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April 30, 2018
ICICI Securities Ltd | Retail Equity Research
Result Update
Biologics, Syngene maintain momentum…
Revenues increased 26% YoY to | 1170 crore (I-direct estimate: |
1098 crore) mainly due to 48% YoY growth in Biologics to | 241
crore (I-direct estimate: | 179 crore) and 45% YoY growth in
Syngene to | 409 crore (I-direct estimate: | 359 crore).
EBITDA margins remained at 20%, however lower than I-direct
estimates of 22.0% mainly due to lower gross margins led by change
in product mix. EBITDA increased 24% YoY to | 233 crore
Net profit increased 2% YoY to | 130 crore (I-direct estimate: | 114
crore). Delta vis-a-vis operational growth was mainly due to higher
interest cost, depreciation and Tax rate (21.6% vs 6.7% in Q4FY17)
Well poised to capitalise on global biosimilars opportunity
Biologics segment (18% of FY18 in total revenues) includes biosimilars,
encompassing Rh-insulin, insulin analogs, monoclonal antibodies &
recombinant proteins. It is the first Indian pharmaceutical company to
receive biosimilar approval in US. The company has invested heavily in
this space in the last two to three years, especially the Malaysian facility.
So far, the progress has been encouraging with Trastuzumab approval in
the US, Glargine launch in Japan and approval in EU and Australia
besides launches in emerging markets. We expect biologics to grow at
~40% CAGR to | 1506 crore in FY18-20E.
Research services (Syngene) to maintain growth momentum
Biocon’s contract research organisation (CRO) arm Syngene contributes
33% of total revenues. The company caters to 316 clients including eight
out of global top 10 global players. This segment has consistently been
growing in double digits and has recently been the major growth driver
for the company as the small molecules segment is slowing down. We
expect revenues to grow at a CAGR of ~19% to | 2011 crore in FY18-20E.
Small molecules under pressure; branded formulations growing decently
Small molecules (35% of FY18 total revenue) comprise APIs like statins,
immunosuppressants, specialty APIs & also include generic formulations
business is witnessing steep pricing pressure in the US. The company is
exploring fewer opportunities but with higher profitability in this segment
like moving into formulations & filing own ANDAs, 505 (b)(2) filing, etc. It
has already filed few ANDAs, which include complex generics & injectables.
We expect small molecules segment to grow at a CAGR 7% CAGR to |
1685 crore in FY18-20E. The branded formulations (14% of FY18 total
revenue) includes finished dosages business in India and overseas
including UAE. It comprises Indian domestic formulations. The company
owns 80+ brands encompassing therapies like diabetology, oncology,
nephrology, cardiology, immunotherapy etc.
Biosimilar deals, approvals and launches to sustain investors interest
Apart from the strong performance in Biologics and Syngene, Key
highlight for FY18 was biosimilar approvals from developed markets.
Although these approvals do not imply immediate launch of the product
in these regions, it endorses the development and manufacturing
capabilities of Biocon in the realm of biosimilars. Partnership in the
biosimilars space with Sandoz for global development of next generation
biosimilars has once again vindicated its capability in biosimilars.
Progress on the biosimilars regulatory front in developed markets and
launches in the developed as well as emerging markets are likely to
maintain investors optimism for the company. We continue to value the
stock on SOTP basis. Accordingly, we arrive at a target price of | 740 per
share.
Rating matrix
Rating : Buy
Target : | 740
Target Period : 12 months
Potential Upside : 14%
What’s Changed?
Target Changed from | 680 to | 740
EPS FY18E Changed from | 8.4 to | 6.2
EPS FY19E Changed from | 11.9 to | 9.3
EPS FY20E Changed from | 16.9 to | 14
Rating Unchanged
Quarterly Performance
Q4FY18 Q4FY17 YoY (%) Q3FY18 QoQ (%)
Revenue 1,169.5 931.1 25.6 1,057.9 10.5
EBITDA 233.0 187.5 24.3 221.7 5.1
EBITDA (%) 19.9 20.1 -21 bps 21.0 -103 bps
Net Profit 130.4 127.5 2.3 91.9 41.9
Key Financials
(| Crore) FY17 FY18E FY19E FY20E
Revenues 3921.6 4129.7 5148.9 6115.5
EBITDA 851.2 829.1 1204.4 1583.8
Adj. Net Profit 508.7 372.4 558.2 839.2
Adj. EPS (|) 8.5 6.2 9.3 14.0
Valuation summary
FY17 FY18E FY19E FY20E
PE(x) 63.9 105.0 70.1 46.6
EV to EBITDA (x) 10.5 7.2 9.8 13.0
Price to book (x) 9.6 8.4 11.3 14.7
RoNW (%) 45.8 47.2 32.6 24.8
RoCE (%) 9.6 8.4 11.3 14.7
Stock data
Particular
Market Capitalisation
Debt (FY18)
Cash (FY18)
EV
52 week H/L 439/268
Equity capital (|Crore)
Face value (|) | 5
| 300 crore
| 39709 crore
Amount
| 39111 crore
| 1920 crore
| 1322 crore
Price performance (%)
1M 3M 6M 1Y
Biocon 15.0 8.7 79.2 76.1
Glenmark 5.8 -10.1 -4.7 -35.9
Torrent Pharma 12.0 -0.6 13.2 -0.8
Aurobindo Pharma 14.9 -0.9 -15.2 1.9
Research Analyst
Siddhant Khandekar
siddhant.khandekar@icicisecurities.com
Mitesh Shah
mitesh.sha@icicisecurities.com
Biocon (Biocon) | 652
ICICI Securities Ltd | Retail Equity Research Page 2
Variance analysis
Q4FY18 Q4FY18E Q4FY17 Q3FY18 YoY (%) QoQ (%) Comments
Revenue 1,169.5 1,098.1 931.1 1,057.9 25.6 10.5 YoY growth and beat I-Direct estimates was mainly due to robust growth in
