Aurobindo Pharma (AURPHA)
CMP: | 948 Target: | 1165 (23%) Target Period: 12 months BUY
February 11, 2021 In line numbers; progress on new ventures continues Revenues grew 8.0% YoY to | 6365 crore led by 13.2% YoY growth in
Europe formulations business to | 1671 crore. US business grew 6.8% YoY to | 3172 crore. ARV segment grew 41.5% YoY to | 443 crore. RoW markets
posted growth of 14.5% YoY to | 396 crore. However, API segment de-grew 13.6% YoY to | 682 crore. EBITDA margins grew 101 bps YoY to 21.5% with Particulars
higher gross margins being partly offset by higher other expenditure. P articular Am ount EBITDA grew 13.3% YoY to | 1369 crore. Adjusted PAT grew 16.4% YoY to Market Capitalisation | 55547 crore | 836.5 crore in line with operational performance and higher other income. Debt (FY20) | 5826 crore
Result Update Result
Cash (FY20) | 2842 crore Exceptional items of | 2814 crore included 1) gain on Natrol business sale, E V | 58531 crore 2) equity interest re-measurement gains in Eugia and 3) impairment charges. 52 week H/L (|) 1023/281 E quity capital | 58.6 crore Global injectables, US key growth drivers… Face value | 1
After filing its first ANDA in the US in 2003, the company has come a long Price performance way with current filings at 634. US revenues have grown from ~US$100 million in 2009 crossing $1.6 billion sales as on 2020. In rupee terms, US 1200 14000 sales have grown at 17% CAGR to | 11484 crore in FY16-20. Despite calling 1000 12000 off Sandoz’ US dermatology and oral solid portfolio acquisition and sale of 800 10000 8000 Natrol business, we expect US revenue size to reach | 14207 crore at a 7.4% 600 CAGR over FY20-23E amid strong pipeline and incremental injectable 6000 400 traction. On the global injectable front, the current ~US$380 million annual 4000
bandwidth is expected to reach US$650-700 million over the next three 200 2000
years on the back of new launches and significant capacity additions. 0 0
Feb-18 Feb-19 Feb-20 Feb-21
Aug-19 Aug-20 Transformation, capacity optimisation to improve financials Aug-18 The API: formulations ratio has improved from 43:57 in FY13 to 14:86 in Aurobindo(L.H.S) NSE500(R.H.S) FY20. Another USP of the company is its vertically integrated model with huge capacity, unmatched by most peers. The company owns 28 Key risks to our call manufacturing facilities, including eight key formulations facilities in India Delay in USFDA inspections, other
and abroad. These can be optimised by 1) continuous US filings and regulatory challenges
Retail Equity Research Equity Retail launches, 2) incremental launches and filings in the RoW markets and 3) site Slower than expected traction in
– transfers and supplies for products covered under the European deals. injectable portfolio Valuation & Outlook Adjusting for certain one-off exceptional items, Q3 results were in line with Research Analyst I-direct estimates on all fronts. Aurobindo has one of the most enduring Siddhant Khandekar generics ecosystems among peers (vertically integrated model, lower [email protected] product concentration) to withstand volatility in the US and other generics
