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9 July 2014 1

Alok Dalal (Alok.Dalal@MotilalOswal.com); +91 22 3982 5584


Hardick Bora (Hardick.Bora@MotilalOswal.com); +91 22 3982 5423
Aggregate core EBITDA to grow 13%, adj. PAT to grow 11%
INR depreciation to aid operations; higher taxes to impact PAT growth

Expect aggregate core EBITDA to grow 13% YoY
For 1QFY15, we expect core sales growth of 16% YoY and core EBITDA growth of
13% YoY for our Healthcare Universe (excluding one-offs). Adjusted PAT is likely to
grow 11% YoY, mainly due to higher taxes. High base effect would impact
operational performance for most companies.

Higher contribution from recently launched products in the US and better sales mix
would drive growth for Dr Reddys, Lupin, Cadila Healthcare, and Alembic Pharma.
Increasing contribution from branded business is likely to drive operational
performance for IPCA Labs. Biocon is likely to report high growth due to lower R&D
expenses. Both MNCs under our coverage, Sanofi India and GSK Pharma, would
report healthy operational performance due to increase in prices of products exiting
price control and low base.

Favorable currency movement should favorably impact operating performance for
the rest of our Healthcare Universe. A sequentially flat INR against the USD may lead
to insignificant MTM impact from monetary forex liabilities. Yet, due to higher taxes,
adjusted PAT would grow slower than core EBITDA.

Expected quarterly performance summary (INR m)
Sector CMP Sales EBDITA Net Profit

(INR)
4.7.14
RECO Jun-14
Var %
YoY
Var %
QoQ
Jun-14
Var %
YoY
Var %
QoQ
Jun-14
Var %
YoY
Var %
QoQ
Alembic Pharma 310 Buy 5,051 18.3 8.9 909 27.2 -0.4 612 31.1 -0.2
Biocon 543 Sell 8,052 15.9 11.4 1,771 21.2 4.2 1,149 22.9 1.7
Cadila Health 1,105 Buy 20,131 23.0 2.3 3,621 26.7 1.0 2,419 23.7 -4.3
Cipla 448 Neutral 29,744 20.7 18.1 5,795 -14.2 41.6 3,559 -25.1 36.5
Divis Labs 1,527 Buy 5,967 15.7 -19.1 2,130 8.7 -17.8 1,581 -9.5 -18.1
Dr Reddy s Labs 2,679 Buy 34,343 23.1 -1.3 8,071 61.2 6.4 5,257 60.6 9.2
Glenmark Pharma 602 Buy 14,185 14.6 -13.5 2,494 0.8 -22.7 1,082 -15.9 -37.9
GSK Pharma 2,548 Neutral 6,878 8.0 14.7 1,277 12.4 30.8 1,167 22.7 20.8
IPCA Labs. 881 Buy 9,583 19.0 27.8 2,304 34.7 26.4 1,526 112.6 11.3
Lupin 1,088 Buy 28,309 22.7 0.5 6,567 44.4 2.1 3,943 69.1 -4.2
Ranbaxy Labs 534 Buy 27,484 2.4 11.4 1,714 -34.7 13.7 361 -73.0 164.9
Sanofi India 3,270 Buy 4,929 13.3 10.8 1,016 16.2 25.4 655 27.9 26.6
Sun Pharma 709 Buy 37,797 14.8 5.9 14,639 6.2 4.1 12,213 8.4 -6.3
Torrent Pharma 696 Neutral 10,819 11.3 11.3 2,057 -1.1 18.8 1,247 -16.3 34.9
Sector Aggregate 243,274 16.4 5.1 54,366 13.3 6.5 36,769 11.4 0.9
Note: Above numbers exclude one-offs to aid comparison of core operations.

Expected quarterly performance summary (Incl. upside from one-off opportunities, INR m))
Sector CMP Sales EBDITA Net Profit

(INR)
4.7.14
RECO Jun-14
Var %
YoY
Var %
QoQ
Jun-14
Var %
YoY
Var %
QoQ
Jun-14
Var %
YoY
Var %
QoQ
Glenmark Pharma 602 Buy 14,484 17.0 -13.9 2,792 12.9 -22.4 1,351 5.0 213.6
Lupin 1,088 Buy 29,775 23.0 -2.4 7,593 42.2 -6.0 4,823 20.3 -12.8
Sun Pharma 709 Buy 43,328 24.4 7.2 19,064 24.6 6.8 15,310 -220.0 -3.5
Torrent Pharma 696 Neutral 12,815 31.8 4.6 3,454 66.1 -1.3 2,444 64.0 0.2



Company name
Alembic Pharmaceuticals
Biocon
Cadila Health
Cipla
Divi's Laboratories
Dr Reddy s Labs
Glenmark Pharma
GSK Pharma
Ipca Laboratories
Lupin
Ranbaxy Labs
Sanofi India
Sun Pharma
Torrent Pharmaceuticals






June 2014 Results Preview | 9 July 2014

Healthcare
Investors are advised to refer through disclosures made at the end of the Research Report.



9 July 2014 2

1QFY15 Aggregates excluding one-offs
Healthcare Universe YoY growth (%) EBITDA Margin Net Profit Margin
Aggregates Sales EBITDA Adj PAT Jun-14 Jun-13 CHG (BP) Jun-14 Jun-13 CHG (BP)

MNC Pharma 10.1 14.1 24.5 19.4 18.8 67 15.4 13.6 178
Big 5 Generics 16.5 12.4 10.3 23.3 24.2 -84 16.1 17.0 -90
CRAMS 15.7 8.7 -9.5 35.7 38.0 -228 26.5 33.9 -737
Second Tier generics 17.5 16.4 17.3 19.4 19.6 -17 11.8 11.9 -2
Sector Aggregate 16.4 13.3 11.4 22.3 23.0 -61 15.1 15.8 -69
Source: MOSL; Big-5 Generics include Sun, Ranbaxy, Cipla, Dr Reddy's and Lupin.

Core 1QFY15 performance: Key highlights
We expect Dr Reddys, Lupin, Cadila Healthcare, IPCA Labs, Biocon, and Alembic
Pharma to record strong operational performance. We attribute the following
company-specific reasons for this performance:
Dr Reddys: We expect Dr Reddys to report strong growth of 61% in core
EBITDA, driven by a robust 33% growth in US base business and higher
contribution from low competition launches like gDacogen, gReclast, gVidaza.
The company will also benefit from low base effect. We expect core EBITDA
margin to expand 550bp YoY to 23.5%.
Lupin: Lupin is likely to witness 44% YoY growth in core EBITDA, as improving
product mix in the US started driving up margins post 2QFY14.
Cadila Healthcare: Uptick in recent launches and contribution from authorized
generics opportunities is likely to result in 50% growth in US sales. EBITDA
margin is likely to expand 50bp YoY due to benefit of operating leverage and
improving sales mix.
IPCA Labs: We expect sales growth momentum to continue, aided by 27%
growth in export formulations. Improving sales mix aided by higher contribution
from branded exports could result in EBITDA margin expansion of 280bp YoY.
Biocon: Slowdown in R&D activity is yet again likely to result in lower R&D
expenses. As such, we expect Biocons EBITDA margin to expand 100bp YoY.
Alembic Pharma: We expect revenue to grow 18% YoY, driven by increasing
contribution from recent launches in the US generics market. With improving
business mix, EBITDA could grow 27%.
MNCs: We expect GSK Pharma and Sanofi India to report healthy operational
performance due to price increases in products exiting price control and low
base effect.

Key developments
Sun Pharma announced acquisition of 100% stake in Ranbaxy for USD4b
The transaction would be an all-stock deal, resulting in 16.3% dilution for Sun
Pharma shareholders. Promoter stake would reduce to 54.7%. Ranbaxy
shareholders would receive 0.8 shares of Sun Pharma for each Ranbaxy share.
Consequently, Daiichi Sankyo would become the largest shareholder in Sun
Pharma, with a stake of 9%.
This transaction would make Sun Pharma the largest pharma company in India,
the largest Indian pharma company in the US, and strengthen its presence in
emerging markets.
The transaction is likely to be closed by the end of 2014. The acquisition would
add to Sun Pharmas cash earnings per share in the first full year. Sun Pharma
June 2014 Results Preview | Sector: Healthcare





9 July 2014 3

expects to realize revenue and operating synergies of USD250m by the third
year post closing of the transaction.

Ranbaxys exclusive copy to finally see light of day
Ranbaxy received FDA approval for its generic version of Diovan on 26 June
2014. This approval paves the way for the company to exercise its 180-day
exclusivity on the USD2.2b opportunity.
We estimate that the product could generate one-off sales of ~USD100m and
INR7/share of one-time profit for Ranbaxy over the exclusivity period. Our
expectation is based on the assumption that Novartis will introduce an
authorized generic version through its generics unit, Sandoz.
This development also increases the likelihood of Ranbaxy capitalizing on other
FTF opportunities gValcyte and gNexium.