Biologics and contract research segments
Raw Material cost 475.2 428.9 348.4 423.8 36.4 12.1 YoY 321 bps contraction in gross margins to 59.4% was mainly due to adverse
product mix
Employee cost 257.0 241.6 193.9 235.3 32.5 9.2 Increased mainly due to commissioning of Malaysian facility
R & D Expenditure 51.0 54.7 65.0 52.9 -21.5 -3.6
Other Expenditures 153.3 131.8 136.3 124.2 12.5 23.4
Total Expenditure 936.5 857.0 743.6 836.2 25.9 12.0
EBITDA 233.0 241.1 187.5 221.7 24.3 5.1
EBITDA (%) 19.9 22.0 20.1 21.0 -21 bps -103 bps Higher raw material and employee cost was largely offset by lower R&D spend and
other expenditure
Interest 16.9 14.7 5.0 14.7 238.0 15.0 Increased mainly due to commissioning of Malaysian facility
Depreciation 95.3 97.4 72.5 97.4 31.4 -2.2 Increased YoY mainly due to commissioning of Malaysian facility
Other income 67.5 43.4 43.2 33.9 56.3 99.1 Includes | 42 crore of forex gain against | 17 crore of forex loss in Q4FY17
EO 0.0 0.0 0.0 0.0 0.0 0.0
PBT 188.3 172.5 153.2 143.5 22.9 31.2
Tax 40.7 43.1 10.3 36.1 295.1 12.7
MI 22.3 22.0 20.9 21.7 6.7 2.8
PAT 130.4 113.6 127.5 91.9 2.3 41.9 Delta vis-à-vis EBITDA was due to higher Interest, Depreciation and Taxation. Beat
vis-à-vis I-Direct estimates mainly due to higher forex gain
Key Metrics
Small Molecules 424.0 379.3 379.0 357.0 11.9 18.8 YoY growth and beat I-Direct estimates was due to higher uptake in key statins
and rosuvastatin formulations and a steady performance by immunosuppressants
Biologics 241.0 178.5 163.0 189.8 47.9 27.0
YoY growth was due to strong growth in key Insulins business markets like
Mexico, Malaysia and the AFMET region and expansion of biosimilar Trastuzumab
footprint in emerging markets. Beat vis-à-vis I-Direct estimates mainly due to
awarded tender contract in some emerging markets
Branded Formulations 149.0 157.2 131.0 156.1 13.7 -4.5 YoY growth was mainly due to strong growth key products in India and robust
growth in UAE led by increase sales in key branded generic products
Contract Research 409.0 359.0 283.0 387.7 44.5 5.5 YoY growth lower base of Q4FY17 (fire incident impact) and strong growth in
chemical development and discovery services supported by biologics business.
Beat vis-à-vis I-Direct mainly due higher-than-expected growth in chemical
development and biologics business
Licensing income 2.0 12.0 16.0 11.8 -87.5 -83.1
Source: Company, ICICI Direct Research
Change in estimates
(| Crore) Old New % Change Old New % Change
Revenues 4,921.5 5,148.9 4.6 5,801.9 6,115.5 5.4 Increased mainly due to strong growth in Q4FY18
EBITDA 1,273.1 1,204.4 -5.4 1,557.8 1,583.8 1.7
EBITDA Margin (%) 25.9 23.4 -251 bps 26.8 25.9 -95 bps
Net Profit 711.3 558.2 -21.5 1,015.5 839.2 -17.4 Changed mainly due to change in expectation of other income
EPS (|) 11.9 9.3 -21.8 16.9 14.0 -17.2
FY19E FY20E
Source: Company, ICICI Direct Research
Assumptions
Current
Growth (%) FY17 FY18E FY19E FY20E FY19E FY20E
Biopharmaceuticals 2,230.0 2,256.1 2,635.7 3,190.8 2,460.3 2,956.3 Increased mainly due to strong growth in Q4FY18
Branded Formulations 548.9 611.5 689.8 793.2 699.2 804.1
Contract Research 1,192.7 1,423.1 1,703.4 2,011.4 1,602.1 1,874.5 Increased mainly due to strong growth in Q4FY18
Licensing income 144.2 22.8 120.0 120.0 120.0 120.0
Earlier
Source: Company, ICICI Direct Research; * excludes Licensing income
ICICI Securities Ltd | Retail Equity Research Page 3
Company Analysis
Biocon was established in 1978 by first generation entrepreneur Dr Kiran
Mazumdar-Shaw. Unlike most pharma companies that are chemical
based, Biocon has carved out its niche in the more complex
biotechnology field. Over the decades, Biocon has successfully evolved
into an emerging global biopharma enterprise, serving its partners and
customers in over 75 countries. As a fully integrated biopharma company,
it delivers innovative biopharmaceutical solutions, ranging from discovery
to development & commercialisation. In 2004, it came out with its maiden
IPO.
Four of its biosimilar products (Trastuzumab, Pegfilgrastim, Adalimumab
and Insulin Glargine) have already reached the critical milestone of global
Phase III clinical trials. The company has initiated filings of biosimilars in
the US and EU besides launches in Japan. Biocon entered into a
partnership with Mylan for six biosimilar programs (Trastuzumab,
Pegfilgrastim, Adalimumab, Bevacizumab, Etanercept and Filgrastim) and
three insulin analog programmes (Glargine, Lispro and Aspart).
The company has received approval for its Insulin Glargine from the
Japanese regulator in March 2016. Biocon has developed and
manufactured Insulin Glargine BS Injection Kit (FFP). FFP in Japan has
commercialised it. The company also achieved its first ANDA approval,
Rosuvastatin Calcium in US.
The company also entered in to a partnership with Sandoz, a Novartis
division and a global leader in biosimilars, for an exclusive portfolio of
next-generation biosimilars in the area of immunology and oncology. This
synergistic partnership will leverage the capabilities of both partners for
an ‘end to end’ play encompassing development, manufacturing,
regulatory approval and commercialization globally. This collaboration
addresses some of the long term biosimilars opportunities beyond the
near term opportunities being addressed by existing partnership with
Mylan.