Mitesh Shah Securities ICICI space. It has also significantly improved its net debt position from foregoing [email protected] the Sandoz deal and from the recent sale of Natrol business. This also bodes well as the company plans to venture into complex areas like biosimilars, Sudarshan Agarwal vaccines and complex injectables where capital requirements are higher and [email protected] precise. Additionally, participation in the PLI scheme, will enhance its backward integration in antibiotics and open up new revenue streams to support its growth prospects in the future. We maintain BUY and arrive at a target price of | 1165 (vs. earlier | 1025) at 16x FY23E EPS of | 72.8. Key Financial Summary
(Year End March) F Y20 F Y21E F Y22E F Y23E CAGR (FY20-23E ) % Revenues (| crore) 23098.5 25503.4 27976.2 30270.9 9.4 E B ITDA (| crore) 4815.7 5444.3 6072.4 6783.3 12.1 E B ITDA margins (% ) 20.8 21.3 21.7 22.4 Net P rofit (| crore) 2857.1 3267.5 3746.9 4264.0 14.3 E P S (|) 48.8 55.8 63.9 72.8 P E (x) 19.6 10.3 14.8 13.0 E V /E B ITDA (% ) 12.0 10.3 9.2 8.2 R O E (% ) 17.0 15.0 14.8 14.6 R O C E (% ) 17.2 19.1 18.5 18.6 Source: ICICI Direct Research; Company Result Update | Aurobindo Pharma ICICI Direct Research
Exhibit 1: Variance Analysis | crore Q3FY21 Q3FY21E Q3FY20 Q2FY21 YoY (%) QoQ (%) Comments YoY growth was mainly due to strong growth in EU, RoW Revenue 6,364.9 6,619.9 5,895.0 6,483.4 8.0 -1.8 and ARV segment Raw Material Expenses 2,572.3 2,648.0 2,565.0 2,515.7 0.3 2.2 Employee Expenses 880.7 926.8 797.8 911.9 10.4 -3.4 Other Expenditure 1,543.3 1,671.6 1,324.2 1,623.0 16.6 -4.9
EBITDA 1,368.6 1,373.5 1,208.0 1,432.8 13.3 -4.5 EBITDA (%) 21.5 20.7 20.5 22.1 101 bps -60 bps Improved mainly due to better gross margins Interest 19.5 16.8 37.1 15.7 -47.5 24.1 Depreciation 276.5 257.3 250.1 257.3 10.6 7.5 Includes forex gain of | 60.6 crore against | 8.9 crore in Other Income 133.4 54.9 30.9 53.8 331.3 148.2 Q3FY20 and | 6.6 crore in Q2FY21 PBT before EO & Forex 1,206.0 1,154.3 951.7 1,213.5 26.7 -0.6 Included 1) net consideration of Natrol sale of | 3093.37 crore 2) | 152.39 crore of gain on account of EO -2,813.9 0.0 12.9 0.0 NA NA remeasurement of equity interest in JV Eugia Pharma Specialties and 3) | 431.87 crore of impairment charges amid Covid PBT 4,019.9 1,154.3 938.8 1,213.5 328.2 231.3 Tax 1,059.1 288.6 232.9 387.3 354.8 173.4 includes tax related to exceptional item of ~| 704 crore Tax Rate (%) 26.3 25.0 24.8 31.9 154 bps -557 bps PAT before MI 2,960.8 865.7 706.0 826.2 319.4 258.4 MI -0.1 -0.4 -0.1 -0.6 0.0 -75.9 Net Profit 2,946.5 855.9 705.5 806.2 317.7 265.5 Adj. Net Profit 836.5 855.9 718.4 806.2 16.4 3.8 Delta vis-à-vis EBITDA mainly due to higher forex gain Key Metrics YoY growth mainly due to continuous growth in generic US 3,171.6 3,155.7 2,969.4 3,189.8 6.8 -0.6 business and recovery in injectable segment Europe 1,671.2 1,617.3 1,476.3 1,514.8 13.2 10.3 Included export incentives of | 3 crore against | 70 crore in RoW 396.2 415.1 345.9 446.5 14.5 -11.3 Q3FY20 and | 77 crore in Q2FY21 YoY growth mainly due to benefit of shifting market from ARV 443.4 501.4 313.4 502.7 41.5 -11.8 EFV to DTG API 682.5 829.3 789.8 829.0 -13.6 -17.7 Source: ICICI Direct Research
Exhibit 2: Change in Estimates FY21E FY22E (| Crore) O ld New% Change O ld New% Change R evenue 25,724.1 25,503.4 -0.9 27,469.5 27,976.2 1.8 E BITDA 5,407.9 5,444.3 0.7 5,842.7 6,072.4 3.9 E BITDA Margin (% ) 21.0 21.3 35 bps 21.3 21.7 41 bps Adj. P AT 3,278.7 3,267.5 -0.3 3,716.3 3,746.9 0.8 E P S (|) 56.0 55.8 -0.4 63.4 63.9 0.9 Source: ICICI Direct Research