INR depreciation to aid operations; minor MTM impact from forex liabilities
On an average, in 1QFY15, the INR depreciated 7% YoY against the USD. We
expect companies with largely unhedged net exports to realize the benefit of
favorable currency at the EBITDA level. Companies that are likely to benefit the
most include Alembic Pharma, Biocon, Cadila, Divis Labs, IPCA, and Dr Reddys.
The INR/USD exchange rate has remained flat QoQ. There would be no
significant MTM impact for companies with large forex liabilities.

Currency movement (INR/USD)

Source: Bloomberg, MOSL

Comparative valuation
Sector / Companies CMP Rating EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
(INR)

FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E
Healthcare


Alembic Pharma 310 Buy 16.3 21.7 26.5 19.0 14.3 11.7 13.2 10.0 8.0 38.9 38.3 35.2
Biocon 543 Sell 23.0 26.8 31.8 23.6 20.3 17.1 14.7 12.3 10.4 13.7 14.4 15.2
Cadila Health 1,105 Buy 46.4 56.8 64.3 23.8 19.5 17.2 17.0 12.2 10.5 25.2 30.1 27.4
Cipla 448 Neutral 17.4 23.4 28.5 25.8 19.1 15.7 15.0 11.5 9.4 12.4 14.6 15.3
Divis Labs 1,527 Buy 65.4 78.8 92.1 23.4 19.4 16.6 16.6 13.8 11.8 27.1 28.2 28.6
Dr Reddy s Labs 2,679 Buy 127.1 146.4 169.2 21.1 18.3 15.8 13.6 11.6 9.9 19.9 19.2 18.6
Glenmark Pharma 602 Buy 26.8 33.7 42.0 22.4 17.9 14.3 13.0 10.9 8.4 19.8 20.0 19.7
GSK Pharma 2,548 Neutral 61.9 84.8 98.0 41.2 30.1 26.0 33.8 22.8 19.3 26.3 34.6 37.6
IPCA Labs. 881 Buy 48.8 59.6 72.7 18.1 14.8 12.1 12.4 10.2 8.2 27.7 26.8 26.1
Lupin 1,088 Buy 41.2 53.0 61.5 26.4 20.5 17.7 15.4 12.5 10.4 23.8 24.7 23.4
Ranbaxy Labs 534 Buy 9.4 18.1 28.1 56.8 29.5 19.0 11.3 17.3 12.5 34.2 16.6 21.4
Sanofi India 3,270 Buy 125.0 152.8 177.5 26.2 21.4 18.4 15.7 12.8 10.7 19.5 21.4 22.4
Sun Pharma 709 Buy 26.6 31.1 35.3 26.6 22.7 20.1 17.4 15.5 13.8 25.7 23.7 21.8
Torrent Pharma 696 Neutral 36.4 43.1 55.7 19.1 16.2 12.5 10.5 9.7 8.1 28.1 27.2 29.1
Sector Aggregate

25.6 20.8 17.6 15.4 13.3 11.2 20.1 20.6 20.4
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June 2014 Results Preview | Sector: Healthcare





9 July 2014 4
















Quarterly Performance (Consolidated) (INR Million)
Y/E March FY14

FY15E FY14 FY15E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Sales 4,272 4,864 4,857 4,640

5,051 5,730 5,627 5,610 18,632 22,018
YoY Change (%) 16.5 19.5 31.5 22.7 18.3 17.8 15.9 20.9 22.5 18.2
Total Expenditure 3,557 3,937 3,834 3,727 4,142 4,526 4,411 4,425 15,055 17,505
EBITDA 715 927 1,022 913

909 1,203 1,215 1,185 3,577 4,513
Margins (%) 16.7 19.1 21.1 19.7 18.0 21.0 21.6 21.1 19.2 20.5
Depreciation 95 99 101 110

115 125 130 136 405 506
Interest 15 26 35 23

25 30 35 44 98 134
Other Income 0 2 2 28 5 5 5 5 32 20
PBT before EO expense 605 805 888 808

774 1,053 1,055 1,010 3,106 3,893
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT 605 805 888 808

774 1,053 1,055 1,010 3,106 3,893
Tax 139 189 229 195

163 221 222 212 751 818
Rate (%) 22.9 23.4 25.8 24.1

21.0 21.0 21.0 21.0 24.2 21.0
Minority Interest. 0 0 0 0 0 0 0 0 0 0
Reported PAT 466 616 659 613

612 832 834 798 2,355 3,075
Adj PAT 466 616 659 613

612 832 834 798 2,355 3,075
YoY Change (%) 51.3 45.1 36.6 40.4

31.1 35.0 26.5 30.2 42.5 30.6
Margins (%) 10.9 12.7 13.6 13.2 12.1 14.5 14.8 14.2 12.6 14.0
E: MOSL Estimates





June 2014 Results Preview | Sector: Healthcare

Alembic Pharmaceuticals


CMP: INR310 Buy
We expect sales to grow 18% YoY to INR5.1b, led by 60% growth in
international generics. While the domestic formulations business is
likely to grow 10% YoY, total API revenues would be flat.
EBITDA is likely to grow 27% YoY to INR909m, with EBITDA margin up
130bp to 18%, aided by recently launched products in the US generics
market and improving sales mix in domestic formulations.
We expect adjusted PAT to grow just 31% YoY to INR612m, primarily
driven by strong operational performance.
We believe ALPM has a focused management team in place and has
stepped into its next phase of high growth. The strong improvement
in operational performance over the last few quarters, we believe, is
but an undertone of this transformation.
Business mix is likely to improve further, with higher contribution
from US generics and specialty therapies in India, while low-margin
APIs and acute therapies may continue to face slowdown.
The stock trades at 19x FY15E and 14.3x FY16E EPS. Maintain Buy.
Key issues to watch for
Upside from Micardis HCT launch
Outlook for domestic formulations and US generics business

Bloomberg ALPM IN
Equity Shares (m) 188.5
M. Cap. (INR b)/(USD b) 58 / 1
52-Week Range (INR) 317 / 118
1,6,12 Rel Perf. (%) 21 / 23 / 87

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 18.6 22.0 26.8 31.8
EBITDA 3.6 4.5 5.9 7.1
NP 2.4 3.1 4.1 5.0
EPS (INR) 12.5 16.3 21.7 26.5
EPS Gr. (%) 42.7 30.4 32.8 22.3
BV/Sh. (INR) 35.8 48.1 65.0 85.7
RoE (%) 40.0 38.9 38.3 35.2
RoCE (%) 43.2 42.9 42.7 40.4
Valuation
P/E (x) 24.8 19.0 14.3 11.7
P/BV (x) 8.7 6.5 4.8 3.6
EV/EBITDA (x) 16.6 13.2 10.0 8.0
EV/Sales (x) 3.2 2.7 2.2 1.8





9 July 2014 5
















Quarterly Performance (Consolidated) (INR Million)
Y/E March FY14

FY15E FY14 FY15E
1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q
Net Sales 6,948 7,339 7,000 7,230 8,052 8,052 7,734 8,456 28,517 32,294
YoY Change (%) 21.7 23.9 10.4 14.7 15.9 9.7 10.5 17.0 17.5 13.2
Total Expenditure 5,486 5,650 5,320 5,530

6,280 6,240 6,033 6,537 21,986 25,090
EBITDA 1,462 1,689 1,680 1,700 1,771 1,812 1,702 1,919 6,531 7,204
Margins (%) 21.0 23.0 24.0 23.5 22.0 22.5 22.0 22.7 22.9 22.3
Depreciation 483 500 510 540

560 575 590 666 2,033 2,391
Interest 4 3 0 10

24 24 24 25 17 97
Other Income 284 187 190 230

285 290 300 315 891 1,190
PBT 1,259 1,373 1,360 1,380 1,472 1,503 1,388 1,543 5,372 5,906
Tax 297 319 260 190

294 301 278 309 1,066 1,181
Rate (%) 23.6 23.2 19.1 13.8 20.0 20.0 20.0 20.0 19.8 20.0
Minority Interest 27 31 50 60

29 30 31 33 168 123
PAT 935 1,023 1,050 1,130 1,149 1,172 1,079 1,202 4,138 4,602
YoY Change (%) 18.7 14.2 14.5 69.0

22.9 14.6 2.8 6.4 -18.7 11.2
Margins (%) 13.5 13.9 15.0 15.6 14.3 14.6 14.0 14.2 14.5 14.3
Licensing income 76 34 40 0

74 73 73 73 150 292
YoY Change (%) -45.3 - -54.5 -

-2.1 113.2 81.3 - -39.0 94.6
Contract research 1,546 1,881 1,830 1,880

1,942 2,060 2,020 2,082 7,137 8,104
YoY Change (%) 26.3 45.7 31.0 13.3 25.6 9.5 10.4 10.7 28.1 13.5
E: MOSL Estimates; Note - Quarterly nos will not add up to full-year nos due to restatements

