Gladiator Stocks: MNC Pharma Thematic

Scrip I-Direct Code Action Target Stoploss Upside

Pfizer PFIZER Buy in the range of 1910.00-1930.00 2295.00 1740.00 20%
Abbott India ABBIND Buy in the range of 4950.00-5050.00 5950.00 4495.00 19%
Time Frame: 6 Months

Research Analysts
Dharmesh Shah dharmesh.shah@icicisecurities.com Pabitro Mukherjee pabitro.mukherjee@icicisecurities.com
Nitin Kunte, CMT nitin.kunte@icicisecurities.com Vinayak Parmar vinayak.parmar@icicisecurities.com

November 15, 2017

MNC
DealPharma
Team Thematic...
At Your Service
MNC pharma companies reported stellar set of numbers in Q2FY18. Key takeaway from the result was strong
revenue growth and substantial margin expansion (on a normalised basis) ranging between 500 to 1000 bps during
the quarter. In fact the EBITDA margins for most of the players (Pfizer and Abbott in particular) were highest in the last
many quarters. The GST blues affected the performance of India focused companies in general and MNCs in
particular in Q1FY18 badly due to de-stocking at the distributors level. The scenario has improved at the distributors
level in Q2 although the inventory days are yet to reach the pre-GST level

With no respite US focused generic companies due to significant price erosion in the base business and USFDA
related issues, the focus has now shifted to India specific business. Most of the MNC are generating almost entire
revenues from Indian branded formulations which are slated to grow at 10-12% p.a. The issues such as NLEM and
other regulatory aspects are mostly in the price and the threat of mandatory generics prescription seems to be losing
its significance for want of clear implementation plan. The only concern now will be the draft pharma policy which
has mandated for lesser dependence on third party manufacturing. Note that most of the MNCs has outsourced their
production to third parties

In this edition of our Gladiator stocks Thematic series, we are looking at Pfizer Limited and Abbott India. The price
action over past few weeks looks exciting as detailed below

2
Pfizer Limited (PFIZER): A triangular consolidation breakout

CMP: | 1916.00 Buying Range: | 1910-1930 Target: | 2295.00 Stop loss: | 1740.00 Upside: 20%

Stock Data Technical View

52 Week High / Low 1999/1642.00 Pfizers India is engaged in manufacturing, marketing, trading and exporting pharmaceutical products. The Company
offers a range of products. The share price on Pfizer witnessed a strong rally during 20142015, rallying from | 1010 to
50 days EMA 1780
lifetime high of | 2724, thereafter it has remained in a secondary corrective phase over the last 24 months. The price
200 days EMA 1793 wise correction took place in the first five months (November 2015 to March 2016) as it witnessed a sharp decline
52 Week EMA 1811 from | 2645 to | 1610. The stock thereafter witnessed a time wise correction for the next 20 months as it consolidated
Face Value (|) 10 in a narrow range between | 1650 and | 2000. The recent developments on price front indicate conclusion of the
corrective phase and signal resumption of the primary uptrend thereby providing fresh entry opportunity to ride the
Market Capitallisation (| Cr.) 8933
next up move in the stock.
Breakout from Triangular consolidation pattern signals continuance of uptrend
Stock price vs. BSE 500 The entire price correction since September 2016 till date has occurred in a well defined Symmetrical Triangle pattern
as highlighted in the adjoining weekly time interval chart. A triangular pattern formed at the base of the consolidation
15,000 is considered as a reversal pattern, which marks accumulation by the investors at the major support area. The price
2,000 14,000 wise correction got arrested near the 61.8% Fibonacci retracement of the entire 2014-15 bull run at | 1650 levels. The
1,900 13,000
strong up move during previous week trade has resulted in a decisive breakout from the symmetrical triangle pattern
1,800 12,000
with high volume of more than double of the 50 weeks average volume of 80 thousand share per week highlighting a
11,000
1,700 structural turnaround in favour of the bulls signalling resumption of the primary uptrend
10,000
1,600 9,000 The medium term support base for the stock has moved higher towards | 1740 levels being the recent consolidation
1,500 8,000 breakout area and the 80% retracement of the previous up move from | 1681 to 1999.
May-17
Nov-16