Exhibit 3: Change in Estimates Current Earlier (| crore) F Y19 F Y20 F Y21E F Y22E F Y21E F Y22E US 9,030.7 11,483.5 12,585.4 13,142.5 12,543.0 12,606.8 E urope 4,960.2 5,921.7 6,371.9 7,399.3 6,307.1 7,284.6 ARV 972.4 1,251.6 1,829.8 1,942.5 1,926.0 2,111.2 Changed mainly due to lower than expected sales in Q3FY21
R oW 1,193.6 1,355.1 1,527.7 1,671.4 1,512.0 1,654.2 API 3,403.2 3,083.4 3,085.1 3,393.6 3,231.9 3,393.5 Source: ICICI Direct Research
ICICI Securities | Retail Research 2 Result Update | Aurobindo Pharma ICICI Direct Research
Conference Call Highlights R&D spend at | 390.5 crore, 6.1% of revenues US – ~US$431 million in sales (up 2.9% YoY); US$:| - 73.66 o 13 ANDA approval in Q3FY21 (incl. 9 injectables) o Filed eight ANDAs with USFDA in Q3FY21 o On a cumulative basis, the company filed 634 ANDAs with USFDA and received approval for 463 ANDAs including 229 tentative approvals . 87 injectables approved; 54 pending approvals o launched 11 products during the quarter including four injectables o filed two DMFs with USFDA during the quarter o looking at four launches in Q4FY21; 12-15 injectable launches in FY22 Injectable sales – US$109 million (US$283 million in 9MFY21) o Currently annual rate US$380 million; to reach US$650-700 million over the next three years Forex gain of | 60.6 crore vs. | 8.9 crore in Q3FY20 ARV - increased conversion from TLE to TLD across the geographies has led to the growth Net organic capex for the quarter ~US$76 million Net cash at the end of December 2020 is at US$117 million (vs. net debt of US$194 million at the end of September 2020) o Cash is at | 5941 crore o Finance cost: 1.5% API - Total revenue including captive consumption at US$206 million in Q3FY21, US$632 million for 9MFY21 o The company aims to double external sales in the next four to five years Vaccines - developing bacterial, pneumococcal conjugate vaccine (PCV); expect to file the product with regulatory authorities in Q4FY22 o Auro Vaccines is developing four viral vaccines including one for Covid-19 o Contract manufacturing may also be possible for both bacterial, viral vaccines o Viral plant to be ready by June 2021, In FY22 to be used for Covid vaccines Biosimilars - Developing 13 biosimilars in two phases (first and second wave) To continue with ~US$200-225 million capex per annum (ex-PLI scheme) o PLI capex (~| 3000 crore) to take 30-32 months; three separate plants . Bulk drugs normally are doing 1.5-2x asset turn . 50-50% can be for captive consumption and external sales . The company will try to match financials to company average Vizag facility structure is ready, need to install machines, etc Setting up oral solid facility in China; 28 already filed with eight to 10 approvals expected in CY21 o Injectables can also be introduced later on
ICICI Securities | Retail Research 3 Result Update | Aurobindo Pharma ICICI Direct Research
The company had ~| 300 crore of MAT credit at beginning of FY21 USFDA inspections are expected to start soon Export incentives: Growth market revenues include export incentives of | 3 crore vs. | 70 crore in Q3FY20 o API revenues include export incentives of | 4 crore vs. | 14 crore in Q3FY20
