DATE 23 Jul 2018

Strong growth in domestic revenues US Business to see 17% revenue cagr

Sun
Pharmaceutical
Industries Strong revenues & earnings cagr over FY18-20E
Margins to see gradual Improvement

INDUSTRY CMP Recommend Add on Targets Time

Dips to Horizon

Buy at CMP
Pharmaceu 4
Rs. 560 and add on Rs. 618-680
ticals Rs. 505-528
Quarters
declines

Page 2
 Company Profile:

Sun Pharmaceuticals is the largest Indian Pharma company with an impressive track record of organic and inorganic growth.
Various US acquisitions augment Sun’s pipeline with differentiated products, where Sun has turned around its business in a
HDFC Scrip Code SUNPHAEQNR highly profitable manner. Sun is the largest pharma company in India with presence in India, the US and other emerging
markets. Sun has also started building specialty portfolio in the US which would start giving fruits FY20 onwards. Sun is one of
BSE Code 524715 the few Indian players which has made heavy investments in specialty US business and continues to do so.
NSE Code SUNPHARMA Investment Theme:
Bloomberg SUNP:IN
We believe that FY19 may see a gradual comeback for large cap pharma companies, driven by (1) Actual and likely regulatory
CMP - Jul 20 2018 Rs. 560 resolutions, (2) Moderating price erosion and (3) Several product launches across generic and specialty categories H2 FY19
Equity Capital (cr) 239.9 onwards. We believe earnings have bottomed out, while the base is favourable.

Face Value (Rs) 1 US business, which constitutes ~33% of revenues, has posted 8% CAGR over FY13-17, on the back of acquisitions like Caraco,
Eq- Share O/S (cr) 239.9 Taro, Dusa, URL and timely product launches. US product basket remains robust - 422 ANDAs filed and 139 pending final
approvals. Some niche launches include Lipodox (Doxil), Doxycycline etc. besides complex/limited competition products and
Market Cap(Rs cr) 134483 plain vanilla generics. US growth has also been backed by extensive infrastructure with 41 global manufacturing facilities.
Book Value (Rs) 159 Management has guided 10-12% revenue growth in FY19. R&D expenses likely to remain around 8-8.5% of sales levels.
Company has 422 approved products in USA and 139 pending for approval. It derives ~33% revenues from US, ~30% from
Avg. 52 Wk Volume 5228199 India. Japan, Canada, Australia & New Zealand and Western Europe constituted ~11% of revenues. Emerging Markets (EMs)
52 Week High 609 (Brazil, Mexico and Russia) contributes 20% to its revenues for FY18. The key product launches likes Tildra (Derma), Yonsa
(Oncology), Venofer (Iron Sucrose) and Seciera (OTX-01) (Ophthalmology) would drive earnings from H2 FY19 onwards. Tildra
52 Week Low 433 is likely to be launched in H2 FY19. Yonsa may be launched in Q2 FY19.
Red Flag Level # 457
Sun received warning letter and reduced the plant status to OAI (Official Action Indicated) in December CY15 after the FDA
Shareholding Pattern % (Jun 30, 18) visit in October CY15. While management was active to achieve resolutions with comprehensive remediation works (being a
large plant), Sun received Form‐483 with multiple observations during the last two years. The VAI status will open opportunity
Promoters 54.4 of receiving new approvals for US markets as US FDA will now start active consideration of the pending applications from Halol
Institutions 34.1 plant. As per our estimate, company generated US$ 250mn revenue from Halol for FY18. Post the recent approval from US
FDA, additional ~US$ 100mn revenue is likely to come from the plant in each year. We estimate around US$ 350mn for FY19
Non Institutions 11.5 and US$ 450mn for FY20 from Halol facility.
Total 100 View and valuation:
PCG Risk
Rating*
Yellow Sun Pharma is amongst the few companies in India to have made large upfront investments in US specialty, we believe
valuations are set to remain buoyant. We expect company to post 15% revenue cagr led by strong growth from domestic
ANALYST revenues while US business would post robust 17% growth in sales over FY18-20. EBITDA margin is likely to witness 360bps
expansion on the back of key drugs launch and moderating price erosion in the US. We estimate PAT cagr of 37% led by strong
Kushal Rughani
revenues and robust operational performance. We recommend BUY on Sun Pharma at CMP of Rs 560 and add on dips to Rs
kushal.rughani@hdfcsec.com
505-528 with TP of Rs 618 and 680 (~27.7x FY20 EPS) over the next 4 quarters.

