing the net profit
Equity (%) after tax by shareholder's fund For high growth companies you should
expect a higher ROE.

DIVIDEND
Get a glimpse into the dividend history-payout amount of PEL, interim dividend and the latest
dividend announcements by PEL in the last 5 years.

Announcement Ex-
# Date Date Amount Interim/Final
1 26-Apr-19 18- 28 Final
Jul-19
2 28-May-18 19- 25 Final
Jul-18
3 12-May-17 21- 21 Final
Jul-17
4 7-May-15 28- 20 Final
Jul-15
5 5-May-14 15- 52.5 Final
Jul-14
6 3-May-13 15- 17.5 Final
Jul-13
7 3-May-12 9-Jul- 17.5 Final
12
8 6-May-11 28- 12 Final
Jul-11
9 10-May-10 29- 5.4 Final
Jun-
10
PROMOTER SHAREHOLDING
Look up all relevant information on shareholding pattern of PEL, the change in shareholding as
compared to last quarter, Promoters shareholding%, persons holding more than 1% shares of the
company.

Shareholding 19- 19- 19- 18- 18-

Pattern Jun Apr Mar Dec Sep
Promoter and 46.09 46.15 49.7 49.99 50.66
Promoter
Group (%)

Indian 46.09 46.15 49.7 49.99 50.66

Foreign NIL NIL NIL NIL NIL
Institutions 37.61 37.96 33.13 31.76 30.93
(%)
FII 28.53 30.71 26.86 26.72 26.05
DII 9.09 7.25 6.26 5.04 4.88
NonInstitutions 16.29 15.89 17.17 18.25 18.41
(%)
Bodies NIL NIL NIL NIL NIL
Corporate
Others 15.55 15.14 16.36 17.43 17.55
Custodians 0.74 0.75 0.81 0.83 0.86
Total no. of 19.89 19.87 18.44 18.34 18.1
shares (cr.)

PUBLIC SHAREHOLDING
Study of the shareholding pattern of a company is a very important part of fundamental analysis.
The shareholding pattern is a determinant of the market capitalization of the stock and is an
indicator of whether the stock valuation is justified or not. Know the Public shareholding % for
the last quarter as announced by the company.
Persons holding securities more Category 16-Dec 16-Jun 16- 15-Dec 17-
than 1% of total number of shares Mar Mar
under category Public
Shareholding.
The Sri Krishna Trust through its Promoters NIL NIL NIL NIL 43.73
Trustee Mr. Ajay G Piramal
PRL Realtors LLP Promoters NIL NIL NIL NIL 4.98
Morgan Stanley Asia (Singapore) Pte. NonPromoters 3.9 NIL 3.96 NIL 3.84

East Bridge Capital Master Fund NonPromoters 3.48 3.06 NIL NIL 3.48
Limited
Life Insurance Corporation of India NonPromoters 2.58 NIL NIL NIL 2.58
Foreign Companies NonPromoters 2.5 NIL NIL NIL 2.5
Aberdeen Global Indian Equity NonPromoters 2.63 NIL NIL NIL 2.43
Limited
Indiahold Ltd. NonPromoters NIL NIL NIL NIL 2.42
Piramal Welfare Trust (Formerly Promoters 1.79 NIL NIL NIL 1.78
known as The Piramal Enterprise
Executives Trust)
Bodies Corporate NonPromoters 1.42 NIL 1.63 NIL 1.32
The Sri Krishna Trust through its Promoters 48.71 48.62 48.62 NIL NIL
Trustee Mr. Ajay G Piramal and Dr.
(Mrs.) Swati A Piramal
Indiahold Ltd NonPromoters 2.42 NIL NIL 2.42 NIL
Life Insurance Corporation Of India NonPromoters NIL NIL 2.34 NIL NIL
Piramal Management Services Pvt. Promoters NIL NIL NIL 48.62 NIL
Ltd as Corporate Trustee of The Sri
Krishna Trust
Foreign Institutional Investors NonPromoters NIL NIL NIL 21.77 NIL
Aberdeen Global Indian Equity Ltd NonPromoters NIL NIL NIL 4.85 NIL
(Foreign Institutional Investors)
Morgan Stanley Asia (Singapore) NonPromoters NIL NIL NIL 3.96 NIL
Pte.(Foreign Institutional Investors)
Piramal Corporate Services Limited Promoters NIL NIL NIL 2.01 NIL
Trustee of The Piramal Enterprise
Executives Trust
Ajay G Piramal Trustee Piramal Promoters NIL NIL NIL 1.21 NIL
Enterprises Limited Senior Employees
Welfare Trust (Formerly known as
COMPANY PROFILE
Study PEL management, company profile, ownership, management, Board of Directors and
Organization Structure of PEL.

