Result Update

June 1, 2013
Rating matrix
Rating Target Target Period Potential Upside : : : : Buy | 200 12 months 18%

Aurobindo Pharma (AURPHA)

| 170
WHATS CHANGED
FY14E 6965 1184 655 655 FY15E 7943 1390 767 767

Key Financials
(| Crore) Revenues EBITDA Net Profit Adjusted PAT FY12 4627 610 -124 334 FY13 5855 889 294 421

PRICE TARGET ....................................................................... Changed from | 187 to | 200 EPS (FY14E) ......................................................................... Changed from | 23.4 to | 21.5 EPS (FY15E) ..........................................................................................Introduced at | 26.4 RATING ...............................................................................................................Unchanged

Moving in right direction

Aurobindo reported a mixed set of Q4FY13 numbers. Revenues grew 32% YoY to | 1570 crore, much higher than I-direct estimate of | 1450 crore, driven by ~41% YoY growth in formulations. Better-than-expected traction in US/EU-RoW formulations and Cephalosporin APIs resulted in overall robust growth. EBITDA margins improved ~350 bps YoY but declined ~120 bps QoQ to 15.3% (I-direct estimate: 16.4%). The sequential decline in margins was on account of 1) lower dossier income and 2) year end provisions at some of the European subsidiaries towards discounts/charge backs/rebates, etc. We maintain BUY as the company seems to be on the right track to address other lingering issues such as margins and leverage. US/EU-RoW lead overall formulations growth US formulations grew 61% YoY to | 486 crore driven by 1) incremental product launches post approvals for various manufacturing sites and 2) growth in the legacy base business. During the quarter, the company filed seven ANDAs taking total filings to 269 and received approval for 12 products taking total approval count to 181. EU-RoW formulations grew ~45% YoY to | 249 crore on the back of incremental product launches. USFDA lifts import alert on Aurobindos Unit VI The USFDA has lifted the import alert for non-sterile products manufactured at Aurobindos UnitVI cephalosporin facility based in Hyderabad, paving the way for resumption of exports of nine products to the US market. Prior to the import alert, the unit had annual US sales of US$33 million for these products. Regulatory ghosts more or less exorcised; maintain BUY With clearances for unit III/VI/XII and approval for unit IV, the company is witnessing incremental approvals and is well poised to launch multiple products in the US. The Q4 performance has once again vindicated the overall recovery, which was visible in Q2 and Q3. The huge debt pile, however, will continue to remain a stumbling block. Since most of it is forex denominated, a falling rupee will only hit more, albeit notionally. Our new target price now stands at | 200 based on 6x FY15E EV/EBITDA.
Exhibit 1: Financial Performance
(| Crore) Revenues EBIDTA EBIDTA Margin (%) Depreciation Interest Reported PAT EPS (|) Q4FY13A 1570.4 240.1 15.3 69.3 31.6 108.6 3.7 Q4FY13E 1449.9 239.2 16.5 63.0 35.5 134.9 4.6 Q4FY12 1190.7 140.4 11.8 53.9 35.2 108.0 3.7 Q3FY13 1570.1 259.1 16.5 60.8 33.1 91.8 3.2 YoY Gr. (%) 31.9 71.0 28.5 -10.3 0.6 QoQ Gr. (%) 0.0 -7.3 14.0 -4.7 NM

Valuation Summary
FY12 EPS (|) Adjusted EPS (|) PE (x) Target PE (x) EV to EBITDA (x) Target EV/EBITDA (x) Price to book (x) RoNW (%) RoCE (%) NM 11.5 NM NM 13.0 14.5 2.1 NM 7.5 FY13 10.1 14.5 16.8 19.8 9.2 10.2 1.9 11.3 10.6 FY14E 22.5 22.5 7.6 8.9 6.6 7.3 1.6 20.5 14.3 FY15E 26.4 26.4 6.5 7.6 5.4 6.0 1.3 19.8 16.8

Stock data
Market Capitalisation Debt (FY13) Cash (FY13) EV 52 week H/L Equity capital Face value MF Holding (%) FII Holding (%) | 4949 crore | 3452 crore | 208 crore | 8193 crore 205/100 | 29.1 crore 5 15.0 16.8

Price movement
6,500 6,000 5,500 5,000 4,500 4,000 Jun-12 Sep-12 Dec-12 Feb-13 Nifty (L.H.S) Price (R.H.S) 250 200 150 100 50 May-13

Analysts name
Siddhant Khandekar siddhant.khandekar@icicisecurities.com Krishna Kiran Konduri krishna.konduri@icicisecurities.com Darpan Thakkar darpan.thakkar@icicisecurities.com

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Quarterly Highlights
Exhibit 2: Revenues grow 32% YoY
1800 1600 1400 1200 | crore
Revenues grew 32% to | 1570 crore (higher than our estimates of | 1450 crore) on the back of 62% growth in the US formulations, 45% growth in EU & RoW and 26% growth in Ceph APIs. The mix of formulations, API for the quarter stood at 58:42