Page 3
 Financial Overview

(Rs cr) FY17 FY18 FY19E FY20E

Key Highlights
Net Sales 31578 26489 30002 35274
EBITDA 10089 5608 6493 8739
APAT 6233 3112 3943 5905
Sun Pharmaceuticals is the largest Indian EPS (Rs) 26 13 16.4 24.6
Pharma company with an impressive track
P/E (x) 21.5 43 34 22.7
record of organic and inorganic growth.
EV / EBITDA (x) 11.8 20.3 17.3 12.5
US business, which constitutes ~33% of RoE (%) 17.9 8.3 10 13.6
turnover, has posted 8% CAGR over FY13-
17, on the back of acquisitions like Caraco, Source: Company, HDFC sec Research
Taro, Dusa, URL and timely product
launches. Domestic Business

US product basket remains robust - 422
ANDAs filed and 139 pending final
approvals. Some niche launches include
Lipodox (Doxil), Doxycycline, Nystatin, etc,
besides complex/limited competition
products and plain vanilla generics.
Management has guided 10-12% revenue
growth in FY19. R&D expenses likely to
remain around 8-8.5% of sales levels.
The key product launches likes Tildra
(Derma), Yonsa (Oncology), Venofer (Iron
Sucrose) and Seciera (OTX-01)
(Ophthalmology) would drive earnings
from H2 FY19 onwards.
Sun Pharma is no.1 pharma player in India with market share of 8.5%. It has gained market share consistently over the past
18 years (~2.4% in FY01). Company is market leader in chronic and has strong positioning in acute segment. Top 10 brands
contributes ~18% of domestic sales. They have > 9200 field force covering over 6 lakh doctors. Over the past ten years,
revenues have witnessed strong 18% cagr. Company’s 32 brands appear amongst the top 300 brands in the country.
Company has higher productivity per MR (Rs 0.9cr) as compared to overall industry average (Rs 0.52cr). Cardiology, CNS,
Gastro, Anti-Infectives and Diabetology are top 5 therapies for the company which contributes 67% of revenues. We
estimate domestic sales to see 11% cagr over the next two years.
Progress of specialty pipeline likely to be key driver
Sun had posted 16% yoy decline in FY18 revenues, which was far worse than management guidance of higher single digit
decline guided at the beginning of the year mainly due to pricing pressure both at Taro and ex-Taro US businesses and delay
in Halol resolution besides GST disturbance in India. Going ahead, the management commentary sounds upbeat with low
double digit growth guidance for FY19 with slew of specialty launches in US after 18-24 months of recalibrated efforts and
recent approvals. This specialty focus remains a key differentiator vis-à-vis peers. The effort-reward aspect in these products
in the US will have bearings on the investors’ sentiments besides final resolution of the lingering Halol resolution.

US business, which constitutes ~33% of revenues, has seen 8% CAGR in FY13-17, on the back of acquisitions like Caraco,
Taro, Dusa, URL and timely product launches. For FY18, US revenues dipped 36% yoy on the back of pricing erosion in the
key drugs and also lower performance from Taro Pharma. However, in the coming years, as pricing pressure is getting eased
and newer products launch would drive US revenues over the next two-three years. US product basket remains robust - 422
ANDAs approved and 139 pending final approvals. Some niche launches include Lipodox (Doxil), Doxycycline, Nystatin, etc,
besides complex/limited competition products and plain vanilla generics. US growth has also been backed by extensive
infrastructure with 41 manufacturing facilities across six continents.
Page 4
We expect Sun to retain its market share in Absorica (Isotretinoin capsules) (Dermatology) in the coming years. As per estimates, the drug contributed ~US$ 220mn
to overall revenues. Beginning from FY21, it will face competition and we expect US$ 50-70mn run rate for Sun.