Nov-17
Mar-17
Jan-17

Sep-17
Jul-17

Faster retracement of last falling segment

The key observation in the price chart of Pfizer is that the stock has completely retraced its recent 13 weeks declining
Pfizer BSE500
leg (| 1899-1681) in just four weeks. Faster retracement of the last falling segment in less than half time interval
highlights a structural turnaround and signals resumption of the next major up move
Price performance last five years
Momentum oscillator indicate build up of strength
87% Among oscillators, the weekly MACD (E-12/26/9) is seen sustaining above the positive territory and has recently given
a buy signal moving above its nine periods average thus highlights the overall positive price structure and indicates
40% 9% 7% build up of positive momentum which augurs well for the stock from a medium term perspective
-4% -23%
Conclusion
Year
-60% Based on aforementioned technical observations, we believe the consolidation phase over the last 13 months has
2013 2014 2015 2016 YTD approached maturity, thus offering fresh entry opportunity. We expect the stock to resolve higher and test our target
area of | 2295 in the medium term being the 61.8% retracement of the entire previous decline from | 2724 to | 1610
Source: Bloomberg, NSE, ICICIdirect.com Research levels placed at | 2295 levels

3
Pfizer Limited (PFIZER): Weekly Bar Chart
2724
The breakout from the triangular consolidation pattern signals reversal of the corrective
trend and offers fresh entry opportunity for medium term investors

61.8% retracement of the

entire decline @ 2300

2049

1899

1681
1656
1610

Strong volumes at the triangular breakout area signals larger participation in

direction of trend

MACD sustaining in positive territory and has given a buy signal thus
supports the positive bias in price

Source: Bloomberg, ICICIdirect.com Research

4
Abbott India (ABBIND): Breakout from rounding bottom augurs well...

CMP: | 4990.00 Buying Range: | 4950-5050 Target: | 5950.00 Stop loss: | 4495.00 Upside: 19%

Stock Data Technical View

52 Week High / Low 5413.4/3988 Abbott India is the subsidiary of global healthcare major Abbott Laboratories, offering diverse range of science-based
nutritional products, diagnostic tools, branded generic pharmaceuticals and diabetes and vascular devices.
50 days EMA 4340
200 days EMA 4376
We believe the stock has undergone a healthy corrective phase over past two years and now looks poised to resume
its primary uptrend, thus providing a fresh entry opportunity from a medium term time horizon
52 Week EMA 4422
Face Value (|) 10
Faster retracement of previous falling segment augurs well
Market Capitallisation (| Cr.) 10595
The share price has been in a corrective phase since its September 2015 peak of | 6177 as it retraced its three fold
rally during 2014-2015. After early signs of bottoming formation near key support of | 4000, the share price rallied
above an intermediate swing high of | 5040 during current week resulting in a faster retracement of last falling
Stock price vs. BSE500 segment. Such a faster retracement of falling segment indicate culmination of corrective phase and revival of bullish
bias in the stock. The share price retraced its 11 month corrective decline (| 5040-4001) in just two months, thus
15,000
5,000 signalling turnaround in price structure and offers fresh entry opportunity.
14,000
13,000
4,500 12,000 Base formation at key value area
11,000 The stock price held its key value area around | 4000 twice during recent correction. The stock entered into a
4,000 10,000 secondary corrective phase after hitting an all-time high of | 6177 in September 2015. The price decline anchored
9,000 around | 4000 in June 2017 and then spent over five months in a basing formation in the broad range of | 4600-4000
3,500 8,000
levels. The key value area of | 4000 is validated by the confluence of the following technical parameters:
May-17
Nov-16

Nov-17
Mar-17
Jan-17

Sep-17
Jul-17

Lower band of the rising channel containing the entire price action since January 2016
50% retracement of preceding major up move from | 3050 to | 4533 placed at | 3791 levels
Abbott India BSE500
Momentum oscillator indicate build-up of strength
Price performance last five years Among oscillators, the weekly MACD (E-12/26/9) is seen generating bullish cross in the positive territory and seen
126% diverging from its 9 period average indicating positive momentum building in the stock
140%

58%
40% -21% Conclusion
14% 5%
Based on aforementioned technical observations, we believe the consolidation phase over the last five months has
Year matured, thus offering fresh entry opportunity. We expect the stock to resolve higher and challenge its life high of |
-60%
2013 2014 2015 2016 YTD 6177 over medium term. The pattern implication of past eighteen month consolidation breakout also provides target
in the vicinity of | 6000 (consolidation range 5000-4000=1000 points) projected above the breakout levels of | 5000.