Exhibit 1: Biosimilars: Insulin pipeline
Molecule Type Status Market Size (US$ billion)
Rh Insulin Regular Acting Insulin Pre-clinical (US), Marketed EM 3.2
Glargine Long Acting Insulin Global Phase III, Japan Aprvd. 6.4
Aspart Rapid Acting Insulin Analog Global Phase I 4.5
Lispro Rapid Acting Insulin Analog Preclinical/Scale Up 2.8
Total Market Size 16.9
Source: Company, ICICI Direct Research
Exhibit 2: Biosimilars: MAbs & biologics pipeline
Molecule Indication Status Market Size (US$ billion)
Adalimumab Chronic Plaque Psoriasis Global Phase III completed 16.1
Trastuzumab mBreast Cancer Aprovd in US, UR in EU 6.9
Pegfilgrastim Chemo-induced Neutropenia Under Review in EU 4.6
Bevacizumab mColorectal Cancer Global Phase III, RoW Phase III 6.9
Filgrastim Chemo-induced Neutropenia Preclinical/Scale Up 0.8
Etanercept Auto-immune Preclinical/Scale Up 8.9
Total Market Size 44.2
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 4
Exhibit 3: Revenues to grow at CAGR of 21.7% in FY18-20E
2485.3
2877.33089.8
3381.0
3921.64129.7
5148.9
6115.5
0.0
1000.0
2000.0
3000.0
4000.0
5000.0
6000.0
7000.0
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Revenues
(|
crore)
Source: Company, ICICI Direct Research
Biocon has realigned its segments after the adoption of Ind-As. They are-
1) small molecules, 2) research services (Syngene), 3) branded
formulations and 4) biologics.
Small molecules- Small molecules (35% of FY18 total revenue) comprise
APIs like statins, immunosuppressants, specialty APIs & also include
generic formulations business witness steep pricing pressure. The
company is exploring fewer opportunities but with higher profitability in
this segment like moving into formulations & filing own ANDAs, 505 (b)(2)
filing, etc. It has already filed few ANDAs, which include complex generics
& injectables. We expect small molecules segment to grow at a CAGR 7%
CAGR to | 1685 crore in FY18-20E.
Biologics – The biologics segment includes novel biologics and
biosimilars, including Rh-insulin, insulin analogs, monoclonal antibodies
and recombinant proteins. This segment accounts for ~18% of FY18 total
revenue. Biocon is mainly focusing on the following therapies-
diabetology, oncology and immunology. This segment has been
specifically carved out to tap numerous biosimilar opportunities
especially in the next three to five years. Globally, the biosimilar space is
still in a nascent state for want of guidelines by most countries including
the US. The now defunct Pfizer deal was also based on biosimilar
opportunities. Biocon’s biosimilar pipeline currently includes 10 products
in different phases of completion. Out of these 10 products, the four
diabetic products- Rh Insulin, Glargine, Lispro and Aspart were the
subject matter of two deals first with Pfizer and then with Mylan
(excluding Rh Insulin). In Q3, Biocon has secured first ever biosimilar
approval (gTrastuzumab) by an Indian pharma company in the US.
Although Trastuzumab approval does not imply immediate launch of the
product in the US, it endorses the development and manufacturing
capabilities of Biocon in the realm of biosimilars. The company has also
announced second partnership in biosimilar space with Sandoz for global
development of next generation biosimilars. The company has invested
heavily in this space over the last two to three years, especially the
Malaysian facility, which is now functional. The progress, so far, has been
encouraging with launches in emerging markets, Glargine launch in Japan
and filing arrangements in the EU and US. We expect biologics to grow at
a CAGR of ~40% to | 1506 crore in FY18-20E.
10.7% CAGR
21.7% CAGR
ICICI Securities Ltd | Retail Equity Research Page 5
Exhibit 4: Recent Progress on the biosimilars front
Date Event
Apr-18 Biocon/Mylan have in-licensed Humira biosimilar from Fujifilm and expects to launch in Europe in H2CY2018
Mar-18 Mylan and Biocon receive approval for Semglee Biosimilar Insulin Glargine in EU and Australia
Jan-18 Collaborates with Sandoz for a global partnership to develop, manufacture and commercialize a number of next generation biosimilars
Dec-17 USFDA approval for Ogivri, a biosimilar Trastuzumab co-developed by Biocon and Mylan
Jul-17 Biocon's partner Fujifilm launches insulin Glargine in Japan
Jul-17 USFDA Oncologic Drugs Advisory Committee (ODAC) recommended approval of Biocon-Mylan's proposed biosimilar Trastuzumab in all eligible indications
Jan-17 USFDA accepts Biocon’s biologics licence application for its biosimilar oncology drug Trastuzumab
Aug-16 European Medicines Agency has accepted Biocon-Mylan Proposed Biosimilar Trastuzumab (gHerceptin) for Review
Jul-16 European Medicines Agency has accepted Biocon-Mylan Proposed Biosimilar Pegfilgrastim (gNeulasta) for Review
Jul-16 Biocon's Insulin Glargine Launched in Japan
Jun-16 Biocon and Mylan to present Phase 3 Trastuzumab Biosimilar Data at the American Society of Clinical Oncology (ASCO) Annual Meeting
Mar-16 Biocon's Insulin Glargine Receives Regulatory Approval in Japan
Mar-16 Biocon inks co-development & commercialisation agreement with Lab PiSA for Rh-insulin in US
May-15 Biocon-Mylan's PEG-G-CSF and Adalimumab enter Phase III clinical trials; patient recruitment for one Insulin Glargine Phase III study completed
Source: Company, ICICI Direct Research
Exhibit 5: Small molecules & biologics to grow at CAGR of 19% in FY18-20E
1503.7
1732.0 1765.0 1729.0
2230.0 2256.1
2635.7
3190.8
0
500
1000
1500
2000
2500
3000
3500
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(|
crore)
Small Molecules+Biologics
Source: Company, ICICI Direct Research
Branded formulations - It comprises India and UAE formulations. Biocon
owns 80+ brands encompassing seven therapeutic segments viz.
diabetology, oncology, nephrology, cardiology, immunotherapy,
comprehensive care and bio-products. However, with ~0.35% market
share (AIOCD MAT March 2018) and 56th
rank in the IPM market (AIOCD),
the company is still a marginal player in the Indian context. Among
therapies, diabetology is the largest therapy, which accounts for 58% of
branded formulations. Some of its unique launches are INSUPen (insulin
delivery device), Biomab (novel biologic for oncology) and Alzumab
(novel biologic for psoriasis). The list includes CANMAb (biosimilar
version of oncology product Herceptin). This segment constitutes ~14%
of total revenue (FY18).