COMPANY PROFILE OF PIRAMAL ENTERPRISES, NSE, INDIA

Date of Incorporation 26-Apr-1947
Date of Listing 03-Nov-1994
Management
Name Designation
Ajay Piramal Chairman
Nandini Piramal Executive Director
Vijay Shah Executive Director
Raghunath Mashelkar Independent Director
Siddharth (Bobby) Mehta Independent Director
S Ramadorai Independent Director
Narayanan Vaghul Independent Director
Keki Dadiseth Independent Director
Gautam Banerjee Independent Director
Deepak M Satwalekar Independent Director
Goverdhan Mehta Independent Director
Anand Piramal Non Executive Director
Swati Piramal Vice Chairperson
Registered Office Address
Piramal Ananta,Agastya Corporate Park,Opposite Fire Brigade,Kamani Junction, Kurla (West),, 400070, Mumbai, Maharashtra, India,
Website
http://www.piramal.com

PEERS PRICE COMPARISION

Last Prv
# Company Name Open High Low Price Price
1 PIRAMAL 2746 2774.9 2725.25 2761.5 2761.5
ENTERPRISES
2 MARKSANS 45.5 46.2 44.75 45.25 45.25
PHARMA
3 SHILPA 659.5 663.9 645.25 656.85 656.85
MEDICARE
4 PROCTER 1015.5 1072 1015.5 1064.3 1064.3
GAMBLE
 HEALTH

5 OPTO CIRCUITS 6.95 7 6.9 6.95 6.95

6 ALEMBIC 500 501.7 497 500.3 500.3
PHARMA
7 SYNGENE 495.1 503.65 491 493.95 493.95
8 IPCA 500 503.45 493 495.55 495.55
9 KOPRAN 71.3 72 70.5 70.9 70.9
10 RPG LIFE 387.55 405 387.55 396.8 396.8
11 CAPLIN POINT 700.4 707.5 690.2 697.9 697.9
12 NECTAR 27.65 27.65 26.95 27.2 27.2
LIFESCIENCES
13 SPARC 370.4 374.8 365.5 367.85 367.85
14 FDC 183.1 188.1 183.1 186.75 186.75
15 PFIZER 1728.8 1730.05 1711 1717.15 1717.15
16 BROOKS LAB 107 112.5 107 108.8 108.8
17 VIMTA LABS 128.4 130.4 128.4 129 129
18 JB CHEMICALS 280.25 283.15 275 275.9 275.9
19 MOREPEN LAB 16.75 17 16.5 16.6 16.6
20 SANOFI INDIA 4208.95 4230 4200 4213.3 4213.3
21 DISHMAN 288.2 304.2 278 301.2 301.2
22 NATCO PHARMA 995.95 995.95 983 986.7 986.7
23 ALKEM 1841 1843 1821 1825 1825
LABORATORIES
24 SUVEN 222.05 230.4 218.1 221.15 221.15
25 GLAXO PHARMA 2464 2474 2436.3 2451.8 2451.8
26 BLISS GVS 175 178.9 168.6 176.85 176.85
27 VENUS 104.05 104.15 103 103.5 103.5
REMEDIES
28 JUBILANT 657.6 662.85 641.6 643.7 643.7

ECONOMIC ANALYSIS
Introduction

India has emerged as the fastest growing major economy in the world and is expected to be one
of the top three economic powers of the world over the next 10-15 years, backed by its strong
democracy and partnerships.
Market size

India’s GDP is estimated to have increased 7.2 per cent in 2017-18 and 7 per cent in 2018-19.
India has retained its position as the third largest start-up base in the world with over 4,750
technology start-ups.