However, FY18 was challenging year with a combined impact of pricing pressure in the US, continuing efforts on Halol warning letter resolution and absence of
meaningful high value launches which led to 36% YoY decline in sales. Due to a challenging environment on the generics front, the management plans to diversify
into specialty products such as Tildrakizumab, Ilumya (both dermatology), BromSite, Seciera, OTX-101 (all ophthalmic) and Odomzo, Yonsa (oncology) etc.

In Jul 2016, SPARC had licensed ELEPSIA (Levecitracetam ER) (EPILEPSY) and Xelpros (Glaucoma). Due to Halol plant under US FDA scanner, company was not able
to launch the products. Now, Halol facility getting clearance from US FDA, Sun Pharma will launch these products and would add additional revenues to Sun and
also Sun Pharma Advanced (SPARC) will get royalty payments.

We expect the US business to increase at CAGR of 9% to Rs 10289cr in FY18-20E on the back of lower base and improvement in base business performance, specialty
launches and Halol resolution.

Conference call highlights

 Company has launched 15 new products in India in Q4 FY18

 Company has 139 ANDAs and three NDAs pending US FDA approval as on Mar-18
 Management has guided for low double digit revenues growth in FY19. The guidance includes Halol resolution in FY19 and new innovative launches.
 Company has sent last response to the US FDA for Halol plant in Q2FY18. As per the management no re-inspection is required for this plant.
 R&D expected to be in the vicinity of 8-8.5% in FY19
 Company plans to commercialise three innovative products Ilumya (Dermatology) in Q3FY19), Yonsa (Oncology) in Q2 FY19 and OTX-101 (Ophthalmology)
in FY19) in the US
 In Odomzo (skin cancer), the company has 10% market share in the US
 Other operating income in Q4 FY18 includes US$ 20mn of milestone payment from Almirall SA (Spain) as part of the licensing agreement for the
development and commercialization of Tildrakizumab for psoriasis in Europe.

Taro’s Q4 results and FY18 Highlights

Taro’s revenues declined 11% YoY to US$ 175mn in the backdrop of persistent competition and a challenging pricing environment despite an increase in overall
volumes. EBITDA margins contracted 840bps YoY to 45.3%. Taro’s net profit increased 4% YoY to US$ 87mn.

For FY18, Net sales of US$ 662mn decreased US$ 217.5mn, the result of continuing increased competition and the challenging pricing environment; despite an
increase in overall volumes. Operating income of US$ 303mn decreased US$ 212mn, and as percentage of net sales was 45.8% as compared to 58.6%. Sun Pharma
owns 75.2% stake in the company as on May 2018.

Net income attributable to Taro was US$ 211mn compared to US$ 456mn. Excluding the impact of one-time tax re-measurement, net income attributable to Taro
would have been US$ 248mn. Company currently has total of 32 ANDAs awaiting FDA approval, including four tentative approvals.

Page 5
FY18 Results Highlights

For FY18, Sun reported 16% decline in revenues on the back of Weak performance from Taro Pharma and its US operations. US revenues dipped 36% yoy to Rs
8747cr. Domestic revenues saw 4% rise and RoW markets show ~10% increase in revenues in FY18. EBITDA margin for the year was at 21.2% due to lacklustre
performance from US business. In Q3 FY18, company had hit as one off expenses of Rs 510cr as tax related items. For Full year 2018, Weak operating performance
and one offs led to PAT decline of 50% to Rs 3112cr.

Halol receives the VAI from US FDA in Jun 2018

US regulator has upgraded current status of Sun’s Halol plant to VAI (Voluntary Action Indicated). The upgradation status of the plant means that the response and
remediation works of Sun are at satisfactory level of US FDA and critical issues in the company are virtually resolved. VAI

Recently in Jul’18, The Food and Drug Administration (US FDA) has given approval for cancer injectable Infugem, which is to be manufactured at the Halol facility.
The company’s major niche future filings, including injectables, will come from the same plant.

The new drug will add to company’s growing oncology portfolio of novel products. It had very small amount of addressable market size (US$ 35mn) for the 12
months ended March 2018.