8.5% CAGR 18.9% CAGR
ICICI Securities Ltd | Retail Equity Research Page 6
Exhibit 6: Branded formulation sales to grow at CAGR of 14% in FY18-20E
347.9
391.4430.0 440.0
548.9
611.5
689.8
793.2
0
100
200
300
400
500
600
700
800
900
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(|
crore)
Branded Formulations
Source: Company, ICICI Direct Research
Research services (Syngene) - Biocon’s research arm Syngene
contributed ~33% to FY18 total revenue. This is the CRO business of
Biocon, which deploys over 3500 scientists (FY18). The company
provides end-to-end discovery and development services for novel
molecular entities (NMEs) across industrial sectors including
pharmaceutical, biotechnology, agrochemicals, consumer health, animal
health, cosmetic and nutrition companies under one roof with a
distinctive economic advantage. It also provides support for biosimilar
and generic molecules development. The company provides variable cost
alternative like full-time equivalent (FTE) and fee-for-service (FFS) to the
traditionally fixed cost, in-house, resource intensive business model of
R&D focused organisations. Currently, the company has 316 clients
ranging from large multinational corporations to start-ups, including eight
of the top 10 global pharmaceutical companies. The company has
developed long-term relationships and has multi-year contracts with its
clients, including four long-duration multidisciplinary partnerships with
Bristol-Myers Squibb (BMS), Herbalife, Baxter International and Amgen.
This segment has consistently been growing at double digit and has
recently been the major growth driver for the company as the biopharma
segment is slowing down. We expect revenues to grow at a CAGR of
~19% to | 2011 crore in FY18-20E.
Research services revenues (FY17)
Dedicated
R&D
services
(34%)
Discovery
services
(26%)
Development
& Mfg
services
(40%)
11.9% CAGR
13.9% CAGR
ICICI Securities Ltd | Retail Equity Research Page 7
Exhibit 8: Trends in overall R&D cost (Ex Capitalisation)
167.8
130.6
168.8
265.5 272.4
215.8
241.2
287.3
6.8
4.5
5.5
7.9
6.9
5.2
4.7
4.7
0
100
200
300
400
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(|
crore)
3.0
4.5
6.0
7.5
9.0
(%
)
R & D cost R & D cost (% revenues)
Source: Company, ICICI Direct Research
Exhibit 9: Trends in EBITDA margins
543.0
687.1 695.8635.8
851.2 829.1
1204.4
1583.8
23.9
22.5
18.8
21.7
21.8
20.1 23.4
25.9
0
400
800
1200
1600
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(|
crore)
18
20
22
24
26
28
(%
)
EBITDA EBITDA Margins (%)
Source: Company, ICICI Direct Research
Exhibit 7: Contract research to grow at CAGR of 17% in FY18-20E
558.0
714.7822.0
1060.0
1192.7
1423.1
1703.4
2011.4
0
500
1000
1500
2000
2500
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(|
crore)
Contract Research
Source: Company, ICICI Direct Research
20.6% CAGR
18.9% CAGR
ICICI Securities Ltd | Retail Equity Research Page 8
Exhibit 10: Net profit to grow at CAGR of 50% in FY18-20E
508.9
413.8
497.4550.4
612.1
372.4
558.2
839.2
14.4
20.516.1 16.3
15.6 9.0
10.8
13.7
0
200
400
600
800
1000
1200
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(|
crore
)
4
6
8
10
12
14
16
18
20
22
(%
)
Net Profit Net Profit Margins (%)
Source: Company, ICICI Direct Research
Exhibit 11: Return ratios likely to improve on the back of better profitability…
11.9
10.4
6.5
9.6
8.4
11.3
11.7
14.7
12.6
13.7
12.5
7.8
10.5
7.2
9.8
13.0
6
10
14
18
22
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
(%
)
4
6
8
10
12
14
16
(%
)
RoCE (RHS) RoNW (LHS)
Source: Company, ICICI Direct Research
SWOT Analysis
Strengths – It is an early entrant in a more lucrative biotech space with
proven track records. The space has high entry barriers due to complexity
of the molecules and tougher trials requirement. Four dedicated centres
catering to the top global players.
Weakness - Its largest segment i.e. small molecules has been witnessing
constant pricing pressure and capacity constraints. Other emerging
segments such as biosimilars will take some time to scale up.
Opportunities – A huge opportunity beckons for biosimilars as globally
seven out of the top 10 drug brands are biologics. Some of them will lose
patent exclusivity in the next five to seven years. The price erosion in
biosimilars is much less than that of chemical compound based drugs.
Threats- (i) Backtracking by Mylan may increase the R&D cost sharply, (ii)
pricing pressure in branded formulations, (iii) increased scrutiny by
USFDA and other regulators worldwide.