India's labour force is expected to touch 160-170 million by 2020, based on rate of population
growth, increased labour force participation, and higher education enrolment, among other
factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute.

India's foreign exchange reserves were US$ 405.64 billion in the week up to March 15, 2019,
according to data from the RBI.

Recent Developments

With the improvement in the economic scenario, there have been various investments in various
sectors of the economy. The M&A activity in India reached record US$ 129.4 billion in 2018
while private equity (PE) and venture capital (VC) investments reached US$ 20.5 billion. Some
of the important recent developments in Indian economy are as follows:

 During 2018-19 (up to February 2019), merchandise exports from India have increased
8.85 per cent year-on-year to US$ 298.47 billion, while services exports have grown 8.54
per cent year-on-year to US$ 185.51 billion.
 Nikkei India Manufacturing Purchasing Managers’ Index (PMI) reached a 14-month high
in February 2019 and stood at 54.3.
 Net direct tax collection for 2018-19 had crossed Rs 10 trillion (US$ 144.57 billion) by
March 16, 2019, while goods and services tax (GST) collection stood at Rs 10.70 trillion
(US$ 154.69 billion) as of February 2019.
 Proceeds through Initial Public Offers (IPO) in India reached US$ 5.5 billion in 2018 and
US$ 0.9 billion in Q1 2018-19.
 India's Foreign Direct Investment (FDI) equity inflows reached US$ 409.15 billion
between April 2000 and December 2018, with maximum contribution from services,
computer software and hardware, telecommunications, construction, trading and
automobiles.
 India's Index of Industrial Production (IIP) rose 4.4 per cent year-on-year in 2018-19 (up
to January 2019).
 Consumer Price Index (CPI) inflation stood at 2.57 per cent in February 2019.
 Net employment generation in the country reached a 17-month high in January 2019.
Government Initiatives

The interim Union Budget for 2019-20 was announced by Mr Piyush Goyal, Union Minister for
Finance, Corporate Affairs, Railways and Coal, Government of India, in Parliament on February
01, 2019. It focuses on supporting the needy farmers, economically less privileged, workers in
the unorganised sector and salaried employees, while continuing the Government of India’s push
towards better physical and social infrastructure.

Total expenditure for 2019-20 is budgeted at Rs 2,784,200 crore (US$ 391.53 billion), an
increase of 13.30 per cent from 2018-19 (revised estimates).

Numerous foreign companies are setting up their facilities in India on account of various
government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister
of India, has launched the Make in India initiative with an aim to boost the manufacturing sector
of Indian economy, to increase the purchasing power of an average Indian consumer, which
would further boost demand, and hence spur development, in addition to benefiting investors.
The Government of India, under the Make in India initiative, is trying to give boost to the
contribution made by the manufacturing sector and aims to take it up to 25 per cent of the GDP
from the current 17 per cent. Besides, the Government has also come up with Digital India
initiative, which focuses on three core components: creation of digital infrastructure, delivering
services digitally and to increase the digital literacy.

Some of the recent initiatives and developments undertaken by the government are listed below:

 In February 2019, the Government of India approved the National Policy on Software
Products – 2019, to develop the country as a software hub.
 The National Mineral Policy 2019, National Electronics Policy 2019 and Faster Adoption
and Manufacturing of (Hybrid) and Electric Vehicles (FAME II) have also been approved
by the Government of India in 2019.
 Village electrification in India was completed in April 2018. Universal household
electrification is expected to be achieved by March 2019 end.
 The Government of India released the maiden Agriculture Export Policy, 2018 which
seeks to double agricultural exports from the country to US$ 60 billion by 2022.
 Around 1.29 million houses have been constructed up to December 24, 2018, under
Government of India’s housing scheme named Pradhan Mantri Awas Yojana (Urban).
 Prime Minister's Employment Generation Programme (PMEGP) will be continued with
an outlay of Rs 5,500 crore (US$ 755.36 million) for three years from 2017-18 to 2019-
20, according to the Cabinet Committee on Economic Affairs (CCEA).
Road Ahead

India's gross domestic product (GDP) is expected to reach US$ 6 trillion by FY27 and achieve
upper-middle income status on the back of digitisation, globalisation, favourable demographics,
and reforms.