June 2014 Results Preview | Sector: Healthcare

Biocon


CMP: INR543 Sell
We expect sales to grow 16% YoY to INR8b, led by 26% growth in CRO
division. The Biopharma division is likely to grow 13%.
We estimate licensing income at INR74m (INR76m in 1QFY14).
EBITDA is likely to grow 21% YoY to INR1.8b, with EBITDA margin
expanding 100bp to 22%. BIOS R&D activity has been moderating
since 3QFY14, which is likely to result in lower R&D spend YoY.
We expect adjusted PAT to grow just 23% YoY to INR1.1b, in line with
operational performance.
Key growth drivers for FY15/FY16 would be (1) traction in insulin
initiative in RoW, (2) ramp-up in CRO division, (3) contribution from
immuno-suppressant supplies, and (4) branded formulations.
However, high R&D costs and long-term capex in the near term would
put pressure on profitability and return ratios.
The stock trades at 23.6x FY15E and 20.3x FY16E earnings. Option
values for the future include separate listing of Contract Research
business and potential out-licensing of the Oral Insulin NCE by BMS.
Return ratios are likely to remain subdued, with both RoE and RoCE in
the 13-14% range from FY13 to FY15. Maintain Sell.
Key issues to watch for
Update on initiatives to out-license Anti-CD6
Progress on product registration for Rh-Insulin in Europe/US
Outlook for listing of Syngene

Bloomberg BIOS IN
Equity Shares (m) 200.0
M. Cap. (INR b)/(USD b) 109 / 2
52-Week Range (INR) 554 / 277
1,6,12 Rel Perf. (%) 15 / -12 / 59

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 28.5 32.3 38.5 45.6
EBITDA 6.5 7.2 8.8 10.5
Net Profit 4.1 4.6 5.4 6.4
Adj. EPS (INR) 20.7 23.0 26.8 31.8
EPS Gr. (%) 26.5 11.2 16.5 18.8
BV/Sh. (INR) 151.3 167.6 186.5 209.1
RoE (%) 13.7 13.7 14.4 15.2
RoCE (%) 11.7 11.6 12.2 13.2
Payout (%) 28.1 29.3 29.3 29.3
Valuations
P/E (x) 26.3 23.6 20.3 17.1
P/BV (x) 3.6 3.2 2.9 2.6
EV/EBITDA (x) 15.5 14.7 12.3 10.4
Div. Yield (%) 0.9 1.1 1.2 1.5





9 July 2014 6
















Quarterly Performance (Consolidated)

(INR Million)
Y/E March FY14 FY15E FY14 FY15E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Revenues 16,371 17,468 18,717 19,685

20,131 20,156 20,535 21,614 72,240 82,436
YoY Change (%) 5.7 12.9 16.7 22.1 23.0 15.4 9.7 9.8 13.6 14.1
Total Expenditure 13,513 14,863 15,764 16,100 16,510 16,483 16,993 18,091 60,239 68,078
EBITDA 2,858 2,605 2,953 3,586

3,621 3,673 3,542 3,523 12,001 14,359
Margins (%) 17.5 14.9 15.8 18.2 18.0 18.2 17.2 16.3 16.6 17.4
Depreciation 466 518 496 528

550 575 600 617 2,012 2,342
Interest 278 319 301 271

250 275 250 236 1,170 1,011
Other Income 125 248 239 162 125 150 125 191 775 591
PBT after EO Income 2,239 2,017 2,360 2,812

2,946 2,973 2,817 2,861 9,422 11,597
Tax 203 101 408 348

442 446 423 429 1,060 1,739
Rate (%) 9.1 5.0 17.3 12.4 15.0 15.0 15.0 15.0 11.3 15.0
Min. Int/Adj on Consol 80 82 92 72 85 87 87 91 326 350
Reported PAT 1,956 1,834 1,860 2,392

2,419 2,440 2,307 2,341 8,036 9,507
Adj PAT 1,956 1,834 1,894 2,529

2,419 2,440 2,307 2,341 8,207 9,507
YoY Change (%) 0.4 92.9 84.1 -3.7

23.7 33.1 21.8 -7.4 25.2 15.8
Margins (%) 11.9 10.5 10.1 12.8 12.0 12.1 11.2 10.8 11.4 11.5
Domestic formulation sales 6,252 6,263 5,883 6,247 6,877 7,015 6,765 7,184 24,645 27,841
YoY Change (%) 7.5 4.1 3.2 9.4 10.0 12.0 15.0 15.0 6.1 13.0
US sales 3,874 4,730 6,316 6,783

5,792 6,145 6,795 7,287 21,703 26,019
YoY Change (%) 7.9 28.7 61.1 74.7 49.5 29.9 7.6 7.4 44.0 19.9
E: MOSL Estimates





June 2014 Results Preview | Sector: Healthcare

Cadila Healthcare


CMP: INR1,105 Buy
We expect revenue to grow 23% YoY to INR20.1b, led by 50% YoY
growth in the US formulations. Total export formulations would grow
37% YoY to INR8.6b. Domestic formulations would grow 10% YoY to
INR6.9b, impacted by the new drug policy.
EBITDA is likely to grow 27% YoY to INR3.6b, with EBITDA margin
inching up 50bp YoY, aided by improving sales mix in the US.
Adjusted PAT is likely to grow 24% YoY to INR2.4b, slower than
EBITDA due to higher taxes.
We believe CDH has made investments in the right areas and will
unlock value at the appropriate time. We expect FY15 to be a year of
recovery for CDH.
New launches in the US would be an important trigger for the
company for FY15.
We estimate 17% EPS CAGR over FY14-17, with improving return
ratios over the next three years.
The stock trades at 23.8x FY15E and 19.5x FY16E EPS. Maintain Buy.
Key issues to watch for
Update on US launches from the Moraiya facility
Outlook for recovery in domestic formulations
Progress on improvement in balance sheet

Bloomberg CDH IN
Equity Shares (m) 204.7
M. Cap. (INR b)/(USD b) 226 / 4
52-Week Range (INR) 1,144 / 631
1,6,12 Rel Perf. (%) 16 / 17 / 8

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 72.2 82.4 97.8 111.4
EBITDA 12.0 14.4 19.5 22.7
Net Profit 8.2 9.5 11.6 13.2
Adj. EPS (INR) 40.1 46.4 56.8 64.3
EPS Gr. (%) 25.6 15.8 22.3 13.2
BV/Sh. (INR) 168.0 200.5 247.6 300.1
RoE (%) 25.2 25.2 30.1 27.4
RoCE (%) 18.7 20.8 26.0 26.9
Payout (%) 26.5 28.9 29.2 29.2
Valuations
P/E (x) 27.6 23.8 19.5 17.2
P/BV (x) 6.6 5.5 4.5 3.7
EV/EBITDA (x) 20.3 17.0 12.2 10.5
Div. Yield (%) 0.8 1.0 1.5 1.7





9 July 2014 7
















Quarterly Performance



(INR Million)
Y/E March FY14 FY15E FY14 FY15E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Revenues 24,639 25,124 25,808 25,195 29,744 28,501 28,944 29,299 101,003 116,489
YoY Change (%) 25.8 14.6 24.6 28.1 20.7 13.4 12.2 16.3 22.0 15.3
EBITDA 6,754 5,642 4,673 4,093 5,795 5,677 5,864 6,199 21,330 23,535
Margins (%) 27.4 22.5 18.1 16.2 19.5 19.9 20.3 21.2 21.1 20.2
Depreciation 789 914 912 1,050 1,100 1,125 1,150 1,200 3,726 4,575
Interest 408 450 333 341 350 350 350 350 1,457 1,400
Other Income 691 756 524 775 400 400 400 400 2,654 1,600
PBT after EO expense 6,249 5,034 3,952 3,477 4,745 4,602 4,764 5,049 18,800 19,160
Tax 1,500 1,358 987 753 1,186 1,151 1,191 1,262 4,634 4,790
Rate (%) 24.0 27.0 25.0 21.7 25.0 25.0 25.0 25.0 24.6 25.0
Minority Interest 0.0 95.7 122.2 116.9 65.0 65.0 140.0 140.0 282.5 410.0
Reported PAT 4,749 3,581 2,843 2,607 3,559 3,387 3,433 3,647 14,166 13,960
Adj PAT 4,749 3,581 2,843 2,607 3,559 3,387 3,433 3,647 14,166 13,960
YoY Change (%) 80.4 1.3 -16.1 -2.6 -25.1 -5.4 20.7 39.9 23.8 -1.5
Margins (%) 19.3 14.3 11.0 10.3 12.0 11.9 11.9 12.4 14.0 12.0
Domestic formulation sales 11,039 10,398 10,443 9,080 12,906 11,958 12,009 10,351 41,242 47,224
YoY Change (%) 17.6 11.4 13.0 16.7 16.9 15.0 15.0 14.0 14.9 14.5
Export formulations 10,344 12,190 13,520 12,820

14,362 14,140 15,177 16,356 48,874 60,036
YoY Change (%) 27.7 17.3 39.5 34.4 38.8 16.0 12.3 27.6 29.6 22.8
E: MOSL Estimates; Note: Quarterly numbers 2QFY14 onwards and annual numbers are consolidated

June 2014 Results Preview | Sector: Healthcare

Cipla


CMP: INR448 Neutral
We expect revenue to grow 21% YoY to INR29.7b.