ICICI Securities Ltd | Retail Equity Research Page 9
Exhibit 12: Trends in quarterly performance
(| Crore) Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 YoY (%) QoQ(%)
Revenues 837.3 813.9 796.2 807.1 945.0 992.0 954.1 1044.4 931.1 933.7 968.6 1057.9 1169.5 25.6 10.5
Raw Material Cost 337.5 293.9 326.3 303.1 322.6 400.2 353.8 374.7 348.4 365.8 377.6 423.8 475.2 36.4 12.1
% to revenues 40.3 36.1 41.0 37.6 34.1 40.3 37.1 35.9 37.4 39.2 39.0 40.1 40.6
Gross Profit 499.8 520.0 469.9 504.0 622.4 591.8 600.3 669.7 582.7 567.9 591.0 634.1 694.3 19.2 9.5
Gross Profit Margin (%) 59.7 63.9 59.0 62.4 65.9 59.7 62.9 64.1 62.6 60.8 61.0 59.9 59.4 -321 bps -57 bps
Employee cost 136.6 148.3 143.1 152.2 166.5 178.5 180.4 194.2 193.9 213.3 225.5 235.3 257.0 32.5 9.2
% to revenues 16.3 18.2 18.0 18.9 17.6 18.0 18.9 18.6 20.8 22.8 23.3 22.2 22.0 115 bps -27 bps
R & D 56.0 50.0 57.4 67.9 100.0 51.4 65.0 85.0 65.0 58.2 53.9 52.9 51.0
% to revenues 6.7 6.1 7.2 8.4 10.6 5.2 6.8 8.1 7.0 6.2 5.6 5.0 4.4 -262 bps -64 bps
Other Expenditure 122.4 113.4 100.3 99.1 159.0 98.8 114.9 114.4 136.3 104.3 129.3 124.2 153.3 12.5 23.4
% to revenues 14.6 13.9 12.6 12.3 16.8 10.0 12.0 11.0 14.6 11.2 13.3 11.7 13.1 -153 bps 137 bps
Total Expenditure 652.5 605.6 627.1 622.3 748.1 728.9 714.1 768.3 743.6 741.6 786.3 836.2 936.5 25.9 12.0
% to revenues 77.9 74.4 78.8 77.1 79.2 73.5 74.8 73.6 79.9 79.4 81.2 79.0 80.1
EBIDTA 184.9 208.3 169.1 184.8 196.9 263.1 240.0 276.1 187.5 192.1 182.3 221.7 233.0 24.3 5.1
EBITDA Margin (%) 22.1 25.6 21.2 22.9 20.8 26.5 25.2 26.4 20.1 20.6 18.8 21.0 19.9 -21 bps -103 bps
Depreciation 58.5 59.0 61.0 63.9 64.8 66.1 68.3 70.3 72.5 98.8 93.6 97.4 95.3 31.4 -2.2
Interest 0.0 4.4 2.9 1.5 16.6 5.7 6.5 8.8 5.0 16.1 13.8 14.7 16.9 238.0 15.0
OI 16.8 19.9 22.7 21.6 21.4 40.9 38.4 47.5 43.2 54.0 50.8 33.9 67.5 56.3 99.1
PBT 143.2 164.8 127.9 141.0 136.9 232.2 203.6 244.5 153.2 131.2 125.7 143.5 188.3 22.9 31.2
Tax 21.9 37.6 28.2 21.8 59.1 55.2 41.7 54.4 10.3 37.6 42.5 36.1 40.7 295.1 12.7
Tax Rate (%) 15.3 22.8 22.1 15.5 43.2 23.8 20.5 22.2 6.7 28.7 33.8 25.2 21.6
PAT 121.3 127.2 99.7 119.2 77.8 177.0 161.9 190.1 142.9 93.6 83.2 107.4 147.6 3.3 37.4
PAT Margin (%) 14.5 15.6 12.5 14.8 8.2 17.8 17.0 18.2 15.3 10.0 8.6 10.2 12.6
Exceptional Items (EI) -95.2 0.0 107.8 0.0 -268.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Profit before MI 216.4 127.2 -8.1 119.2 346.2 177.0 161.9 190.1 142.9 93.6 83.2 107.4 147.6 3.3 37.4
Add/(less) MI 15.3 7.1 12.5 17.7 21.1 15.8 19.8 19.5 20.9 16.4 20.3 21.7 22.3
Net Profit after MI 201.2 120.1 -20.6 101.5 325.1 161.2 142.1 170.6 122.0 77.2 62.9 85.7 125.3 2.7 46.2
Net Profit (excl.EI) 106.0 120.1 87.2 101.5 56.7 161.2 142.1 170.6 122.0 77.2 62.9 85.7 125.3 2.7 46.2
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 10
Conference call Highlights
Insulin Glargine (Semglee) co-developed by Biocon and Mylan, is
the first biosimilar from the partnered portfolio to be approved in
the developed markets of EU and Australia. Semglee is expected
to be launched by Mylan in Australia and Europe in the 2HFY18
Biocon also received Insulin Glargine approval in South Korea and
biosimilar Trastuzumab approval in Turkey
Biocon and Mylan agreed to accelerate the introduction of
biosimilar Adalimumab in Europe through Mylan’s in-licensing
arrangement with Fujifilm Kyowa Kirin Biologics (FKB), to enable
launch in EU, around market formation. FKB’s product is at an
advanced stage of review and could potentially obtain approval in
Europe in the 2HCY18, clearing the way for a potential launch by
Mylan around market formation. Biocon retains its economic
interest in this arrangement vis-a-vis Mylan.
Biocon and Mylan have expanded their long-standing
collaboration to add two new next-generation biosimilar
programs with Insulin Glargine 300 units/mL and Pertuzumab
In the US, Mylan’s application for Insulin Glargine under the NDA
pathway is under review by the USFDA
The company has completed Phase I study for Insulin Aspart and
expect comparative PK/PD results in H1FY19
In Europe, the regulatory review of the company’s Marketing
Authorization Applications (MAAs) for biosimilar Trastuzumab and
Pegfilgrastim are progressing well and it expects decisions by
CHMP by end of CY18
The review of Biologics License Application (BLA) for biosimilar
Pegfilgrastim by USFDA is in progress. The company has
responded to all information requests received till date and are
awaiting their response by June 4, 2018. As per the management,
the global Phase III trial of biosimilar Bevacizumab continues to
make good progress
Gross R&D expenses in FY18 were at | 401.9 crore, while net R&D
expenses reflected in the P&L were | 215.8 crore. The company
has guided for | 450-500 crore of gross R&D for FY19
Net loss (ex R&D) of Malaysian subsidiaries reported in P&L was
US$ 5 million in FY18. The company expects ~US$ 50 million
worth of expenses chargeable to P&L for FY19 (~US$ 48 million in
FY18)
Guided for mid teen growth of Branded formulation in FY19
Guided for | 1000 crore gross capex excluding Syngene in the
next two years
The company has guided for core margins at similar level of FY18
i.e. 27%
ICICI Securities Ltd | Retail Equity Research Page 11
Valuation
Apart from the strong performance in Biologics and Syngene, Key
highlight for FY18 was biosimilar approvals from developed markets.