India's revenue receipts are estimated to touch Rs 28-30 trillion (US$ 385-412 billion) by 2019,
owing to Government of India's measures to strengthen infrastructure and reforms like
demonetisation and Goods and Services Tax (GST).

India is also focusing on renewable sources to generate energy. It is planning to achieve 40 per
cent of its energy from non-fossil sources by 2030 which is currently 30 per cent and also have
plans to increase its renewable energy capacity from to 175 GW by 2022.

India is expected to be the third largest consumer economy as its consumption may triple to US$
4 trillion by 2025, owing to shift in consumer behaviour and expenditure pattern, according to a
Boston Consulting Group (BCG) report; and is estimated to surpass USA to become the second
largest economy in terms of purchasing power parity (PPP) by the year 2040, according to a
report by PricewaterhouseCoopers.

India's consumer goods industry is likely to grow at a slower pace at 11-12% in 2019, almost 2%
lower than that in 2018, says a report.

The industry is also expected to grow at 12-13% during the April to June quarter of the calendar
year 2019, according to Nielsen.

"In line with the consumer goods growth forecast for Q1 2019 at 13-14%, this sector grew at
13.6%. We are witnessing a softening of growth by 1-2% sequentially every quarter leading to
healthy double digit growth in the first half of the year followed by a high single digit growth in
the second half of the year," Nielsen said.

Nielsen maintained that the consumer goods industry growth outlook will be in the range of 11-
12% in 2019, almost 2% lower than that in 2018.

The volume growth which peaked in 2018 to 11% is expected to be healthy but lower at 8.5-
9.5% in FY19, it added.

It noted that the 13.6% growth in first quarter is slightly lower than the last quarter of 2018 (-
2.3% from the previous quarter).

"Similar sentiments are witnessed in the economy with a 6.6% GDP growth in the December
quarter of 2018 against an expected 6.8%. Inflationary pressure is also seen mounting in recent
months from 2% in January 2019 to 2.9% in March 2019," it added.
"While slight drop is witnessed in urban growth, there is a significant softening of growth trends
in rural which is dampening the overall consumer goods industry growth from third quarter of
2018 to first quarter of 2019.

Historically, rural has grown 3-5% points faster than urban and the recent slowdown in rural
growth has brought the growth closer to the urban growth.

ECONOMIC VARIABLES
Growth rates of national income

It seems to be a good time for the consumer goods industry in India. The country is set to
become a truly middle class-led economy, fueled by growth in income, according to a joint
report by World Economic Forum and Bain & Company. Consumer spending in India will grow
from $1.5 trillion at present to $6 trillion by 2030, making the country the third largest consumer
market in the world after the U.S. and China, said the report, released on Wednesday. According
to the report titled ‘Future of Consumption in Fast-Growth Consumer Markets’, the upper-
middle and high-income segments are expected to grow from being one-in-four, to one-in-two
households by 2030.

Domestic private consumption contributes to 60% of India’s GDP (against 40% in China), which
means that the Indian economy is protected to a great extent against external shocks and cycles
of low or high public investment.

Inflation

When prices rise for energy, food, commodities, and other goods and services, the entire
economy is affected. Rising prices, known as inflation, impact the cost of living, the cost of
doing business, borrowing money, mortgages, corporate and government bond yields, and every
other facet of the economy. Inflation can be both beneficial to economic recovery and, in some
cases, negative. If inflation becomes too high the economy can suffer; conversely, if inflation is
controlled and at reasonable levels, the economy may prosper. With controlled, lower inflation,
employment increases. Consumers have more money to buy goods and services, and the
economy benefits and grow. However, the impact of inflation on economic recovery cannot be
assessed with complete accuracy. Some background details will explain why the economic
results of inflation will differ as the inflation rate varies.