The domestic formulations business would grow 14% YoY to
INR12.9b, while export formulations revenue would grow 39% YoY to
INR14.4b, aided by consolidation of Cipla Medpro.

EBITDA is likely to decline 14% YoY to INR5.8b, with EBITDA margin
likely to contract 7.9% YoY to 19.5% from a high base.

We expect adjusted PAT to decline 25% YoY to INR3.6b on account of
higher depreciation and lower other income.

We believe the next few quarters would remain an investment phase,
the benefits of which would come through only in FY16.

The stock trades at 25.8x FY15E and 19.1x FY16E EPS. Maintain
Neutral.
Key issues to watch for
Update on launch of inhalers in Europe
Improvement in profitability at Cipla Medpro

Bloomberg CIPLA IN
Equity Shares (m) 802.9
M. Cap. (INR b)/(USD b) 360 / 6
52-Week Range (INR) 453 / 367
1,6,12 Rel Perf. (%) 10 / -10 / -20

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 101.0 116.5 134.4 153.8
EBITDA 21.3 23.5 29.7 34.9
Net Profit 14.2 14.0 18.8 22.9
Adj. EPS (INR) 17.6 17.4 23.4 28.5
EPS Gr. (%) 23.8 -1.5 34.7 21.8
BV/Sh. (INR) 125.1 140.1 160.9 186.5
RoE (%) 14.1 12.4 14.6 15.3
RoCE (%) 17.4 16.0 18.7 19.8
Payout (%) 13.5 13.5 11.2 10.2
Valuations
P/E (x) 25.4 25.8 19.1 15.7
P/BV (x) 3.6 3.2 2.8 2.4
EV/EBITDA (x) 17.4 15.3 11.7 9.6
Div. Yield (%) 0.4 0.4 0.5 0.6





9 July 2014 8
















Quarterly Performance (INR Million)
Y/E March FY14 FY15E FY14 FY15E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Op Revenue 5,159 5,659 6,874 7,380 5,967 6,453 7,830 8,751 25,072 29,000
YoY Change (%) 10.1 19.7 28.9 13.6 15.7 14.0 13.9 18.6 17.2 15.7
Total Expenditure 3,200 3,182 4,015 4,788 3,837 3,807 4,432 5,303 15,185 17,379
EBITDA 1,959 2,477 2,859 2,592 2,130 2,646 3,398 3,448 9,887 11,622
Margins (%) 38.0 43.8 41.6 35.1 35.7 41.0 43.4 39.4 39.4 40.1
Depreciation 209 225 233 254 260 270 285 305 921 1,120
Interest 4 4 4 9 4 4 4 4 21 14
Other Income 547 376 98 120 160 160 160 160 1,140 640
PBT 2,293 2,624 2,721 2,449 2,027 2,532 3,270 3,299 10,086 11,127
Tax 546 574 531 518 446 557 719 726 2,169 2,448
Rate (%) 23.8 21.9 19.5 21.2 22.0 22.0 22.0 22.0 21.5 22.0
Reported PAT 1,747 2,049 2,190 1,931 1,581 1,975 2,550 2,573 7,917 8,679
Adj PAT 1,747 2,049 2,190 1,931 1,581 1,975 2,550 2,573 7,917 8,679
YoY Change (%) 4.4 73.7 51.8 6.2 -9.5 -3.6 16.4 33.3 31.5 9.6
Margins (%) 33.9 36.2 31.9 26.2 26.5 30.6 32.6 29.4 31.6 29.9
E: MOSL Estimates; Quarterly numbers are standalone

June 2014 Results Preview | Sector: Healthcare

Divi's Laboratories


CMP: INR1,527 Buy
We expect revenue to grow 16% YoY to INR6b on increased capacity
utilization at new the SEZ unit and favorable currency impact. Growth
would be driven by both CCS and API businesses.
EBITDA is likely to grow 9% YoY to INR2.1b, with 230bp YoY decline in
margins as contribution of generics in near term is likely to remain
higher.
We expect PAT to decline 10% YoY to INR1.6b due to lower other
income (forex gain of INR430m in 1QFY14).
DIVI expects FY15 revenue to grow more than 20%, with EBITDA
margin sustaining at 40%. Revenue growth would be aided by
capacity utilization at DSN SEZ.
We estimate 17% revenue, EBITDA, PAT CAGR over FY14-16, with
EBITDA margin stabilizing at ~40%.
We expect the balance sheet to continue strengthening, and expect
dividend payout to go up from 40% in FY14 to 45% in FY15.
The stock trades at 23.4x FY15E and 19.4x FY16E EPS. Buy.
Key issues to watch for
Ramp-up at Vizag SEZ
Outlook for growth beyond FY15

Bloomberg DIVI IN
Equity Shares (m) 132.7
M. Cap. (INR b)/(USD b) 203 / 3
52-Week Range (INR) 1,546 / 905
1,6,12 Rel Perf. (%) 19 / -2 / 25

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 25.3 29.0 34.6 40.6
EBITDA 10.1 11.6 13.9 16.2
Net Profit 7.7 8.7 10.5 12.2
Adj. EPS (INR) 58.3 65.4 78.8 92.1
EPS Gr. (%) 28.5 12.2 20.5 16.9
BV/Sh. (INR) 223.3 259.2 298.6 344.7
RoE (%) 28.3 27.1 28.2 28.6
RoCE (%) 36.0 34.6 36.1 36.6
Payout (%) 40.2 45.0 50.0 50.0
Valuations
P/E (x) 26.2 23.4 19.4 16.6
P/BV (x) 6.8 5.9 5.1 4.4
EV/EBITDA (x) 20.1 17.3 14.6 12.6
Div. Yield (%) 1.3 1.6 2.2 2.6





9 July 2014 9
















Quarterly Performance - IFRS (INR Million)
Y/E March FY14 FY15E FY14 FY15E
1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q
Gross Sales 28,449 33,575 35,338 34,809

34,343 35,894 37,666 37,323 132,171 145,226
YoY Change (%) 12.0 16.5 23.3 4.2

20.7 6.9 6.6 7.2 13.7 9.9
Total Expenditure 23,051 25,119 25,576 27,223

26,273 27,100 29,379 29,000 100,969 111,752
EBITDA 5,398 8,456 9,762 7,586

8,071 8,794 8,286 8,323 31,202 33,474
Margins (%) 19.0 25.2 27.6 21.8

23.5 24.5 22.0 22.3 23.6 23.0
Amortization 1,603 1,733 1,793 1,956

1,800 1,850 1,900 2,096 7,085 7,646
Other Income 342 972 735 437

300 300 300 302 2,486 1,203
Profit before Tax 4,137 7,695 8,704 6,067

6,571 7,244 6,687 6,529 26,602 27,031
Tax 528 792 2,521 1,252

1,314 1,449 1,337 1,306 5,093 5,406
Rate (%) 12.8 10.3 29.0 20.6

20.0 20.0 20.0 20.0 19.1 20.0
Net Profit 3,609 6,903 6,183 4,815

5,257 5,795 5,349 5,224 21,510 21,625
One-off/low-competition PAT in US 335 0 0 0

0 0 0 0 335 0
Adjusted PAT 3,273 6,903 5,686 4,815

5,257 5,795 5,349 5,224 21,174 21,625
YoY Change (%) 23.8 97.9 56.5 22.9

60.6 -16.0 -5.9 8.5 54.8 2.1
Margins (%) 11.5 20.6 16.1 13.8 15.3 16.1 14.2 14.0 16.0 14.9
E - MOSL Estimates

June 2014 Results Preview | Sector: Healthcare

Dr Reddys Labs


CMP: INR2,679 Buy
We expect 20% YoY growth in core revenue for 1QFY15 to INR34.2b.
Growth would be led by 27% YoY growth in US revenue and 22% YoY
growth in Russia/CIS. Revenue growth would be restricted by 12%
growth in domestic formulations and 13% growth in PSAI segment.
Core EBITDA is likely to grow 49% YoY to INR80b due to base effect
and improving product mix in the US. Consequently, we expect
EBITDA margin to expand 450bp YoY to 23.5%.
PAT could see a growth of 46% YoY to INR5.2b, slower than EBITDA
growth due to higher taxes.
Adjusted for one-off contribution from gActos in 1QFY14, core sales
should grow 23%, while core EBITDA and PAT grow 61%.
Though FY15 is likely to be a muted year for DRRD, we believe
accelerated launches in the US in FY16 could drive strong double-digit
growth in FY16.
The stock trades at 21.1x FY15E and 18.3x FY16E core earnings.
Maintain Buy.
Key issues to watch for
View on pipeline of products in the US
FY16 outlook for both generics and PSAI businesses