Exhibit 4: Quarterly Financials (| Crore) Q 3F Y 18Q 4F Y 18Q 1F Y 19Q 2F Y 19Q 3F Y 19Q 4F Y 19Q 1F Y 20Q 2F Y 20Q 3F Y 20Q 4F Y 20Q 1F Y 21Q 2F Y 21Q 3F Y 21 Y oY (% ) Q oQ (% ) Total Operating Income4336.1 4049.1 4250.3 4751.4 5269.7 5292.2 5444.6 5600.5 5895.0 6158.4 5924.8 6483.4 6364.9 8.0 -1.8 Raw Material E xpenses1817.5 1669.5 1907.3 2042.9 2389.9 2372.6 2298.5 2368.3 2565.0 2503.4 2407.4 2515.7 2572.3 0.3 2.2 % of revenue 41.9 41.2 44.9 43.0 45.4 44.8 42.2 42.3 43.5 40.6 40.6 38.8 40.4 -310 bps 161 bps Gross Profit 2518.6 2379.6 2343.0 2708.5 2879.8 2919.6 3146.1 3232.2 3330.0 3655.1 3517.4 3967.7 3792.6 13.9 -4.4 G P M (% ) 58.1 58.8 55.1 57.0 54.6 55.2 57.8 57.7 56.5 59.4 59.4 61.2 59.6 310 bps -161 bps Employee Expenses 540.7 581.3 596.1 625.5 649.8 713.5 779.9 777.2 797.8 864.3 888.0 911.9 880.7 10.4 -3.4 % of revenue 12.5 14.4 14.0 13.2 12.3 13.5 14.3 13.9 13.5 14.0 15.0 14.1 13.8 30 bps -23 bps Other Manufacturing E952.4 xpenses1010.2 1035.8 1096.8 1141.0 1149.2 1215.1 1314.7 1324.2 1474.5 1372.0 1623.0 1543.3 16.6 -4.9 % revenues 22.0 24.9 24.4 23.1 21.7 21.7 22.3 23.5 22.5 23.9 23.2 25.0 24.2 179 bps -79 bps Total E xpenditure 3310.5 3261.0 3539.2 3765.1 4180.7 4235.3 4293.5 4460.2 4687.0 4842.2 4667.4 5050.6 4996.3 6.6 -1.1 % of revenue 76.3 80.5 83.3 79.2 79.3 80.0 78.9 79.6 79.5 78.6 78.8 77.9 78.5 -101 bps 60 bps E B ITDA 1025.6 788.1 711.1 986.2 1089.0 1057.0 1151.1 1140.3 1208.0 1316.2 1257.4 1432.8 1368.6 13.3 -4.5 EBITDA Margins (% ) 23.7 19.5 16.7 20.8 20.7 20.0 21.1 20.4 20.5 21.4 21.2 22.1 21.5 101 bps -60 bps Depreciation 138.1 156.6 154.5 163.7 163.1 186.6 240.9 243.3 250.1 232.4 255.5 257.3 276.5 10.6 7.5 Interest 18.9 24.7 29.5 35.4 47.7 50.1 49.9 40.9 37.1 31.8 21.1 15.7 19.5 -47.5 24.1 Other Income 25.8 43.8 43.7 26.3 63.9 32.3 15.8 20.6 30.9 32.6 115.6 53.8 133.4 331.3 148.2 Less: Forex & E xceptional-7.3 Items0.0 0.0 26.8 25.0 36.2 12.7 12.8 12.9 -12.3 0.0 0.0 -2813.9 PBT 901.7 650.6 570.7 786.6 917.0 816.3 863.4 863.9 938.8 1096.8 1096.4 1213.5 4019.9 328.2 231.3 Total Tax 306.9 122.4 115.5 175.4 204.8 231.1 227.8 224.4 232.9 228.5 303.7 387.3 1059.1 354.8 173.4 Tax rate (% ) 34.0 18.8 20.2 22.3 22.3 28.3 26.4 26.0 24.8 20.8 27.7 31.9 26.3 154 bps -557 bps PAT before MI 594.8 528.2 455.2 611.2 712.2 585.2 635.7 639.5 706.0 868.3 792.7 826.2 2960.8 319.4 258.4 Minority Interest -0.2 0.3 -0.1 -0.1 0.0 -0.2 -0.2 -0.3 -0.1 -0.8 0.1 -0.6 -0.1 0.0 -75.9 Adjusted PAT 587.8 528.5 455.7 638.3 737.3 621.6 648.5 652.6 718.4 837.6 780.6 806.2 836.5 16.4 3.8 Source: ICICI Direct Research, Company
ICICI Securities | Retail Research 4 Result Update | Aurobindo Pharma ICICI Direct Research
Company Background Aurobindo Pharma was set up by first generation entrepreneurs PV Ramprasad Reddy and K Nithyananda Reddy in 1986. Based in Hyderabad, the company is an integrated pharmaceutical company, which started as an API manufacturer. In 2001, it moved up the value chain by foraying into formulations while from 2007 onwards it started scaling up the formulation business. APL's manufacturing facilities have been approved by several leading regulatory agencies like USFDA, UKMHRA, WHO, Health Canada, MCC South Africa, ANVISA Brazil. The company owns 28 