GDP

Economic growth is measured in gross domestic product (GDP), or the total value of all goods
and services produced. The percentage of growth or decline, compared to the previous year, is
adjusted for inflation. Therefore, if growth was 5% and inflation was 2%, GDP would be
reported at 3%.As prices rise, the value of the dollar declines, as its purchasing power erodes
with each increase in the price of basic goods and services.

The Cost of Borrowing

Low or no inflation, theoretically, may help an economy recover from a recessionor a

depression. With both inflation and interest rates low, the cost of borrowing money for
investments or borrowing for the purchase of big-ticket items, such as automobiles or securing a
mortgage on a house or condo, is also low. These low rates are expected to encourage
consumption, say some economists.

Banks and other lending institutions, however, may be reluctant to lend money to consumers
when rates of return on loans are low, which decreases profit margins. Businesses can plan their
borrowing, hiring, marketing, improvement and expansion strategies accordingly. Investors,
likewise, know roughly what government and corporate bonds and other debt will return since
most of these instruments are pegged to yields. However, economists differ notoriously in their
opinions. Some economists claim that a 6% inflation rate for several years would help the
economy by helping to resolve the U.S. debt problem, lifting wages and stimulating economic
growth.

The Consumer Price Index

The standard measurement of inflation is the government's Consumer Price Index (CPI).
Components of the CPI include a "basket" of certain elementary goods and services, such as
food, energy, clothing, housing, medical care, education, and communication and recreation. If
the average price of all goods and services in the CPI were to go up 3% over the previous year's
level, for example, then inflation would be pegged at 3%. This also means that the purchasing
power of the dollar would have declined by 3%.

Exchange Rates:

This paper addresses the question of how exchange rates affect consumer demand in markets
where advertising plays an important role. We identify an effect that has not been emphasized in
the existing literature: when foreign exchange rates appreciate, a foreign product becomes more
expensive to domestic consumers, but at the same time, advertising becomes cheaper for the
foreign advertiser. Thus, demand depends on exchange rates through two channels, the price
charged in domestic currency, and the extent of advertising. Our paper attempts to quantify the
impact of exchange rates in a market where advertising prominence, its cost to foreign firms, and
its impact on consumers can all be directly measured: internet search advertising, a $25 billion
international market. We decompose the impact of exchange rate shocks into its impact on the
prominence of foreign advertisements and its impact on consumer demand conditional on
advertising prominence. We show that in some cases, when foreign currency appreciates, despite
foreign products becoming more expensive to domestic consumers and consumers responding to
this effect, consumers visit foreign websites more often, due to increases in advertising
prominence.

INDUSTRY ANALYSIS
Introduction

India is the largest provider of generic drugs globally. Indian pharmaceutical sector industry
supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand
in the US and 25 per cent of all medicine in UK.

India enjoys an important position in the global pharmaceuticals sector. The country also has a
large pool of scientists and engineers who have the potential to steer the industry ahead to an
even higher level. Presently over 80 per cent of the antiretroviral drugs used globally to combat
AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms.

Market Size

The pharmaceutical sector was valued at US$ 33 billion in 2017. The country’s pharmaceutical
industry is expected to expand at a CAGR of 22.4 per cent over 2015–20 to reach US$ 55 billion.
India’s pharmaceutical exports stood at US$ 17.27 billion in FY18 and have reached US$ 19.14
billion in FY19. Pharmaceutical exports include bulk drugs, intermediates, drug formulations,
biologicals, Ayush & herbal products and surgicals.

Indian companies received 304 Abbreviated New Drug Application (ANDA) approvals from the
US Food and Drug Administration (USFDA) in 2017. The country accounts for around 30 per
cent (by volume) and about 10 per cent (value) in the US$ 70-80 billion US generics market.

India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture,

bio-industry and bioinformatics is expected grow at an average growth rate of around 30 per cent
a year and reach US$ 100 billion by 2025.

Investments and Recent Developments

The Union Cabinet has given its nod for the amendment of the existing Foreign Direct
Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100 per cent
under the automatic route for manufacturing of medical devices subject to certain conditions.

The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$ 15.98 billion
between April 2000 and March 2019, according to data released by the Department of Industrial
Policy and Promotion (DIPP).