Bloomberg DRRD IN
Equity Shares (m) 170.1
M. Cap. (INR b)/(USD b) 456 / 8
52-Week Range (INR) 2,940 / 2025
1,6,12 Rel Perf. (%) 11 / -17 / -13

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 132.2 145.2 162.9 183.5
EBITDA 31.2 33.5 38.3 44.0
Net Profit 21.2 21.6 24.9 28.8
Adj. EPS (INR) 124.5 127.1 146.4 169.2
EPS Gr. (%) 54.5 2.1 15.1 15.6
BV/Sh. (INR) 533.8 639.9 763.9 907.5
RoE (%) 23.3 19.9 19.2 18.6
RoCE (%) 18.0 17.9 17.9 18.1
Payout (%) 16.7 17.6 17.6 17.6
Valuation
P/E (x) 21.5 21.1 18.3 15.8
P/BV (x) 5.0 4.2 3.5 3.0
EV/EBITDA (x) 14.9 13.6 11.6 9.9
Div. Yield (%) 0.7 0.7 0.8 0.9





9 July 2014 10
















Quarterly performance (INR Million)
Y/E March FY14

FY15E FY14 FY15E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Revenues (Core) 12,379 14,630 16,012 16,817

14,484 16,000 18,488 19,419 59,839 68,391
YoY Change (%) 19.0 16.6 15.9 25.9 17.0 9.4 15.5 15.5 19.4 14.3
EBITDA 2,474 3,153 3,644 3,598

2,792 3,299 4,148 4,328 12,870 14,566
Margins (%) 20.0 21.6 22.8 21.4 19.3 20.6 22.4 22.3 21.5 21.3
Depreciation 349 605 611 603

620 650 680 700 2,168 2,650
Interest 464 485 473 464

500 500 500 500 1,886 2,000
Other Income 37 138 56 97 80 80 80 82 328 322
PBT before EO Expense 1,698 2,201 2,617 2,628

1,752 2,229 3,048 3,210 9,144 10,238
Extra-Ord Expense 0 0 0 2,175 0 0 0 0 2,175 0
PBT after EO Expense 1,698 2,201 2,617 453

1,752 2,229 3,048 3,210 6,969 10,238
Tax 392 628 474 19

385 490 670 706 1,513 2,252
Rate (%) 23.1 28.5 18.1 4.1 22.0 22.0 22.0 22.0 21.7 22.0
Reported PAT (incl one-offs) 1,306 1,573 2,143 434

1,367 1,738 2,377 2,504 5,456 7,986
Minority Interest 19 30 -19 3 16 16 16 16 33 64
Adj PAT (excl one-offs) 1,287 1,330 2,130 1,520

1,082 1,722 2,361 2,383 4,964 7,549
YoY Change (%) 154.1 -6.6 35.3 2.2

-15.9 29.5 10.9 56.8 -0.5 52.1
Margins (%) 10.4 9.1 13.3 9.0 7.5 10.8 12.8 12.3 8.3 11.0
E: MOSL Estimates



June 2014 Results Preview | Sector: Healthcare

Glenmark Pharma


CMP: INR602 Buy
We expect Glenmark Pharmaceuticals (GNP) to post 15% YoY growth
in core revenue (excluding one-offs and R&D income) to INR14.2b,
led primarily by high growth in emerging markets and APIs. Reported
sales would grow 17% YoY to INR14.5b.
The branded business is likely to grow 20% YoY, while the generics
segment would grow just 5% due to slowdown in the US. We expect
R&D licensing income of INR299m from Sanofi (nil in 1QFY14).
Core EBITDA is likely to be flat YoY at INR2.5b, with core EBITDA
margin down 240bp YoY, impacted by adverse sales mix. Reported
EBITDA would grow 13% YoY to INR2.8b.
Adjusted PAT is likely to decline 16% YoY to INR1.1b, mainly due to
higher depreciation. Reported PAT is likely to grow 5% YoY.
We expect GNP to gradually reduce its net debt over FY14-16,
resulting in improvement in D/E from 1.1x in FY14 to 0.7x by FY16.
We also expect gradual improvement in return ratios.
The stock trades at 22.4x FY15E and 17.9x FY16E EPS. Maintain Buy.
Key issues to watch for
Product pipeline for US
Update on free cash generation and debt repayment schedule
Progress of NCE/NBE pipeline

Bloomberg GNP IN
Equity Shares (m) 271.2
M. Cap. (INR b)/(USD b) 163 / 3
52-Week Range (INR) 640 / 489
1,6,12 Rel Perf. (%) 7 / -8 / -29

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 59.8 68.4 79.8 94.0
EBITDA 12.9 14.6 17.4 22.1
Net Profit 4.6 7.3 9.1 11.4
Adj. EPS

16.8 26.8 33.7 42.0
EPS Gr. (%) -8.8 59.9 25.5 24.8
BV/Sh. (INR) 110.0 135.7 168.0 212.8
RoE (%) 15.3 19.8 20.0 19.7
RoCE (%) 17.7 17.4 19.3 21.6
Payout (%) 11.6 11.9 9.7 7.2
Valuations
P/E (x) 35.8 22.4 17.9 14.3
P/BV (x) 5.5 4.4 3.6 2.8
EV/EBITDA(x) 14.6 13.0 10.9 8.4
Div. Yield (%) 0.3 0.5 0.5 0.5





9 July 2014 11
















Quarterly Performance

(INR Million)
Y/E December CY13 CY14 CY13 CY14E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Net Sales 6,321 6,369 6,205 6,306

5,999 6,878 7,037 7,290 25,202 27,204
YoY Change (%) 1.5 -2.3 -7.2 -4.0 -5.1 8.0 13.4 15.6 -3.1 7.9
Total Expenditure 4,693 5,232 5,126 5,190 5,023 5,601 5,392 5,322 20,240 21,337
EBITDA 1,629 1,137 1,080 1,116

977 1,277 1,645 1,968 4,961 5,867
Margins (%) 25.8 17.9 17.4 17.7 16.3 18.6 23.4 27.0 19.7 21.6
Depreciation 42 50 50 58

43 44 44 43 199 174
Other Income 817 454 455 544 549 508 509 609 2,269 2,175
PBT before EO Expense 2,404 1,541 1,485 1,603

1,483 1,741 2,111 2,535 7,029 7,869
Tax 698 590 468 518

517 575 696 836 2,274 2,624
Rate (%) 29.1 38.3 31.5 32.3 34.9 33.0 33.0 33.0 32.4 33.4
Adjusted PAT 1,706 951 1,017 1,085

966 1,167 1,414 1,698 4,755 5,244
YoY Change (%) -8.1 -44.0 -37.8 -31.3

-43.4 22.7 39.0 56.6 -29.8 10.3
Margins (%) 27.0 14.9 16.4 17.2 16.1 17.0 20.1 23.3 18.9 19.3
Extra-Ord Expense 16 -201 8 -84

0 0 0 0 371 0
Reported PAT 1,690 1,151 1,010 1,169 966 1,167 1,414 1,698 4,384 5,244
E: MOSL Estimates



June 2014 Results Preview | Sector: Healthcare

GSK Pharma


CMP: INR2,548 Neutral
We expect GLXO to report 8% YoY growth in 2QCY14 sales to INR6.9b.
EBITDA is likely to grow 12% YoY to INR1.3b, with EBITDA margin
expanding 70bp YoY to 18.6% on a low base.
Growth and profitability would remain impacted by supply chain
issues highlighted in CY13 and price revisions taken due to fresh price
control implemented last year.
We expect adjusted PAT to grow 23% YoY to INR1.2b, faster than
EBITDA due to lower taxes.
GLXO deserves premium valuations due to strong parentage (giving
access to large product pipeline), brand-building ability, and likely
positioning in the post patent era. It is one of the few companies with
the ability to drive reasonable growth without any major capital
requirement, leading to high RoCE of 45-50%.
At 41.2x CY14E and 30.1x CY15E EPS, current valuations adequately
reflect the recovery in business over this period. Maintain Neutral.
Key issues to watch for
Update on supply chain related issues
Market performance of products impacted by DPCO 2013

Bloomberg GLXO IN
Equity Shares (m) 84.7
M. Cap. (INR b)/(USD b) 216 / 4
52-Week Range (INR) 3,054 / 2,175
1,6,12 Rel Perf. (%) -1 / -39 / -36

Financial Snapshot (INR billion)
Y/E Dec 2013 2014E 2015E 2016E
Sales 25.2 27.2 31.2 35.9
EBITDA 5.0 5.9 8.7 10.3
Net Profit 4.8 5.2 7.2 8.3
Adj. EPS (INR) 56.2 61.9 84.8 98.0
EPS Gr. (%) -29.8 10.3 36.9 15.7
BV/Sh. (INR) 238.1 235.8 244.7 260.9
RoE (%) 23.6 26.3 34.6 37.6
RoCE (%) 34.8 39.3 51.6 56.0
Payout (%) 101.5 101.3 87.5 81.4
Valuations
P/E (x) 45.4 41.2 30.1 26.0
P/BV (x) 10.7 10.8 10.4 9.8
EV/EBITDA (x) 39.3 33.8 22.8 19.3
Div. Yield (%) 2.0 2.2 2.6 2.7