manufacturing facilities, including eight key formulations facilities in India and abroad. The company owns three R&D centres. The current employee strength is more than 8000, which includes more than 750 scientists. In FY20, the API: formulations ratio was at 14:86. US formulations constitute 50% of revenues followed by Europe (26%), APIs (13%), RoW (6%) and ARV formulations (~5%). The company faced a USFDA embargo in 2011 for two of its units for non- compliance with cGMP. It also went through political turmoil due to the Telangana issue and alleged favours received by promoters through political connections. Aurobindo acquired commercial operations in seven Western European countries from Actavis. The company has acquired personnel, commercial infrastructure, products, marketing authorisation and dossier license rights in these seven countries. The acquisition brought in a pipeline of ~1200 products from different segments and an additional pipeline of over 200 products under its foray. Net sales for the acquired businesses were ~€320 million. GPMs were ~30%. They were fetching losses of ~€23 million at the EBITDA level. Aurobindo Pharma also acquired the Generis group in Portugal in Q4FY17, through its step down subsidiary Agile Pharma (Netherlands) for a consideration of ~€135 million (~| 985 crore). Generis’ CY16 revenues were €64.8 million and EBITDA was €12.7 million. Recently, the company also acquired Canada based Apotex' businesses in five European countries (Poland, Czech Republic, the Netherlands, Spain, and Belgium) for ~€74 million. This acquisition will add 200 generics and more than 80 OTC products that had total sales of €133 million in FY18. In the US, the company had acquired the assets of nutritional supplement maker Natrol Inc. for a consideration of ~US$132.5 million. With this acquisition, the company had forayed into the nutritional OTC business in the US and other international markets. More recently, the company signed a definitive agreement on October 25, 2020 with New Mountain Capital and its affiliate Jarrow Formulas to sell its 'Natrol' business (wholly owned step- down subsidiary) as a going concern with related assets, liabilities, products, brands and employees for a cash consideration of US$550 million (| 4048 crore). This transaction is expected to be closed by January 2021. Aurobindo Pharma has received government approval for setting up plants for production of Penicillin-G, 7-ACA (through Lyfius Pharma) and Erythromycin Thiocyanate (TIOC) through Qule Pharma, with committed production capacity of 15,000 MT, 2,000 MT and 1,600 MT, respectively under the PLI scheme. The committed investment for Penicillin-G, 7-ACA and TIOC is | 1,392 crore, | 813 crore and | 834 crore respectively. The commercial production is projected to commence from FY24.
ICICI Securities | Retail Research 5 Result Update | Aurobindo Pharma ICICI Direct Research
Exhibit 5: Revenues to grow at 9.4% CAGR in FY20-23E Exhibit 6: US to grow at CAGR of 7.4% over FY20-23E 16000 35000 14207 30271 14000 12585 13142 30000 27976 11484 25503 12000 25000 23099 19564 10000 9031 20000 7442 16500 8000 6827 13831 15090 6144
15000 (| crore) (|
(| crore) (| 6000 10000 4000 5000 2000 0 0 FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E Revenues US