Although these approvals do not imply immediate launch of the product
in these regions, it endorses the development and manufacturing
capabilities of Biocon in the realm of biosimilars. Partnership in the
biosimilars space with Sandoz for global development of next generation
biosimilars has once again vindicated its capability in biosimilars.
Progress on the biosimilars regulatory front in developed markets and
launches in the developed as well as emerging markets are likely to
maintain investors optimism for the company. We continue to value the
stock on SOTP basis. Accordingly, we arrive at a target price of | 740 per
share.
Exhibit 13: Contract research to grow at CAGR of 17% in FY17-20E
Particulers FY19E EPS (| cr) Multiple (x) Per share (| )
Biocon (ex Syngene) 7.1 36.0 255.6
Syngene
Targeted Market Cap 14700
Biocon's Holding 74.5%
Holding Company Discount 20.0%
Syngene valuation 8762
Per share valuation 146
NPV (BIosimilars) 340
SOTP valuation 740
Source: ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 12
Exhibit 14: One year forward PE
0.0
100.0
200.0
300.0
400.0
4/26/201
1
10/26/20
11
4/26/201
2
10/26/20
12
4/26/201
3
10/26/20
13
4/26/201
4
10/26/20
14
4/26/201
5
10/26/20
15
4/26/201
6
10/26/20
16
4/26/201
7
10/26/20
17
4/26/201
8
(|)
Series1 43.5x 33.5x 17.0x 10.4x 3.8x
[
Exhibit 15: One year forward PE of company vs. CNX Pharma Index
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.004/26/201
1
10/26/20
11
4/26/201
2
10/26/20
12
4/26/201
3
10/26/20
13
4/26/201
4
10/26/20
14
4/26/201
5
10/26/20
15
4/26/201
6
10/26/20
16
4/26/201
7
10/26/20
17
4/26/201
8
(x)
Biocon CNX Pharma
Source: Company, ICICI Direct Research
Exhibit 16: Valuation
Revenues Growth EPS Growth P/E EV/EBITDA RoNW RoCE
(| crore) (%) (|) (%) (x) (X) (%) (%)
FY17 3922 16.0 8.5 61.6 63.9 45.8 10.5 9.6
FY18E 4130 5.3 6.2 -26.8 105.0 47.2 7.2 8.4
FY19E 5149 24.7 9.3 49.9 70.1 32.6 9.8 11.3
FY20E 6115 18.8 14.0 50.3 46.6 24.8 13.0 14.7
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 13
Recommendation history vs. Consensus
0.0
10.0
20.0
30.0
40.0
50.0
60.0
0
100
200
300
400
500
600
700
800
Apr-18Feb-18Nov-17Sep-17Jul-17Apr-17Feb-17Nov-16Sep-16Jun-16Apr-16Feb-16Nov-15Sep-15Jun-15Apr-15
(%
)(|)
Price Idirect target Consensus Target Mean % Consensus with BUY
Source: Reuters, Company, ICICI Direct Research
Key events
Date Event
Nov-13 Receives marketing approval from Drugs Controller General of India to launch its biosimilar Trastuzumab (anti-cancer) in Indian market.
Jan-14 Biocon launches its biosimilar CanMab in Indian market
Sep-14 Biocon Research buys back the 7.69% stake held by GE Equity International Mauritius valuing Syngene at | 2800 crore.
Jan-15 Silver Leaf Oak acquires 10% stake in Syngene International, Biocon's Research Services Subsidiary at a valuation of | 3800 crore
Jul-15 Syngene IPO starts from July 27, 2015 at a price range of | 240-250
Oct-15 Acquired API unit of Acacia Life Sciences Private Limited at Vizag
Jun-16 Biocon and Mylan to Present Phase 3 Trastuzumab Biosimilar Data at the American Society of Clinical Oncology (ASCO) Annual Meeting
Jul-16 Biocon's Insulin Glargine launched in Japan
Jul-16 European Medicines Agency accepts Biocon-Mylan proposed biosimilar Pegfilgrastim (gNeulasta) for review
Aug-16 European Medicines Agency accepts Biocon-Mylan proposed biosimilar Trastuzumab (gHerceptin) for review
Jan-17 USFDA accepts Biocon’s biologics licence application for its biosimilar oncology drug Trastuzumab
Jul-17 USFDA Oncologic Drugs Advisory Committee (ODAC) recommends approval of Biocon/Mylan’s proposed biosimilar Trastuzumab, a biologically similar version of
Roche's breast-cancer drug Herceptin
Dec-17 USFDA approval for Ogivri, a biosimilar Trastuzumab co-developed by Biocon and Mylan
Jan-18 Collaborates with Sandoz for a global partnership to develop, manufacture and commercialize a number of next generation biosimilars
Mar-18 Mylan and Biocon receive approval for Semglee Biosimilar Insulin Glargine in EU and Australia
Apr-18 Biocon/Mylan have in-licensed Humira biosimilar from Fujifilm and expects to launch in Europe in H2CY2018
Source: Company, ICICI Direct Research
Top 10 Shareholders Shareholding Pattern
Rank Investor Name Latest Filing Date % O/S Position Position Change
1 Shaw (Kiran Mazumdar) 31-Dec-17 39.6 237.9m 0.0
2 Glentec International 31-Dec-17 19.8 118.6m 0.0
3 OppenheimerFunds, Inc. 31-Dec-17 3.7 22.2m 1.6
4 Biocon India Ltd Employee Welfare Trust 27-Mar-18 1.5 9.0m -0.2
5 Franklin Templeton Asset Management (India) Pvt. Ltd. 31-Mar-18 1.4 8.4m 0.0
6 Jupiter Asset Management Ltd. 31-Dec-17 1.4 8.4m -2.5
7 Templeton Asset Management Ltd. 31-Dec-17 1.1 6.7m 2.2
8 Chandavarkar (Arun Suresh) 31-Dec-17 1.1 6.6m 0.0
9 Aditya Birla Sun Life AMC Limited 31-Mar-18 0.8 5.0m 0.0
10 The Vanguard Group, Inc. 31-Mar-18 0.7 4.5m -0.3
(in %) Mar-17 Jun-17 Sep-17 Dec-17 Mar-18
Promoter 60.7 60.7 60.7 60.7 60.7
Public 39.3 39.3 39.3 39.3 39.3
Source: Reuters, ICICI Direct Research
Recent Activity
Investor Name Value ($ mn) Shares Investor Name Value ($ mn) Shares
Templeton Asset Management Ltd. 18.47 2.19 Jupiter Asset Management Ltd. -20.98 -2.49
OppenheimerFunds, Inc. 13.64 1.62 Fidelity International -18.86 -2.24
Mazumdar (Ravi Rasendra) 1.45 0.15 Reliance Nippon Life Asset Management Limited -3.23 -0.35
Dimensional Fund Advisors, L.P. 1.10 0.11 Causeway Capital Management LLC -2.38 -0.28
Charles Schwab Investment Management, Inc. 0.98 0.11 The Vanguard Group, Inc. -2.56 -0.28
BUYS SELLS
Source: Reuters, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 14
.