9 July 2014 12
















Quarterly Performance (INR Million)
Y/E March FY14

FY15E FY14 FY15E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Revenues (Core) 8,056 8,467 8,330 7,496

9,583 9,775 9,373 9,126 32,818 37,857
YoY Change (%) 27.0 9.8 18.8 11.6 19.0 15.5 12.5 21.7 16.7 15.4
EBITDA 1,710 2,345 2,173 1,823

2,304 2,441 2,293 2,255 8,106 9,292
Margins (%) 21.2 27.7 26.1 24.3 24.0 25.0 24.5 24.7 24.7 24.5
Depreciation 241 252 256 260

300 310 320 336 1,031 1,266
Interest 71 57 54 63

72 71 70 72 269 285
Other Income -435 -346 30 244 315 320 100 102 -500 837
PBT after EO Expense 963 1,690 1,893 1,745

2,247 2,380 2,003 1,949 6,306 8,578
Tax 245 396 502 375

539 571 481 468 1,524 2,059
Rate (%) 25.4 23.4 26.5 21.5 24.0 24.0 24.0 24.0 24.2 24.0
Reported PAT 718 1,295 1,391 1,370

1,708 1,808 1,522 1,481 4,782 6,520
YoY Change (%) 67.0 3.5 58.3 81.7

138.0 39.7 9.4 8.1 47.4 36.3
Margins (%) 8.9 15.3 16.7 18.3 17.8 18.5 16.2 16.2 14.6 17.2
Domestic formulation 2,504 2,762 2,463 1,966

2,904 3,204 2,857 2,280 9,694 11,245
YoY Change (%) 11.7 5.1 15.8 10.2 16.0 16.0 16.0 16.0 10.4 16.0
Export formualtions 3,300 3,626 3,818 3,732

4,176 4,297 4,266 4,402 14,476 17,141
YoY Change (%) 47.0 6.9 20.3 19.2 26.5 18.5 11.7 18.0 21.2 18.4
E: MOSL Estimates



June 2014 Results Preview | Sector: Healthcare

Ipca Laboratories


CMP: INR881 Buy
We expect revenue to grow 19% YoY to INR9.6b, led by 27% growth
in export formulations. Domestic formulations would grow 16% YoY
on a low base, while total API sales would grow 12% YoY.
EBITDA is likely to grow 35% YoY to INR2.3b, aided by 280bp YoY
expansion in EBITDA margin to 24%. This would be driven by higher
contribution from international formulations.
We expect adjusted PAT to grow 113% YoY to INR1.5b, boosted by
higher other income (forex loss in 1QFY14).
We expect significant ramp-up in IPCA's international formulations
revenue, led by 36% CAGR in US generics and 33% CAGR in US
business over FY13-16. Domestic formulations growth is likely to be
maintained at 16%.
We expect IPCA to clock EPS CAGR of 24% over FY14-17 on the back
of 18% revenue CAGR, aided by 80-100bp EBITDA margin expansion
and reversal of MTM losses.
The stock trades at 18.1x FY15E EPS and 14.8x FY16E EPS. Buy.
Key issues to watch for
Ramp-up at recently approved Indore SEZ for US
Outlook for institutional tender business after FY14

Bloomberg IPCA IN
Equity Shares (m) 126.2
M. Cap. (INR b)/(USD b) 111 / 2
52-Week Range (INR) 907 / 609
1,6,12 Rel Perf. (%) 6 / 1 / -5

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 32.8 37.9 45.2 53.4
EBITDA 8.1 9.3 11.3 13.7
Net Profit 4.8 6.2 7.5 9.2
Adj. EPS (INR) 37.9 48.8 59.6 72.7
EPS Gr. (%) 47.4 28.8 22.1 22.0
BV/Sh. (INR) 155.3 196.8 247.4 309.2
RoE (%) 27.2 27.7 26.8 26.1
RoCE (%) 29.4 31.5 31.4 31.3
Payout (%) 15.4 15.0 15.0 15.0
Valuation
P/E (x) 23.3 18.1 14.8 12.1
P/BV (x) 5.7 4.5 3.6 2.9
EV/EBITDA (x) 14.2 12.4 10.2 8.2
Div. Yield (%) 0.7 0.8 1.0 1.2





9 July 2014 13
















Quarterly Performance (Consolidated) (INR Million)
Y/E March FY14 FY15E FY14 FY15E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Sales 24,207 26,315 29,830 30,516 29,775 29,156 32,841 33,578 110,866 125,350
YoY Change (%) 9.1 17.5 21.0 20.3 23.0 10.8 10.1 10.0 17.2 13.1
EBITDA 5,340 6,232 7,343 8,080 7,593 6,793 8,374 8,462 28,029 31,222
Margins (%) 22.1 23.7 24.6 26.5 25.5 23.3 25.5 25.2 25.3 24.9
Depreciation 624 606 637 743 700 725 750 787 2,610 2,962
Interest 54 49 42 122 45 45 45 45 267 180
Other Income 565 1,178 714 742 500 500 500 500 2,164 2,000
PBT 5,226 6,755 7,379 7,957 7,348 6,523 8,079 8,130 27,317 30,081
Tax 2,172 2,582 2,542 2,327 2,425 2,153 2,666 2,683 9,622 9,927
Rate (%) 41.6 38.2 34.4 29.2 33.0 33.0 33.0 33.0 35.2 33.0
EO Exp/(Inc) -1,000 0 0 0 0 0 0 0 -1,000 0
Minority Interest 44 111 76 100 100 100 100 100 331 400
Recurring PAT 2,331 3,383 4,001 4,115 4,808 4,268 5,311 5,345 13,831 19,732
YoY Change (%) 30.7 22.9 42.3 37.2 106.2 26.2 32.7 29.9 33.7 42.7
Margins (%) 9.6 12.9 13.4 13.5 16.1 14.6 16.2 15.9 12.5 15.7
Advanced mkt formulations 13,917 14,183 17,948 18,712 17,669 15,726 19,649 20,631 64,760 73,172
YoY Change (%) 17.7 20.8 22.5 25.8 27.0 10.9 9.5 10.3 22.0 13.0
Emerging mkt formulations 7,861 9,270 8,909 8,889 9,253 10,509 10,132 9,938 34,966 39,763
YoY Change (%) -2.3 12.3 16.3 10.2 17.7 13.4 13.7 11.8 9.2 13.7
E: MOSL estimates; Quarterly nos will not add up to full year nos due to restatement of past quarters

June 2014 Results Preview | Sector: Healthcare

Lupin


CMP: INR1,088 Buy
We expect revenue to grow 23% YoY to INR30b, driven mainly by 27%
YoY growth in advanced market formulations. Domestic formulations
would grow 16% YoY, while RoW markets are likely to grow 23%.
Core revenue excluding one-off upsides from generic Tricor, Trizivir
and Niaspan is likely to grow 23% YoY to INR28.3b.
EBITDA would grow 42% YoY to INR7.6b, with EBITDA margin
expanding by 340bp YoY to 25.5%. Core EBITDA would be INR6.6b,
with core EBITDA margin at 23.2%, up 350bp YoY, aided by improving
sales mix in the US.
Reported PAT is likely to grow 20% to INR4.8b, while adjusted PAT is
likely to grow 69% to INR3.9b on a low base.
Key growth drivers for FY15/FY16 would be strong product pipeline
for the US, and higher contribution from oral contraceptives. Growth
in India formulations is likely to rebound to 16% in FY15.
The stock trades at 24.7x FY15E and 20.5x FY16E EPS. Maintain Buy.
Key issues to watch for
Outlook on future launches in the US
Revival in constant currency sales growth in Irom
Outlook on domestic formulations business post DPCO 2013

Bloomberg LPC IN
Equity Shares (m) 447.5
M. Cap. (INR b)/(USD b) 487 / 8
52-Week Range (INR) 1,102 / 742
1,6,12 Rel Perf. (%) 13 / -8 / -6

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 109.3 125.3 146.2 167.4
EBITDA 26.5 31.2 37.7 43.9
Rep. PAT 18.4 19.8 24.0 28.0
Rep.EPS (INR) 41.0 44.1 53.6 62.5
Adj. PAT 13.8 18.5 23.8 27.6
Adj. EPS (INR) 30.8 41.2 53.0 61.5
EPS Gr. (%) 33.4 33.4 28.8 16.0
BV/Sh. (INR) 154.6 191.6 237.0 289.9
RoE (%) 22.8 23.8 24.7 23.4
RoCE (%) 40.1 36.2 35.9 34.4
Payout (%) 16.0 15.9 15.3 15.0
Valuations
P/E (x) 35.3 26.4 20.5 17.7
P/BV (x) 7.0 5.7 4.6 3.8
EV/EBITDA (x) 18.3 15.4 12.5 10.4
Div. Yield (%) 0.6 0.6 0.6 0.7