Source: ICICI Direct Research, Company Source: ICICI Direct Research, Company
Exhibit 7: Europe to grow at CAGR of ~11% over FY20-23E Exhibit 8: EBITDA & EBITDA margins trend 6783 9000 7991 7200 24 6072 8000 7399 6300 5444 23 7000 6372 22.7 22.8 22.9 22.4 5922 5400 4816 6000 22 4960 4500 3772 3843 21.7 4354 3434 5000 3141 21.3 3600 20.8 21
4000 3125 3277 (%) (| crore) (| (| crore) (| 2700 3000 20 1800 19.6 2000 19 1000 900 0 0 18 FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E Europe EBITDA EBITDA Margins (%)
Source: ICICI Direct Research, Company Source: ICICI Direct Research, Company
Exhibit 9: PAT & PAT margins trend Exhibit 10: RoE & RoCE trend 6300 25 5378 30 27.2 5400 25 4264 20 23.1 24.224.4 4500 21.1 3747 20 20.020.7 15.3 14.115 17.0 18.5 3600 13.8 14.6 17.2 19.115.0 18.6 2831 13.4 15 15.9 14.8 2302 2412 236512.1 12.3 17.7
2700 1916 10 (%) 14.6 (%)
(| crore) (| 10 1800 5 5 900 0 0 0 FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E PAT PAT Margins (%) RoCE RoNW
Source: ICICI Direct Research, Company Source: ICICI Direct Research, Company
Exhibit 11: Valuation Revenues G rowth Adj. EPS G rowth P/EEV/EBITDA RoNW RoCE (| crore) (%) (|) (%) (x) (X) (%) (%) F Y 20 23099 18.1 48.3 16.5 19.6 12.0 17.0 17.2 F Y 21E 25503 10.4 91.8 14.4 10.3 10.3 15.0 19.1 F Y 22E 27976 9.7 63.9 14.7 14.8 9.2 14.8 18.5 F Y 23E 30271 8.2 72.8 13.8 13.0 8.2 14.6 18.6 Source: ICICI Direct Research
Exhibit 12: Shareholding Pattern (in %) Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 P romoter 51.9 52.0 52.0 52.0 51.9 O thers 48.1 48.0 48.0 48.0 48.1 Source: ICICI Direct Research, Company
ICICI Securities | Retail Research 6 Result Update | Aurobindo Pharma ICICI Direct Research
Financial Summary
Exhibit 13: Profit & Loss (| crore) Exhibit 14: Cash Flow Statement (| crore) (Year-end March) F Y20 F Y21E F Y22E F Y23E (Year-end March) F Y20 F Y21E F Y22E F Y23E R evenues 23,098.5 25,503.4 27,976.2 30,270.9 Profit/(Loss) after taxation 3,013.2 5,377.9 3,746.9 4,264.0 G rowth (% ) 18.1 10.4 9.7 8.2 Add: Depreciation & Amortization 966.7 1,065.9 1,258.0 1,378.0 Raw Material E xpenses 9,735.2 10,221.1 11,330.4 12,108.3 Net Increase in Current Assets -43.9 -2,004.1 -1,480.5 -1,394.1 Employee Expenses 3,219.2 3,589.2 3,916.7 4,237.9 Net Increase in Current Liabilities 320.8 1,207.4 621.8 620.1 Other Manufacturing E xpenses 5,328.4 6,248.7 6,656.8 7,141.3 CF from operating activities 4,381.3 5,722.9 4,205.2 4,913.5 Total Operating E xpenditure 18,282.8 20,059.0 21,903.8 23,487.5 EBITDA 4,815.7 5,444.3 6,072.4 6,783.3 (Purchase)/Sale of Fixed Assets-1,401.7 -1,500.0 -2,000.0 -2,500.0 G rowth (% ) 25.3 13.1 11.5 11.7 (Inc)/dec in Investments -179.1 -2,000.0 -2,000.0 -2,000.0 Interest 159.8 75.8 59.0 45.5 O thers 31.7 321.5 -1.9 -1.1 Depreciation 966.7 1,065.9 1,258.0 1,378.0 CF from investing activities -1,549.2 -3,178.5 -4,001.9 -4,501.1 Other Income 99.9 358.6 330.6 417.4 PBT before E xceptional Items 3,789.1 4,661.3 5,086.0 5,777.2 Issue of E quity Shares 0.2 0.0 0.0 0.0 Less: Forex & E xceptional Items 26.1 -2,813.9 0.0 0.0 Inc / (Dec) in Debt -1,632.4 -3,139.7 -500.0 -500.0 PBT 3,763.0 7,475.2 5,086.0 5,777.2 Dividend & Dividend Tax -188.4 -391.9 -273.0 -310.7 Total Tax 913.5 2,036.4 1,281.7 1,455.8 others -126.6 -75.8 -59.0 -45.5 