Genesis of the manufacturing issues in Halol

Sun Pharma received a warning letter and reduced the plant status to OAI (Official Action Indicated) in Dec’ 15 after the FDA visit in Oct’15. While management was
active to achieve resolutions with comprehensive remediation works (being a large plant), Sun received Form‐483 with multiple observations during the last two
years. The Halol plant came in to the fold of SUNP post its acquisition of MJ Pharma in CY05. The plant has production lines of Tabs, Caps, liquids, sterile dry powder
injectable, small volume injectable, ointments, soft gelatine caps and aerosols. Company has approvals from key regulators such as US FDA, MHRA (UK).

What does the VAI mean for Halol

The VAI status will open opportunities of receiving new approvals for US markets as US FDA will now start active consideration of the pending applications from
Halol plant. This clearance is a big boost for the company as this facility caters to the US market and it will pave the way for getting new product approvals.

While many approvals are expected in near term, we few of those ANDAs will be irrelevant as older molecules are crowded with strong competition and price
erosion. Given the track record of Sun, it will not pursue/launch majority of the molecules as management to pursue only ‘profitable growth’ as it was observed in
the case of withdrawal of co‐pay arrangement of Absorica in US. We find gVenofer (Iron Sucrose, mkt: US$ 350mn) will be one of the few major approvals in FY19E
from Halol due to its complex chemistry. Company generated ~US$ 250mn revenues from the facility for FY18. With the approval from US FDA, we expect additional
revenues of ~US$ 100mn for FY19 and US$ 180-200mn for FY20 (i.e. US$ 450mn).

Page 6
Key Events post 2007

Time line Event

May-07 Initial Agreement to acquire Taro Pharma
Sep-10 Increases stake in Taro from 49%
Sep-11 Receives EIR for Cranbury, New Jersey Facility
Feb-12 US FDA grants special approval to Sun for supply of Oncology product Doxil to the US market
Aug-12 US FDA gives approval to Caraco's manufacturing sites
Nov-12 Acquires US based Derma company Dusa Pharma
Dec-12 Acquires generics business of URL pharma from Takeda Pharma
Sep-14 Halol unit receives Form 483 observation letter from US FDA
Apr-15 Completes Ranbaxy Merger
Dec-15 Receives warning letter from the US FDA for its Halol manufacturing facility
Feb-16 Launches generic version of Gleevec (Imatinib Mesylate Tablets) in the US. Sun had sole 180 days exclusivity
Mar-16 Acquires 14 established prescription brands in Japan from Novartis for cash consideration of US$ 293mn
Dec-16 Halol unit receives Form 483 observations from US FDA post re-inspection of the plant
May-17 Receives US FDA approval for novel Anti Psoriasis drug (Tildrakizumab), a first biologic drug approval for the company
Mar-18 Receives US FDA approval for its biologic drug (Ilumya) Dermatology
May-18 In - Licensing Oncology product Yonsa receives US FDA approval
Jun-18 Halol Facility gets EIR from US FDA
Source, Company, HDFC Sec Research

Page 7
View & Valuations

Sun Pharma is amongst the few companies in India to have made large upfront investments in US specialty, we believe valuations are set to remain buoyant.
However, challenges like: 1) US FDA scrutiny in the pants 2) slowdown in US generics, and 3) investments in specialty continues to remain. We expect company to
post 15% revenue cagr led by strong growth from domestic revenues while US business would post robust 17% growth in sales over FY18-20. EBITDA margin is likely
to witness 360bps expansion on the back of key drugs launch and moderating price erosion in the US. We believe the two growth triggers from here are: 1) Key
Products launches from FY20 onwards 2) clearance of Halol facility. Clearance of Halol facility, ramp up of generics and specialty business driven by increased
investments augurs well for the company as it improves the launch visibility. We estimate PAT cagr of 37% led by strong revenues and robust operational
performance. It is to be noted that at its peak of Rs 1200, Sun was trading at ~55x PE in FY15 earnings. We recommend BUY on Sun Pharma at CMP of Rs 560 and
add on dips to Rs 505-528 with TP of Rs 618 (~25x FY20 EPS) and 680 (27.7x FY20 EPS) over the next 4 quarters.