9 July 2014 14
















Quarterly performance (INR Million)
Y/E March FY14 FY15E FY14 FY15E
2Q 3Q 4Q 5Q 1Q 2Q 3Q 4Q
Net Income 26,834 28,016 28,940 24,668 27,484 36,661 37,439 27,023 133,797 128,607
YoY Change (%) -16.9 4.1 6.7 -0.2 2.4 30.9 29.4 9.5 7.4 -3.9
EBITDA 2,625 1,938 2,602 1,508 1,714 9,571 9,307 3,065 10,912 23,657
Margins (%) 9.8 6.9 9.0 6.1 6.2 26.1 24.9 11.3 8.2 18.4
Depreciation 763 849 915 953 910 920 925 936 4,276 3,691
Interest 488 503 543 689 525 540 575 616 2,735 2,256
Other Income -1,378 -297 -209 -225 280 300 305 347 -1,855 1,232
PBT before EO Expense -3 289 935 -360 559 8,411 8,112 1,860 2,045 18,942
Extra-Ord Expense 4,863 4,202 1,539 -657 0 0 0 0 9,129 0
PBT after EO Expense -4,866 -3,913 -603 296 559 8,411 8,112 1,860 -7,084 18,942
Tax 311 570 981 1,099 140 2,103 2,028 465 3,314 4,735
Rate (%) -6.4 -14.6 -162.6 370.5 25.0 25.0 25.0 25.0 -46.8 25.0
Reported PAT -5,177 -4,483 -1,585 -802 419 6,308 6,084 1,395 -10,398 14,206
Minority Interest 64 58 5 -66 75 70 75 73 120 293
Reported PAT (incl one-offs) -5,241 -4,542 -1,589 -737 344 6,238 6,009 1,322 -10,519 13,913
Adj PAT (excl. one-offs) 1,337 644 1,200 136 361 1,238 1,000 1,378 3,941 3,976
YoY Change (%) -50.6 -68.8 0.0 -78.1 -73.0 92.1 -16.7 911.8 -53.8 0.9
Margins (%) 5.0 2.3 4.1 0.6 1.3 3.4 2.7 5.1 2.9 3.1
E: MOSL Estimates; FY14E figures are 15 months; We assume all exclusivities to flow through in 2QFY15

June 2014 Results Preview | Sector: Healthcare

Ranbaxy Labs


CMP: INR534 Buy
We expect a muted 2% YoY growth in sales to INR27.5b, impacted by
slowdown in US generics and APIs.
EBITDA is likely to decline 35% YoY to INR1.7b due to discontinuation
of operations at Dewas and Paonta Sahib. Also, consent decree
related costs continue to impact profitability.
We estimate reported PAT at INR344m compared to INR5.2b in the
corresponding quarter last year. PAT adjusted for forex impact is
likely to decline 73% YoY to INR361m due to subdued operational
performance and higher tax rate.
Operational pressure in the near term would be overcome by the
monetization of key FTF opportunities.
Moreover, SUNPs track record in turning around acquisition targets
gives us the confidence that RBXYs core margins can expand to
industry average of 18-20% over the next five years.
The stock trades at 51.7x FY15E and 26.9x FY16E core EPS. We
maintain Buy.

Key issues to watch for
Timeline for resolving US FDA issues under the consent decree
Improvement in core EBITDA margins
Launch timeline for Divan and Valcyte

Bloomberg RBXY IN
Equity Shares (m) 423.1
M. Cap. (INR b)/(USD b) 226 / 4
52-Week Range (INR) 538 / 254
1,6,12 Rel Perf. (%) 16 / -13 / 25

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales* 133.8 128.6 128.2 141.9
EBITDA* 10.9 23.7 15.5 21.2
Adj. PAT 3.9 4.0 7.6 11.9
Rep. EPS

-24.9 32.9 18.1 28.1
Adj. EPS

9.3 9.4 18.1 28.1
EPS Gr. (%) -53.8 0.9 92.3 55.1
BV/Sh. (INR) 69.2 96.2 108.6 130.9
RoE (%) 13.5 34.2 16.6 21.4
RoCE (%) 9.6 22.1 12.7 16.7
Payout (%) 25.1 62.2 32.3 20.9
Valuations
P/E (x) 52.2 51.7 26.9 17.3
P/BV (x) 7.0 5.0 4.5 3.7
EV/EBITDA

25.8 21.6 16.0 11.6
Div. Yield (%) 0.4 1.0 1.0 1.0
Reporting period changed to March ending;
FY14E figures are 15 months; *Estimates include
upside from FTF




9 July 2014 15
















Quarterly Performance (INR Million)
Y/E December CY13 CY14 CY13 CY14E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Net Sales 3,881 4,351 4,974 4,883 4,449 4,929 5,689 5,532 18,089 20,598
YoY Change (%) 12.3 10.8 19.6 15.5 14.6 13.3 14.4 13.3 21.1 13.9
EBITDA 720 874 1,246 1,147 810 1,016 1,368 1,269 3,987 4,462
Margins (%) 18.6 20.1 25.1 23.5 18.2 20.6 24.0 22.9 22.0 21.7
Depreciation 223 227 234 247 240 245 250 255 931 990
Interest 3 1 0 0 2 1 1 1 4 5
Other Income 163 145 153 118 215 200 200 200 579 815
PBT before EO Items 657 791 1,165 1,018 783 970 1,316 1,213 3,631 4,282
Extra-Ord Expense 0 0 0 -254 0 0 0 0 -254 0
PBT after EO Items 657 791 1,165 1,272 783 970 1,316 1,213 3,885 4,282
Tax 213 279 396 191 266 315 428 394 1,079 1,403
Effective tax Rate (%) 32.4 35.3 34.0 18.8 34.0 32.5 32.5 32.5 27.8 32.8
Reported PAT 444 512 769 1,081 517 655 889 818 2,806 2,879
Adj PAT 444 512 769 827 517 655 889 818 2,552 2,879
YoY Change (%) 10.7 26.4 49.9 84.6 16.4 27.9 15.6 -1.0 34.7 12.8
Margins (%) 11.4 11.8 15.5 16.9 11.6 13.3 15.6 14.8 14.1 14.0
E: MOSL Estimates

June 2014 Results Preview | Sector: Healthcare

Sanofi India


CMP: INR3,270 Buy
We expect revenue to grow 13% YoY in 2QCY14 to INR4.9b, led by the
export formulations business.
EBITDA is likely to grow 16% YoY to INR1b, with EBITDA margin
expanding 50bp due to increasing contribution from exports and
price increases in key products.
We expect PAT to grow 28% YoY to INR655m. Growth is likely to be
higher than EBITDA due to higher other income and lower taxes.
We believe SANL is witnessing a phase of change in margin profile,
led by (a) pricing benefit under new DPCO, and (b) discontinuation of
some loss-making projects that had hurt margins in the past.
We expect increasing momentum in earnings growth over the next
few years.
The stock trades at 26.2x CY14E and 21.4x CY15E EPS. Maintain Buy.
Key issues to watch for
Amortization of goodwill and brands acquired from Universal
Medicare
Impact of Drug Price Control Order (DPCO), 2013

Bloomberg SANL IN
Equity Shares (m) 23.0
M. Cap. (INR b)/(USD b) 75 / 1
52-Week Range (INR) 3,540 / 2,280
1,6,12 Rel Perf. (%) -7 / -7 / -2

Financial Snapshot (INR billion)
Y/E Dec 2013 2014E 2015E 2016E
Sales 18.1 20.6 23.6 26.9
EBITDA 4.0 4.5 5.3 6.2
Net Profit 2.4 2.9 3.5 4.1
Adj. EPS (INR) 104.1 125.0 152.8 177.5
EPS Gr. (%) 35.7 20.1 22.3 16.1
BV/Sh. (INR) 580.3 641.5 713.2 792.1
RoE (%) 17.9 19.5 21.4 22.4
RoCE (%) 26.3 28.1 30.9 32.4
Payout (%) 45.9 51.0 53.1 55.5
Valuations
P/E (x) 31.4 26.2 21.4 18.4
P/BV (x) 5.6 5.1 4.6 4.1
EV/EBITDA (x) 18.2 15.7 12.8 10.7
Div. Yield (%) 1.4 1.7 2.1 2.6





9 July 2014 16
















Quarterly Performance (Consolidated)