PAT before MI 2,849.5 5,438.7 3,804.3 4,321.3 C F from financing activities -1,947.2 -3,607.3 -832.1 -856.2 Minorities and Associates -18.5 -60.8 -57.4 -57.3 PAT 2,831.0 5,377.9 3,746.9 4,264.0 Net Cash flow 885.0 -1,063.0 -628.8 -443.9 Adjusted PAT 2,857.1 3,267.5 3,746.9 4,264.0 Opening Cash 1,957.2 2,842.2 1,779.2 1,150.4 G rowth (% ) 16.5 14.4 14.7 13.8 Closing Cash 2,842.2 1,779.2 1,150.4 706.5 EPS (Diluted) 48.3 91.8 63.9 72.8 Free Cash Flow 2,979.6 4,222.9 2,205.2 2,413.5 EPS (Adjusted) 48.8 55.8 63.9 72.8 Source: ICICI Direct Research Source: ICICI Direct Research
Exhibit 15: Balance Sheet (| crore) Exhibit 16: Key Ratios (Year-end March) F Y20 F Y21E F Y22E F Y23E (Year-end March) F Y20 F Y21E F Y22E F Y23E E quity Capital 58.6 58.6 58.6 58.6 Per share data (|) Reserve and Surplus 16,751.8 21,737.9 25,211.7 29,165.0 Adjusted E PS (Diluted) 48.8 55.8 63.9 72.8 Total Shareholders funds 16,810.4 21,796.4 25,270.3 29,223.6 BV per share 286.9 372.0 431.2 498.7 Total Debt 5,826.4 2,686.7 2,186.7 1,686.7 Dividend per share 3.5 6.7 4.7 5.3 Deferred Tax Liability 302.5 332.7 366.0 402.6 Cash Per Share 48.5 30.4 19.6 12.1 Minority Interest 0.1 0.1 0.2 0.2 Operating Ratios (%) Long term Provisions 74.7 83.7 93.7 105.0 Gross Profit Margins 57.9 59.9 59.5 60.0 Other Non Current Liabilities 87.49 91.9 96.5 101.3 E BITDA margins 20.8 21.3 21.7 22.4 S ource of F unds 23,101.6 24,991.6 28,013.4 31,519.4 Net Profit margins 12.4 12.8 13.4 14.1 Gross Block - Fixed Assets 11,525.3 13,625.3 15,725.3 17,225.3 Inventory days 121.7 135.2 135.2 135.2 Accumulated Depreciation 3,044.8 4,110.7 5,368.7 6,746.7 Debtor days 68.2 63.7 63.7 63.7 Net B lock 8,480.5 9,514.6 10,356.6 10,478.6 Creditor days 40.2 49.9 49.9 49.9 Capital WIP 1,985.9 1,385.9 1,285.9 2,285.9 Asset Turnover 2.2 2.0 1.9 1.9 Net Fixed Assets 10,466.5 10,900.6 11,642.5 12,764.5 E BITDA Conversion Rate 91.0 105.1 69.3 72.4 Goodwill on Consolidation 915.9 591.9 591.9 591.9 Return Ratios (%) Investments 554.7 2,554.7 4,554.7 6,554.7 R oE 17.0 15.0 14.8 14.6 Inventory 7,699.9 9,445.5 10,361.4 11,211.2 R oC E 17.2 19.1 18.5 18.6 C ash 2,842.2 1,779.2 1,150.4 706.5 R oIC 21.5 20.5 19.1 19.3 Debtors 4,315.2 4,450.3 4,881.8 5,282.2 Valuation Ratios (x) Loans & Advances & Other CA 1,555.3 1,678.6 1,811.8 1,955.7 P /E 19.6 10.3 14.8 13.0 Total Current Assets 16,412.5 17,353.6 18,205.4 19,155.6 EV / EBITDA 12.0 10.3 9.2 8.2 C reditors 2,545.0 3,490.0 3,828.3 4,142.4 EV / Net Sales 2.5 2.2 2.0 1.8 Provisions & Other CL 3,279.8 3,542.2 3,825.5 4,131.6 Market Cap / Sales 2.4 2.2 2.0 1.8 Total Current Liabilities 5,824.8 7,032.1 7,653.9 8,273.9 Price to Book Value 3.3 2.5 2.2 1.9 Net Current Assets 10,587.7 10,321.5 10,551.5 10,881.7 Solvency Ratios LT L& A, Other Assets 413.6 446.6 482.4 521.0 Debt / E quity 0.3 0.1 0.1 0.1 Deferred Tax Assets 163.2 176.3 190.4 205.6 Debt / EBITDA 1.2 0.5 0.4 0.2 Application of F unds 23,101.6 24,991.6 28,013.4 31,519.4 Current Ratio 2.3 2.2 2.2 2.2 Source: ICICI Direct Research Source: ICICI Direct Research