Source: Bloomberg, NSE, ICICIdirect.com Research

5
Abbott India (ABBIND): Weekly Bar Chart
The faster retracement of falling segment augurs
well for the stock over medium term
6177 Pattern implication @ 5950

4000

The stock rebounding from major support area of

| 4000:
-The value of rising 200-week EMA at 3940
- 50% retracement of previous rally (1752-6177)

1752

Strong volumes at key value area highlight accumulation by stronger hands

MACD oscillator generated positive cross over and seen diverging

from its 9 period average underscoring positive momentum

Source: Bloomberg, ICICIdirect.com Research

6
Strategy Follow up

Date Scrip Name Rec Price Target Stoploss CMP Return till date (%)
13-Jul-17 ABB 1460 1720 1320 1368 -6.3%
2-Aug-17 United Spirits 2580 3480 2298 3024 17.2%
3-Aug-17 Philips Carbon 590 1285 840 1006 70.5%
18-Sep-17 Asian granito 485 615 430 492 1.4%
25-Oct-17 Sadbhav Engg 315 385 275 318 1.0%
25-Oct-17 JK Lakshmi Cement 425 490 380 440 3.5%
1-Nov-17 Oberoi Realty 485 590 417 457 -5.8%
3-Nov-17 Symphony 1570 1920 1390 1582 0.8%
3-Nov-17 PNB 205 257 178 185 -9.8%
9-Nov-17 GSK Consumer 5700 6700 5190 6022 5.6%
9-Nov-17 Vardhman Textiles 1255 1465 1128 1255 0.0%
10-Nov-17 Ultratech Cement 4420 5090 4090 4365 -1.2%

Summary Performance - Recommendations till date

Total Recommendations 315 Open 12
Closed Recommendations 303 Yield on Positive recommendations 19.0%
Positive Recommendations 231 Yield on Negative recommendations -8.0%
Closed at cost 8
Strike Rate 78%

7
Notes

It is recommended to enter in a staggered manner within the prescribed range provided in

the report
Once the recommendation is executed, it is advisable to keep strict stop loss as provided in
the report on closing basis.
The recommendations are valid for six months and in case we intend to carry forward the
position, it will be communicated through separate mail.

Trading portfolio allocation

It is recommended to spread out the trading corpus in a proportionate manner between the
various technical research products
Please avoid allocating the entire trading corpus to a single stock or a single product
segment
Within each product segment it is advisable to allocate equal amount to each
recommendation
For example: The Momentum Pick product carries 3 to 4 intraday recommendations. It is
advisable to allocate equal amount to each recommendation

8
 Recommended product wise trading portfolio allocation
Allocations
Product Product wise Max allocation
allocation In 1 Stock Number of Calls Return Objective Duration

Momentum Picks- 10% 30-50% 2-3 Stocks 1-2% Intraday

Intraday
Momentum Picks- 25% 8-10% 6-8 Per Month 5-8% 1 Month
Positional
Stocks on the move 25% 12-15% 6-8 Per Month 10-12% 3 Months

Gladiator Stocks 35% 15-20% 20-30% 6 Months

Cash 5%

100%

9
Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC
Andheri (East)
Mumbai 400 093
research@icicidirect.com

10
Disclaimer
ANALYST CERTIFICATION
We /I, Dharmesh Shah, Nitin Kunte, Pabitro Mukherjee, Vinayak Parmar Research Analysts, authors and the names subscribed to this report,
hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also
certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Terms & conditions and other disclosures:
ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock
brokering and distribution of financial products. ICICI Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number
INH000000990.ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is Indias largest private sector bank and has its various
subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management,
etc. (associates), the details in respect of which are available on www.icicibank.com
ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India.
We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our
Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from
maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
The information and opinions in this section have been prepared by ICICI Securities and are subject to change without any notice. The report and
information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to,
copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI
Securities. While we would endeavour to update the information herein on reasonable basis, ICICI Securities is under no obligation to update or
keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-
rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable
regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in
certain other circumstances.
The research recommendations are based on information obtained from public sources and sources believed to be reliable, but no independent
verification has been made nor is its accuracy or completeness guaranteed. These research recommendations and information herein is solely for
informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or
other financial instruments. ICICI Securities will not treat recipients as customers by virtue of their receiving these recommendations. Nothing in
this section constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate
to your specific circumstances. The securities discussed and opinions expressed herein may not be suitable for all investors, who must make
their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be
taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks.
The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities
accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of these recommendations. Past performance is not
necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before
investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not
predictions and may be subject to change without notice.

11
Disclaimer
ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been
mandated by the subject company for any other assignment in the past twelve months.
ICICI Securities or its associates might have received any compensation from the companies mentioned herein during the period preceding
twelve months from the date of these recommendations 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 herein 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 reports.
It is confirmed that Dharmesh Shah, Nitin Kunte, Pabitro Mukherjee and Vinayak Parmar, Research Analysts giving these recommendations have
not received any compensation from the companies mentioned herein 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/companies mentioned herein as of the last day of the month preceding the publication of these research recommendations.
Since Associates (ICICI group companies) 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 herein.
It is confirmed that Research Analysts do not serve as an officer, director or employee or advisory board member of the companies mentioned
herein.
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented herein.
Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned herein.
We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis
activities.
This report or recommendations are not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities
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 to observe such restriction.

12