Financial summary
Profit and loss statement | Crore
Year-end March FY17 FY18E FY19E FY20E
Total Operating Income 3921.6 4129.7 5148.9 6115.5
Growth (%) 16.0 5.3 24.7 18.8
Raw Material Expenses 1477.1 1642.4 1996.4 2310.2
Employee Expenses 747.0 931.1 1109.3 1256.3
R&D Expenditure 272.4 215.8 241.2 287.3
Other Expenditures 573.9 511.3 597.6 677.9
Total Operating Expenditure 3070.4 3300.6 3944.4 4531.6
Operating Profit (EBITDA) 851.2 829.1 1204.4 1583.8
Growth (%) 33.9 -2.6 45.3 31.5
Depreciation 277.2 385.1 441.7 518.8
Interest 26.0 61.5 42.6 27.6
Other Income 157.1 206.2 103.0 91.7
PBT before Exceptional Items 705.1 588.7 823.1 1129.1
Less: Exceptional Items -128.3 0.0 0.0 0.0
Total Tax 161.6 156.9 181.1 248.4
PAT before MI 671.8 431.8 642.0 880.7
Minority Interest 76.0 80.7 104.2 123.1
Adjusted PAT 508.7 372.4 558.2 839.2
Growth (%) 61.6 -26.8 49.9 50.3
EPS (Adjusted) 8.5 6.2 9.3 14.0
Source: Company, ICICI Direct Research
Cash flow statement | Crore
Year-end March FY17 FY18E FY19E FY20E
Profit/(Loss) after taxation 612.1 372.4 558.2 839.2
Add: Depreciation & Amortization 277.2 385.1 441.7 518.8
Net Increase in Current Assets -380.8 -276.0 -106.2 -349.7
Net Increase in Current Liabilities 310.4 526.3 209.2 239.9
Other Operating Activities 26.0 61.5 42.6 27.6
CF from operating activities 844.9 1069.3 1145.5 1275.9
(Increase)/Decrease in Investments -394.0 707.5 0.0 0.0
(Purchase)/Sale of Fixed Assets -632.2 -923.6 -1100.0 -1100.0
Increase/ (Decrease) in Minority Interest 110.3 91.6 -93.1 0.0
Other Investing Activities -65.2 -290.7 -27.6 -11.9
CF from investing activities -981.1 -415.2 -1220.7 -1111.9
Proceeds from issues of Equity Shares 0.0 0.0 0.0 0.0
Inc/(dec) in loan funds -261.9 -285.3 -500.0 -500.0
(Payment) of Dividend and Dividend Tax -70.2 -29.8 -56.2 -83.9
Interest Paid -26.0 -61.5 -42.6 -27.6
Other Financing Activities 0.0 0.0 0.0 0.0
CF from financing activities -358.1 -376.6 -598.8 -611.5
Net Cash flow -494.3 277.5 -674.0 -447.5
Opening Cash 1538.6 1044.3 1321.8 647.8
Closing Cash 1044.3 1321.8 647.8 200.4
Free Cash Flow 212.7 145.7 45.5 175.9
Source: Company, ICICI Direct Research
Balance sheet | Crore
Year-end March FY17 FY18E FY19E FY20E
Liabilities
Equity Capital 100.0 300.0 300.0 300.0
Reserve and Surplus 4737.7 4880.3 5382.4 6137.7
Total Shareholders funds 4837.7 5180.3 5682.4 6437.7
Total Debt 2205.4 1920.1 1420.1 920.1
Deferred Tax Liability (Net) -190.6 -193.4 -212.7 -234.0
Minority Interest 376.1 467.7 374.6 374.6
Other NCL & LT Provisions 393.9 410.1 392.3 392.3
Source of Funds 7622.5 7784.8 7656.6 7890.6
Assets
Gross Block - Fixed Assets 5409.7 5869.7 6794.7 7982.0
Accumulated Depreciation 1811.0 2196.1 2637.8 3156.6
Net Block 3598.7 3673.6 4156.9 4825.4
Capital WIP 839.2 1302.8 1477.8 1390.5
Total Fixed Assets 4437.9 4976.4 5634.7 6215.9
Goodwill on Consolidation 26.4 26.4 26.4 26.4
Investments 1382.7 675.2 675.2 675.2
Inventory 635.3 722.5 794.8 944.0
Debtors 883.2 1063.9 1104.9 1312.3
Cash 1044.3 1321.8 647.8 200.4
Other Current Assets 419.9 428.0 421.0 414.0
Total Current Assets 2982.7 3536.2 2968.4 2870.6
Creditors 739.7 1005.3 1200.1 1425.4
Provisions 46.8 46.5 76.7 106.8
Other Current Liabilities 698.2 959.2 943.4 927.9
Total Current Liabilities 1484.7 2011.0 2220.2 2460.1
Net Current Assets 1498.0 1525.2 748.2 410.5
Other Non Current assets 277.5 581.6 572.0 562.6
Application of Funds 7622.5 7784.8 7656.6 7890.6
Source: Company, ICICI Direct Research
Key ratios
Year-end March FY17 FY18E FY19E FY20E
Per share data (|)
Reported EPS 10.2 6.2 9.3 14.0
BV per share 80.6 86.3 94.7 107.3
Dividend per share 1.2 0.5 0.9 1.4
Cash Per Share 17.4 22.0 10.8 3.3
Operating Ratios (%)
Gross Margin 62.3 60.2 61.2 62.2
EBITDA margin 21.7 20.1 23.4 25.9