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Exhibit 17: ICICI Direct Coverage Universe (Healthcare) Com pany I-Direct CMP TPRating M Cap EP S (|) P E(x) RoCE (%) RoE (%) C ode (|) (|) (| cr) F Y 19 F Y 20F Y 21EF Y 22E F Y 19 F Y 20 F Y 21EF Y 22E F Y 19F Y 20F Y 21EF Y 22E F Y 19 F Y 20F Y 21EF Y 22E Ajanta Pharma AJAP HA 1815 2,250 B uy 15841 43.5 53.4 70.3 77.3 41.7 34.0 25.8 23.5 21.8 24.7 26.7 24.8 17.1 18.1 20.3 19.1 Alembic PharmaALEMPHA 938 1,055 Hold 18438 30.2 44.4 57.5 43.9 31.1 21.1 16.3 21.4 19.6 21.0 23.9 17.0 21.8 27.1 23.0 15.5 Apollo HospitalsAPOHOS 2736 2,310 Hold 39339 16.2 22.3 -1.6 36.1 168.5 122.5 NA 75.8 8.8 10.2 4.9 13.0 7.1 9.7 -0.5 10.0 Aurobindo PharmaAURPHA 948 1,165 B uy 55547 41.9 48.8 55.8 63.9 22.6 19.4 17.0 14.8 15.9 17.2 19.1 18.5 17.7 17.0 15.0 14.8 B iocon B IO C O N 408 450 Hold 48984 6.2 5.8 6.5 13.9 65.8 70.2 62.7 29.4 10.9 10.2 9.2 16.5 12.2 10.4 10.5 18.7 Cadila HealthcareCADHEA 474 555 B uy 48505 18.1 14.0 20.3 21.1 26.2 33.9 23.4 22.5 12.8 10.7 13.5 13.2 17.8 13.8 16.0 14.7 C ipla C IP LA 846 975 B uy 68231 18.6 19.2 31.0 32.4 45.5 44.0 27.3 26.2 10.9 12.0 17.0 16.1 10.0 9.8 14.0 13.1 Divi's Lab DIV LAB 3783 4,440 B uy 100428 51.0 51.9 72.3 88.3 74.2 73.0 52.3 42.9 25.5 23.9 28.5 28.4 19.4 18.8 22.1 22.1 Dr Reddy's LabsDRREDD 4861 5,525 B uy 80833 114.6 121.8 87.0 188.6 42.4 39.9 55.8 25.8 10.7 9.6 15.7 19.5 13.6 13.0 8.6 16.0 Glenmark PharmaGLEPHA 504 635 B uy 14207 26.9 26.4 36.5 37.6 18.7 19.1 13.8 13.4 15.3 12.7 14.9 14.1 13.5 12.2 14.5 13.1 Hikal HIK C HE 172 230 B uy 2126 8.4 8.1 10.2 12.2 20.6 21.3 17.0 14.1 14.3 12.8 13.6 14.9 13.6 12.2 13.5 14.2 Ipca Laboratories IP C LAB 1939 2,490 B uy 24592 34.9 47.6 95.8 96.0 55.6 40.8 20.2 20.2 15.0 17.6 27.8 22.9 14.2 16.6 25.3 20.3 Jubilant Life JUB LIF 962 850 B uy 15317 54.9 59.9 54.4 70.3 17.5 16.1 17.7 13.7 14.3 14.4 14.7 16.9 17.8 16.6 13.2 14.7 Lupin LUP IN 1069 1,165 B uy 48469 16.5 -12.7 24.5 37.3 64.6 NA 43.7 28.7 9.4 9.7 8.9 12.2 5.4 -4.6 8.2 11.2 Narayana HrudalayaNARHRU 490 580 B uy 10003 2.9 6.4 -2.3 8.0 168.6 77.1 NA 61.3 7.7 11.0 -0.5 12.1 5.5 11.4 -4.3 13.2 Natco Pharma NATPHA 909 885 Hold 16556 35.4 25.3 32.7 28.0 25.7 35.9 27.8 32.4 21.3 14.0 17.1 13.6 18.5 12.2 14.0 11.0 S un P harma SUNPHA 634 675 B uy 152102 15.9 16.8 28.7 23.5 40.0 37.8 22.1 27.0 10.3 10.0 12.9 12.3 9.2 8.9 14.3 10.6 Syngene Int. S Y NINT 580 700 B uy 23200 8.3 10.3 9.7 13.2 70.1 56.3 59.8 44.0 14.8 14.5 12.6 15.8 16.8 15.7 15.1 17.1 Torrent Pharma TORPHA 2758 3,290 B uy 46676 48.9 60.6 70.0 81.6 56.4 45.5 39.4 33.8 14.2 15.4 17.4 19.4 17.5 21.2 20.7 20.4 S halby S HALIM 111 130 Hold 1199 2.9 2.6 4.7 4.9 37.9 43.5 23.6 22.6 6.8 7.2 6.6 7.9 4.1 3.5 6.0 5.9 Aster DM ASTDM 151 210 B uy 7543 6.7 5.5 3.9 10.7 22.6 27.3 38.7 14.1 8.3 7.1 5.4 9.2 10.4 8.5 5.6 13.4 Indoco RemediesINDR E M 317 380 B uy 2922 -0.3 2.6 9.3 14.8 NA 121.2 34.1 21.4 0.9 4.6 11.4 15.6 -0.4 3.5 11.4 15.7 Caplin Point CAPPOI 461 605 B uy 3487 23.3 28.4 32.6 43.7 19.7 16.2 14.1 10.6 34.6 26.5 26.0 28.3 27.9 22.7 21.1 22.4 Granules India GRANUL 333 460 B uy 8235 9.5 12.4 21.1 23.6 34.8 26.8 15.7 14.1 11.8 15.2 22.4 22.0 15.5 16.7 22.4 20.2 Laurus Labs LAULAB 358 440 B uy 19216 1.7 4.8 17.9 21.1 204.9 75.3 20.0 17.0 7.7 13.0 33.8 31.6 6.0 14.4 36.4 31.0 Source: ICICI Direct Research, Bloomberg
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Buy: >15%; Hold: -5% to 15%; Reduce: -5% to -15%; Sell: <-15%
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093 [email protected]
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