Key Risks & Concerns

 Challenging macro environment, regulatory woes and the endeavour to create a specialty business in the US are exerting significant pressure on the
business.
 Tight Regulatory Scrutiny
 Lower than expected pick up in tildrakizumab
 Competition in its key drugs may affect US growth
 Delay in key Products launch
 Large USD depreciation

Page 8
 Revenue Mix (%) EBITDA to witness strong growth over FY18-20E

5.4
12000 28.6 31.9 35
11.3 30
30.8 10000
India
8000 24.8 25
21.2 21.6
US 20
6000
18.7 EM 15
4000
RoW 10

API 2000 5
8158 10089 5608 6494 8739
Others 0 0
33.6 FY16 FY17 FY18 FY19E FY20E

EBITDA EBITDA Margin

R&D Expenditure Trend

ANDAs Filed over FY13-18

40 2500 10
35 32
cr
35 33 32
31 2000 8.6
30 29 27 27 7.2 8
30 7.9
26 6.1 7
25 1500
25 22 22 22 2122 21 22 23 24 6.3
19 6
20 20 1000 27 29

15 15 North
4
500
10 10 East
704 1041 1955 2303 2314 2249
0 West2
5 5
FY13 FY14 FY15 FY16 FY17 FY18
0 16 South
0
FY15 FY16 FY17 FY18 FY19E FY20E 28 R&D % of Revenues
FY13 FY14 FY15 FY16 FY17 FY18

Source, Company, HDFC Sec Research

Page 9
 422 Approved ANDAs Mix Domestic Business Therapeutic Mix (%)

60
Cardiology
110 Derma 16 19
19 Neuro (CNS)
CNS
30 CVS 4 Gastro
Pain
5 Anti
46 Allergy Infectives
17 Diabetic
97 Oncology 7
60 Others Pain
9 Derma
12
11 Gynaec

India Business revenue trend US Business revenue trend

16000
12000 40 13758 13759
33 14000
35 32 9965 12092
10000 31
29 8871 12000
30 8029 27
7749 26 29 9707
10000
8000 25 7282
22 22 21 21 22 23 24 8747
North
8000
6000 20 East
6000
15
4000 West
4000
10
16 South
2000 2000
5 28
0
0 0
FY16 FY17 FY18 FY19E FY20E
FY15
FY16 FY16
FY17 FY17
FY18 FY18
FY19E FY19E
FY20E FY20E