EBIT Margin 14.6 10.8 14.8 17.4
PAT Margin 13.0 9.0 10.8 13.7
Inventory days 59.1 63.9 56.3 56.3
Debtor days 82.2 94.0 78.3 78.3
Creditor days 68.8 88.9 85.1 85.1
Asset Turnover 0.5 0.5 0.7 0.8
EBITDA Conversion Ration 99.3 129.0 95.1 80.6
Return Ratios (%)
RoE 10.5 7.2 9.8 13.0
RoCE 9.6 8.4 11.3 14.7
RoIC 13.1 9.8 15.6 18.8
Valuation Ratios (x)
P/E 63.9 105.0 70.1 46.6
EV / EBITDA 45.8 47.2 32.6 24.8
EV / Net Sales 9.9 9.5 7.6 6.4
Market Cap / Sales 10.0 9.5 7.6 6.4
Price to Book Value 8.1 7.5 6.9 6.1
Solvency Ratios
Debt / EBITDA 2.6 2.3 1.2 0.6
Debt / Equity 0.5 0.4 0.2 0.1
Current Ratio 1.3 1.1 1.0 1.1
Quick Ratio 0.9 0.7 0.7 0.7
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 15
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 1363 1,515 Hold 11994.6 57.4 57.0 63.5 75.7 23.8 23.9 21.5 18.0 42.3 34.6 31.5 30.2 33.7 26.8 24.4 23.9
Alembic Pharma ALEMPHA 520 570 Hold 9802.8 21.2 23.7 23.0 28.6 24.5 22.0 22.6 18.2 25.3 19.6 17.6 19.7 21.0 19.9 16.8 18.0
Apollo Hospitals APOHOS 1069 1,230 Hold 14865.5 15.9 10.3 23.8 31.6 67.3 103.9 44.9 33.9 6.1 6.8 9.3 10.8 6.0 3.8 8.2 10.0
Aurobindo Pharma AURPHA 631 665 Hold 36941.5 38.8 42.6 38.0 41.5 16.3 14.8 16.6 15.2 24.4 23.5 18.4 17.9 24.2 21.3 16.1 15.2
Biocon BIOCON 652 740 Buy 39111.0 8.5 6.2 9.3 14.0 76.9 105.0 70.1 46.6 9.6 8.4 11.3 14.7 10.5 7.2 9.8 13.0
Cadila Healthcare CADHEA 405 405 Hold 41466.7 14.5 16.6 18.1 20.3 27.9 24.3 22.4 19.9 13.1 17.6 16.7 17.3 21.4 20.7 19.2 18.6
Cipla CIPLA 595 640 Hold 47876.4 12.5 19.6 26.8 32.1 47.4 30.4 22.2 18.5 7.7 9.7 14.5 16.0 8.0 11.4 13.9 14.7
Divi's Lab DIVLAB 1160 1,070 Hold 30797.0 39.9 32.7 40.7 48.7 29.0 35.4 28.5 23.8 25.3 19.3 21.2 22.2 19.8 14.7 16.2 16.9
Dr Reddy's Labs DRREDD 2130 2,520 Hold 35336.1 78.0 59.4 93.4 140.2 27.3 35.9 22.8 15.2 7.3 6.8 9.5 12.1 10.5 7.5 10.8 14.2
Glenmark Pharma GLEPHA 568 535 Hold 16027.2 42.2 33.4 31.5 38.2 13.4 17.0 18.0 14.9 19.5 16.2 14.3 15.5 26.5 17.5 14.3 14.9
Indoco Remedies INDREM 205 280 Hold 1889.1 8.4 4.8 12.2 15.4 24.5 42.5 16.8 13.3 8.7 5.4 11.2 13.8 11.8 6.5 14.5 16.0
Ipca Laboratories IPCLAB 626 715 Buy 8976.5 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 871 1,090 Buy 13873.4 36.1 46.9 68.0 85.3 24.1 18.6 12.8 10.2 13.8 14.7 18.4 20.4 16.8 18.1 21.0 21.0
Lupin LUPIN 813 850 Hold 36754.3 56.7 30.2 35.1 45.2 14.3 26.9 23.1 18.0 16.6 10.0 10.9 13.7 19.0 9.3 10.0 11.6
Narayana Hrudalaya NARHRU 274 360 Buy 5607.7 4.1 3.8 6.4 9.7 66.4 72.6 42.6 28.3 12.5 10.5 14.1 18.4 8.8 7.4 11.2 14.5
Natco Pharma NATPHA 821 910 Hold 15149.7 26.3 34.8 41.5 26.7 31.2 23.6 19.8 30.7 33.6 26.7 28.1 16.7 29.5 21.4 21.9 12.9
Sun Pharma SUNPHA 519 530 Hold 124485.8 29.0 12.2 18.6 22.4 17.9 42.5 27.8 23.2 20.3 10.5 12.4 13.7 19.0 7.6 10.7 11.6
Syngene Int. SYNINT 627 715 Buy 12532.0 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 1403 1,390 Hold 23740.9 55.2 38.8 51.1 69.6 25.4 36.2 27.5 20.2 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 16
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 pankaj.pandey@icicisecurities.com
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com
ICICI Securities Ltd | Retail Equity Research Page 17
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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
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in the past twelve months.
ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in
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 the report in the past twelve months.
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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described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and
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