Some of the recent developments/investments in the Indian pharmaceutical sector are as follows:
  Between Jul-Sep 2018, Indian pharma sector witnessed 39 PE investment deals worth
US$ 217 million.
 Investment (as % of sales) in research & development by Indian pharma companies*
increased from 5.3 per cent in FY12 to 8.5 per cent in FY18.
 In 2017, Indian pharmaceutical sector witnessed 46 merger & acquisition (M&A) deals
worth US$ 1.47 billion
 The exports of Indian pharmaceutical industry to the US will get a boost, as branded
drugs worth US$ 55 billion will become off-patent during 2017-2019.

Government Initiatives

Some of the initiatives taken by the government to promote the pharmaceutical sector in India
are as follows:

 In October 2018, the Uttar Pradesh Government announced that it will set up six pharma
parks in the state and has received investment commitments of more than Rs 5,000-6,000
crore (US$ 712-855 million) for the same.
 The National Health Protection Scheme is largest government funded healthcare
programme in the world, which is expected to benefit 100 million poor families in the
country by providing a cover of up to Rs 5 lakh (US$ 7,723.2) per family per year for
secondary and tertiary care hospitalisation. The programme was announced in Union
Budget 2018-19.
 In March 2018, the Drug Controller General of India (DCGI) announced its plans to start
a single-window facility to provide consents, approvals and other information. The move
is aimed at giving a push to the Make in India initiative.
 The Government of India is planning to set up an electronic platform to regulate online
pharmacies under a new policy, in order to stop any misuse due to easy availability.
 The Government of India unveiled 'Pharma Vision 2020' aimed at making India a global
leader in end-to-end drug manufacture. Approval time for new facilities has been reduced
to boost investments.
 The government introduced mechanisms such as the Drug Price Control Order and the
National Pharmaceutical Pricing Authority to deal with the issue of affordability and
availability of medicines.

Road Ahead

Medicine spending in India is projected to grow 9-12 per cent over the next five years, leading
India to become one of the top 10 countries in terms of medicine spending.

Going forward, better growth in domestic sales would also depend on the ability of companies to
align their product portfolio towards chronic therapies for diseases such as such as
cardiovascular, anti-diabetes, anti-depressants and anti-cancers that are on the rise.
The Indian government has taken many steps to reduce costs and bring down healthcare
expenses. Speedy introduction of generic drugs into the market has remained in focus and is
expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health
programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical
companies.
 TECHNICAL ANALYSIS
1 Month

OSCILLATORS

Name Value Action

Relative Strength Index (14) 41.74 Neutral

Stochastic %K (14, 3, 3) 8.05 Neutral

Commodity Channel Index (20) −160.42 Buy

Average Directional Index (14) 21.48 Neutral

Awesome Oscillator −283.83 Sell

Momentum (10) −424.40 Sell

MACD Level (12, 26) −49.48 Sell

Stochastic RSI Fast (3, 3, 14, 14) 0.00 Neutral

Williams Percent Range (14) −97.32 Neutral

Bull Bear Power −854.59 Neutral

Ultimate Oscillator (7, 14, 28) 50.88 Neutral

MOVING AVERAGES

Name Value Action

Exponential Moving Average (5) 1970.17 Sell

Simple Moving Average (5) 2017.72 Sell

Exponential Moving Average (10) 2132.38 Sell

Simple Moving Average (10) 2179.26 Sell

Exponential Moving Average (20) 2237.00 Sell

Simple Moving Average (20) 2370.50 Sell

Exponential Moving Average (30) 2193.34 Sell

Simple Moving Average (30) 2462.14 Sell

Exponential Moving Average (50) 1955.69 Sell

Simple Moving Average (50) 2005.71 Sell

Exponential Moving Average (100) — —

Simple Moving Average (100) — —

Exponential Moving Average (200) — —

Simple Moving Average (200) — —

Ichimoku Cloud Base Line (9, 26, 52, 26) 2506.73 Neutral

Volume Weighted Moving Average (20) 2251.52 Sell

Hull Moving Average (9) 1770.47 Sell

MACD and Line Chart of Piramal Enterprises

Candle Stick Chart of Piramal Enterprises

OHLC Chart

Exponential Moving Average (EMA)