Source, Company, HDFC Sec Research

Page 10
Income Statement (Consolidated) Balance Sheet (Consolidated)
Year ending March (Rs mn) FY16 FY17 FY18 FY19E FY20E Year ending March (Rs mn) FY16 FY17 FY18 FY19E FY20E
Net Revenues 284,870 315,784 264,895 300,021 352,740 SOURCES OF FUNDS
Growth (%) 3.8 10.9 (16.1) 13.3 17.6 Share Capital - Equity 2,407 2,399 2,399 2,399 2,399
Material Expenses 63,304 81,307 74,247 82,382 93,215 Reserves 327,418 363,997 378,606 408,213 457,435
Employee Expenses 47,723 49,023 53,671 59,104 65,610 Total Shareholders’ Funds 329,825 366,397 381,006 410,613 459,834
SG&A Expenses 29,627 29,210 25,430 30,002 35,274 Minority Interest 40,853 37,909 38,842 42,892 45,942
Other Operating Expenses 62,634 55,351 55,466 63,605 71,254 Long Term Debt 31,103 14,361 17,721 14,177 11,341
EBITDA 81,583 100,893 56,081 64,929 87,388 Short Term Debt 52,061 66,549 79,797 63,838 51,070
EBITDA Margin (%) 28.6 31.9 21.2 21.6 24.8 Total Debt 83,164 80,910 97,518 78,014 62,411
EBITDA Growth (%) 3.7 23.7 (44.4) 15.8 34.6 Net Deferred Taxes (30,462) (21,780) (19,748) (19,748) (19,748)
Depreciation 10,375 12,648 14,998 16,902 18,411 Other Non-current Liabilities &
21,055 13,418 12,111 4,344 12,654
Provns
EBIT 71,208 88,245 41,083 48,027 68,978
TOTAL SOURCES OF FUNDS 444,434 476,853 509,728 516,114 561,093
Other Income (Including EO
(269) 6,232 4,013 8,500 9,500 APPLICATION OF FUNDS
Items)
Interest 5,232 3,998 5,176 3,500 2,750 Net Block 75,831 84,953 91,590 94,060 97,025
PBT 65,706 90,479 39,920 53,027 75,728 CWIP 25,936 31,986 18,318 32,500 30,291
Tax (Incl. Deferred) 9,138 12,116 13,582 9,545 13,631 Goodwill 82,891 91,799 107,243 108,372 108,996
Minority Interest (11,112) (8,719) (4,722) (4,050) (3,050) Investments 3,664 5,035 3,001 3,001 3,001
RPAT 45,457 69,644 21,616 39,432 59,047 Other Non-current Assets 28,581 41,291 57,057 43,106 43,897
EO (Loss) / Profit (Net Of Tax) 90 7,316 (9,505) - - Total Non-current Assets 216,903 255,063 277,210 281,040 283,211
APAT 45,367 62,327 31,121 39,432 59,047 Cash & Equivalents 146,452 158,292 167,721 190,634 219,487
APAT Growth (%) -0.1 37.4 -50.1 26.7 49.7 Inventories 64,225 68,328 68,807 67,153 75,983
Adjusted EPS (Rs) 18.9 26.0 13.0 16.4 24.6 Debtors 67,757 72,026 78,153 57,538 67,649
Source: Company, HDFC sec Research Other Current Assets 28,476 35,465 29,199 38,539 43,530
Total Current Assets 160,458 175,819 176,159 163,230 187,162
Creditors 35,829 43,954 47,662 44,535 50,391
Other Current Liabilities & Provns 43,549 68,367 63,700 74,254 78,376
Total Current Liabilities 79,378 112,321 111,362 118,789 128,767
Net Current Assets 81,080 63,498 64,797 44,441 58,395
TOTAL APPLICATION OF FUNDS 444,434 476,853 509,728 516,114 561,093
Source: Company, HDFC sec Research

Page 11
Cash Flow (Consolidated) Key Ratios

Year ending March (Rs mn) FY16 FY17 FY18 FY19E FY20E FY16 FY17 FY18 FY19E FY20E
Reported PBT 65,706 90,479 34,790 53,027 75,728 PROFITABILITY (%)
Non-operating & EO items (4,129) (11,849) (13,110) (8,500) (9,500) GPM 77.8 74.3 72.0 72.5 73.6
Interest expenses 5,232 3,998 5,176 3,500 2,750 EBITDA Margin 28.6 31.9 21.2 21.6 24.8
Depreciation 10,375 12,648 14,998 16,902 18,411 APAT Margin 15.9 19.7 11.7 13.1 16.7
Working Capital Change 2,468 (4,092) (18,374) 26,013 (7,226) RoE 14.9 17.9 8.3 10.0 13.6
Tax Paid (19,885) (20,571) (8,452) (9,545) (13,631) RoIC (or Core RoCE) 23.1 28.1 9.6 14.1 19.2
OPERATING CASH FLOW ( a ) 59,768 70,612 15,028 81,397 66,531 RoCE 12.1 14.3 7.0 8.2 11.4
Capex (33,329) (35,904) (22,706) (34,155) (19,000) EFFICIENCY
Free cash flow (FCF) 26,439 34,708 (7,678) 47,242 47,531 Tax Rate (%) 13.9 13.4 34.0 18.0 18.0
Investments (14,278) (10,108) (59,510) - - Fixed Asset Turnover (x) 2.3 2.4 1.8 1.8 2.0
Non-operating Income 3,892 3,796 8,388 8,500 9,500 Inventory (days) 82.3 79.0 94.8 81.7 78.6
INVESTING CASH FLOW ( b ) (43,716) (42,216) (73,828) (25,655) (9,500) Debtors (days) 86.8 83.3 107.7 70.0 70.0
Debt Issuance/(Repaid) (7,820) 8,371 16,608 (19,504) (15,603) Other Current Assets (days) 36.5 41.0 40.2 46.9 45.0
Interest Expenses (3,014) (3,338) (5,176) (3,500) (2,750) Payables (days) 45.9 50.8 65.7 54.2 52.1
FCFE 5,219 33,429 (47,368) 32,738 38,678 Other Current Liab & Provns (days) 55.8 79.0 87.8 90.3 81.1
Share Capital Issuance (378) (27,283) (3,789) - - Cash Conversion Cycle (days) 103.9 73.4 89.3 54.1 60.4
Dividend (8,687) (2,889) (9,825) (9,825) (9,825) Debt/EBITDA (x) 1.0 0.8 1.7 1.2 0.7
Others (3,588) 1,701 (14,961) - - Net D/E (x) (0.2) (0.2) (0.2) (0.3) (0.3)
FINANCING CASH FLOW ( c ) (23,486) (23,438) (17,144) (32,829) (28,178) Interest Coverage (x) 13.6 22.1 7.9 13.7 25.1
NET CASH FLOW (a+b+c) (7,433) 4,957 (75,944) 22,913 28,853 PER SHARE DATA (Rs)
EO Items, Others - - - - - EPS 18.9 26.0 13.0 16.4 24.6
Closing Cash & Equivalents 102,337 136,774 75,464 122,207 151,060 Dividend 1.0 3.5 3.5 3.5 3.5
Source: Company, HDFC sec Research Book Value 137.1 152.7 158.8 171.1 191.7
VALUATION
P/E (x) 29.5 21.5 43 34 22.7
P/BV (x) 4.1 3.7 3.5 3.3 2.9
EV/EBITDA (x) 13.0 11.8 20.3 17.3 12.5
EV/Revenues (x) 3.9 3.5 4.3 3.9 3.1
OCF/EV (%) 5.6 6.8 1.4 8.1 6.9
Source: Company, HDFC sec Research