(INR Million)
Y/E March FY14

FY15E FY14 FY15E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Revenues 34,822 41,921 42,866 40,436 42,871 44,474 45,123 43,724 160,044 176,192
YoY Change (%) 31.0 57.8 50.3 31.6 23.1 6.1 5.3 8.1 42.4 10.1
EBITDA 15,306 18,284 19,751 17,856 18,006 19,346 19,629 17,483 71,196 74,463
Margins (%) 44.0 43.6 46.1 44.2 42.0 43.5 43.5 40.0 44.5 42.3
Depreciation 978 1,005 1,050 1,061 1,080 1,100 1,130 1,150 4,094 4,460
Net Other Income 735 1,079 1,535 2,050 1,740 1,790 1,890 1,997 5,399 7,415
PBT before EO Exp 15,063 18,358 20,236 18,844 18,665 20,036 20,388 18,330 72,501 77,419
EO Exp/(Inc) 25,174 0 0 0 0 0 0 0 25,174 0
PBT -10,111 18,358 20,236 18,844 18,665 20,036 20,388 18,330 47,327 77,419
Tax 1,511 2,760 2,438 1,199 3,173 3,406 3,466 3,116 7,908 13,161
Rate (%) 10.0 15.0 12.0 6.4 17.0 17.0 17.0 17.0 10.9 17.0
Profit after Tax -11,622 15,598 17,798 17,645 15,492 16,630 16,922 15,214 39,419 64,258
Share of Minority Partner 1,139 1,975 2,487 1,774 1,393 1,802 1,884 1,673 7,375 6,751
Reported PAT -12,761 13,623 15,311 15,871 14,100 14,827 15,038 13,541 32,044 57,506
One-off upsides 1,145 1,938 2,722 2,843 3,097 1,218 1,218 1,218 8,647 6,751
Adj Net Profit 11,269 11,686 12,589 13,028 11,002 13,609 13,820 12,323 48,572 50,755
YoY Change (%) 98.4 51.2 57.3 42.5 -2.4 16.5 9.8 -5.4 59.0 4.5
Margins (%) 32.4 27.9 29.4 32.2 25.7 30.6 30.6 28.2 30.3 28.8
E: MOSL Estimates; * Quarterly no. dont match with annual no. because of reinstatement of financials

June 2014 Results Preview | Sector: Healthcare

Sun Pharma


CMP: INR709 Buy
We expect sales to grow 24% YoY to INR43.3b, driven by 28% growth
in US revenues. Domestic formulations would grow 18% YoY, while
RoW markets could grow 31%. Core sales are likely to grow 15% YoY
to INR37.8b.
EBITDA is likely to grow 25% YoY to INR19.1b. We expect EBITDA
margin to remain flat YoY at 44% on a high base, aided primarily by
Doxil and Cymbalta one-off sales. Core EBITDA margin is likely to
decline 310bp YoY to 38.7%, with core EBITDA at INR14.6b.
We estimate reported PAT at INR15.3b compared to net loss of
INR12.8b last quarter. Adjusted PAT is likely to grow 8% YoY to
INR12.2b, impacted by higher tax outgo.
We believe that operational outperformance in the near term will be
driven by recent price increases taken in certain products at Taro.
Consolidation of RBXYs business and its subsequent turnaround
would be growth drivers in the longer run.
The stock trades at 26.6x FY15E and 22.7x FY16E core EPS. Buy.
Key issues to watch for
Outlook on competitive landscape for Taros products
Sustainability of price increases at URL Pharma

Bloomberg SUNP IN
Equity Shares (m) 2,071.2
M. Cap. (INR b)/(USD b) 1,468 / 25
52-Week Range (INR) 714 / 476
1,6,12 Rel Perf. (%) 14 / -2 / 4

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 160.0 178.1 201.9 227.2
EBITDA 71.2 78.4 84.8 90.8
Rep. PAT 32.0 61.9 70.4 78.1
Rep.EPS (INR) 15.5 29.9 34.0 37.7
Adj. PAT 48.6 55.1 64.5 73.2
Core EPS
( )
23.5 26.6 31.1 35.3
EPS Gr. (%) 59.0 13.5 17.0 13.4
BV/Sh. (INR) 90.8 116.6 145.9 177.7
RoE (%) 28.7 25.7 23.7 21.8
RoCE (%) 26.2 34.2 31.0 28.1
Payout (%) 18.4 12.3 12.5 14.2
Valuations
P/E (x) 30.2 26.6 22.7 20.1
P/BV (x) 7.8 6.1 4.9 4.0
EV/EBITDA (x) 19.5 17.4 15.5 13.8
Div. Yield (%) 0.4 0.5 0.6 0.7





9 July 2014 17
























Quarterly performance (INR Million)
Y/E March FY14

FY15E FY14 FY15E
1Q 2Q 3Q 4Q 1Q 2Q 3QE 4Q
Net Revenues (Core) 9,720 9,720 10,150 12,250

12,815 13,532 13,252 13,191 41,840 52,790
YoY Change (%) 26.7 26.9 27.3 40.6 31.8 39.2 30.6 7.7 30.3 26.2
EBITDA 2,080 1,790 2,150 3,500

3,454 2,986 3,188 3,252 9,520 12,881
Margins (%) 21.4 18.4 21.2 28.6 27.0 22.1 24.1 24.7 22.8 24.4
Depreciation 210 220 210 230

250 450 500 550 870 1,750
Interest 80 150 160 200

200 560 560 580 590 1,900
Other Income 80 100 100 100 90 90 85 80 380 345
PBT before EO Expense 1,870 1,520 1,880 3,170

3,094 2,066 2,213 2,202 8,440 9,576
Extra-Ord Expense 0 0 0 0 0 0 0 0 0 0
PBT after EO Expense 1,870 1,520 1,880 3,170

3,094 2,066 2,213 2,202 8,440 9,576
Tax 380 390 300 730

650 434 465 462 1,800 2,011
Rate (%) 20.3 25.7 16.0 23.0 21.0 21.0 21.0 21.0 21.3 21.0
Reported PAT 1,490 1,130 1,580 2,440

2,444 1,632 1,749 1,740 6,640 7,565
Minority Interest 0 0 0 0 0 0 0 0 0 0
Adj PAT 1,490 1,130 1,324 924

1,247 1,457 1,573 1,568 4,869 5,845
YoY Change (%) 46.3 17.4 17.9 -22.3

-16.3 28.9 18.8 69.6 3.5 20.1
Margins (%) 15.3 11.6 13.0 7.5 9.7 10.8 11.9 11.9 11.6 11.1
Dom. formulations sales 3,120 2,970 2,970 2,560 3,619 4,632 4,632 4,157 11,620 17,040
YoY Change (%) 12.3 9.6 14.9 17.4 16.0 56.0 56.0 62.4 13.5 46.6
Intl. formulations sales 5,390 5,720 6,390 8,820

8,195 7,530 7,765 7,889 26,320 31,379
YoY Change (%) 28.0 31.1 42.3 67.7 52.0 31.6 21.5 -10.6 43.5 19.2
E: MOSL Estimates; Consolidation of Elder Pharma brands from 2QFY15




June 2014 Results Preview | Sector: Healthcare

Torrent Pharmaceuticals


CMP: INR696 Neutral
We expect 32% YoY growth in 1QFY15 reported sales to INR12.8b
over a high base, led by ~3x growth in US business due to one-off
launches. Domestic formulations would grow 16% YoY, while export
formulations are likely to grow 52% YoY.
Core sales (excluding one-offs) are likely to grow 11% YoY.
Reported EBITDA would grow 66% YoY to INR3.5b, with EBITDA
margin expanding 560bp YoY, aided by one-off opportunities. Core
EBITDA would remain flat at INR2b, with core EBITDA margin
declining 240bp YoY.
We expect reported PAT to grow 64% YoY to INR2.4b, in line with
operational performance. Adjusted PAT would decline 16% YoY to
INR1.2b, impacted by higher interest costs.
We expect 17% CAGR in core earnings over FY14-16, slower than the
27% growth witnessed over the last two years. However, the stock
trades at 19.1x FY15E and 16.2x FY16E EPS, which is at 18-20%
premium over its last 5-year average valuations. Maintain Neutral.
Key issues to watch for
Sustained recovery in domestic formulations
Performance of Brazilian operations amidst market pressures
Outlook for US business

Bloomberg TRP IN
Equity Shares (m) 169.2
M. Cap. (INR b)/(USD b) 118 / 2
52-Week Range (INR) 724 / 386
1,6,12 Rel Perf. (%) 8 / 24 / 32

Financial Snapshot (INR billion)
Y/E March 2014 2015E 2016E 2017E
Sales 41.8 52.8 60.4 69.2
EBITDA 9.5 12.9 13.6 15.9
Net Profit 5.2 6.2 7.3 9.4
Adj. EPS
( )
31.0 36.4 43.1 55.7
EPS Gr. (%) 11.4 17.6 18.4 29.1
BV/Sh. (INR) 115.0 144.0 173.3 209.8
RoE (%) 31.0 28.1 27.2 29.1
RoCE (%) 36.3 29.9 23.8 26.3
Payout (%) 29.8 35.1 35.1 35.1
Valuation
P/E (x) 22.5 19.1 16.2 12.5
P/BV (x) 6.1 4.8 4.0 3.3
EV/EBITDA
( )
12.2 10.5 9.7 8.1
Div. Yield (%) 1.4 1.9 1.9 2.4





9 July 2014 18


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