Page 12
 Rating Chart

R HIGH
E
T
MEDIUM
U
R
N LOW
LOW MEDIUM HIGH
RISK

Ratings Explanation:

RATING Risk - Return BEAR CASE BASE CASE BULL CASE

IF RISKS MANIFEST
IF INVESTMENT
IF RISKS MANIFEST PRICE CAN FALL 15% &
LOW RISK - LOW RATIONALE FRUCTFIES
BLUE PRICE CAN FALL 20% IF INVESTMENT
RETURN STOCKS PRICE CAN RISE BY
OR MORE RATIONALE FRUCTFIES
20% OR MORE
PRICE CAN RISE BY 15%
IF RISKS MANIFEST
IF INVESTMENT
MEDIUM RISK - IF RISKS MANIFEST PRICE CAN FALL 20% &
RATIONALE FRUCTFIES
YELLOW HIGH RETURN PRICE CAN FALL 35% IF INVESTMENT
PRICE CAN RISE BY
STOCKS OR MORE RATIONALE FRUCTFIES
35% OR MORE
PRICE CAN RISE BY 30%
IF RISKS MANIFEST
IF INVESTMENT
IF RISKS MANIFEST PRICE CAN FALL 30% &
HIGH RISK - HIGH RATIONALE FRUCTFIES
RED PRICE CAN FALL 50% IF INVESTMENT
RETURN STOCKS PRICE CAN RISE BY
OR MORE RATIONALE FRUCTFIES
50% OR MORE
PRICE CAN RISE BY 30%

Page 13
 Price Chart

800

700

600

500

400

300

200

100

Rating Definition:

Buy: Stock is expected to gain by 10% or more in the next 1 Year.

Sell: Stock is expected to decline by 10% or more in the next 1 Year.

# Explanation of Red Flag Price Level – If stock price starts sustaining below red-flag, the premise of investment needs to be reviewed. Risk averse investors
should exit the stock and preserve capital. The downside of following red-flag level is that if the price decline turns out to be temporary and if it recovers
subsequently you won’t be able to participate in the gains.

Page 14
Research Analyst: Kushal Rughani (kushal.rughani@hdfcsec.com)

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066
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adverse disciplinary history as on the date of publication of this report. 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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of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any
material conflict of interest.
Any holding in stock – No
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