1500.4 39.5 1190.7 1214.4

1570.1

1570.4

45 40 35 30 25 20 15 10 5 0 %

31.9 22.2

1000 800 600 400 200 0 3.1 Q4FY12 Q1FY13 Q2FY13 Revenues 12.8

Q3FY13 YoY Growth (%)

Q4FY13

Source: Company, ICICIdirect.com Research

Exhibit 3: EBITDA margins up 350 bps on lower base

300 250
EBITDA margins improved 350 bps to 15.3% (lower than our estimate of 16.5%) on the back of an improved

250.3 118.3

259.1

140 240.1 71.0 120 100 80 60 40 20 0 -20 -40 -60

200 (| cr) 150 100 50 0 Q4FY12 Q1FY13 EBITDA

[

product mix and higher dossier income YoY. However, on QoQ basis, margins declined 120 bps due to year end provisions at European subsidiaries towards discount/charge back/rebates. EBITDA in absolute terms grew 71% YoY to | 240 crore (our estimates: | 239 crore)

140.4

139.8

35.5

-14.8 -34.5 Q2FY13 Q3FY13 YoY Growth (%) Q4FY13

Source: Company, ICICIdirect.com Research

Exhibit 4: Trends in EBITDA & net profit margin

20 15 10 5 (%) 0 -5 -10 -15 EBITDA Margins NPM Margins Q4FY12 Q1FY13 -10.6 Q2FY13 Q3FY13 Q4FY13 11.8 9.1 11.5 5.8 6.9 16.7 14.8 16.5 15.3

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 2

Exhibit 5: Trends in net profit

250 200
Despite strong growth at the EBITDA level, the net profit remained flat YoY at | 108.6 crore due to forex loss and higher tax provision. The company booked forex loss of | 1.3 crore as against forex gains of | 103.4 crore on the back of restatement forex debt. The effective tax rate during the quarter was 29.3% due to higher provision of deferred tax

222.4

150 100 (| cr) 50 0 -50 -100 -150

108.0

91.8

108.6

Q4FY12

Q1FY13

Q2FY13

Q3FY13

Q4FY13

-128.9 Net Profit

Source: Company, ICICIdirect.com Research

Exhibit 6: Formulation composition improves YoY

100 80 60 % 40 20 0 Q4FY12 Q1FY13 Q2FY13 API Q3FY13 Dossier Income Q4FY13 Formulations 53.1 52.4 58.8 56.6 57.2 0.2 46.7 0.5 47.0 0.8 40.5 2.4 41.0 1.2 41.6

Exhibit 7: Trends in dossier income

50 40 | crore 30 20 10 0 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Dossier Income Q4FY13 2.9 6.8 18.9 11.7 38.6

Source: Company ICICIdirect.com, Research

Source: Company, ICICIdirect.com Research

Exhibit 8: New product launches boost growth in US business

600 500
Sales from the US business grew 61.5% to | 486 crore

513.4 57.8 424.9 50.0 300.9 328.3 19.8

61.5 486.0

70 60 50 40 20 10 0 -10 -20 (%) 30

400 | crore 300 200 100 0 -14.0 Q4FY12

driven by new product launches and improved market share of existing products. The company launched 23 products during the year. Aurobindo is planning to launch 16-20 products in FY14. Of this, three are likely to be control substance products. The company filed seven ANDAs taking total ANDAs count to 269. Aurobindo received approval for 12 products during the quarter taking the total approval to 181 (including 26 tentative approvals). During the quarter, the company launched three injectables from Unit IV and re-launched six Cephalosporin products from Unit VI

Q1FY13 USA

Q2FY13

Q3FY13

Q4FY13

YoY growth (%)

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 3

Exhibit 9: EU & RoW up 45% YoY on the back of new product launches
270 225
Sales from Europe & RoW markets grew 45% to | 249 crore on the back of new product launches. The company received approval for four dossiers each from Australia and Canadian regulatory. Aurobindo filed 10 dossiers during the quarter taking total dossier filings to 1753

249.2 225.7 68.2 171.8 186.1 45.1 35.8 22.6 9.2 Q4FY12 Q1FY13 Q2FY13 EU & ROW Q3FY13 YoY growth (%) Q4FY13 223.3

80 70 60 50 (%) 50 40 30 20 0 -10 -20 -30 -40 (%) 10

(%)

180 | crore 135 90 45 0

40 30 20 10 0

Source: Company, ICICIdirect.com Research

Exhibit 10: ARV business posts marginal growth of 4% YoY

280 240 200 | crore 160 120 80 40 0 Q4FY12 -33.7 Q1FY13 ARV Q2FY13 Q3FY13 Q4FY13 -2.4 -18.4 175.9 140.2 3.9 175.1 182.8 252.2 44.6

Revenues from the ARV business grew only 4% to | 182.8 crore as the company remained selective in accepting tenders. The management indicated the company will bid for only lucrative tenders

YoY growth (%)

Source: Company, ICICIdirect.com Research

Exhibit 11: API business grows 17% YoY on the back of sharp growth in Cephs API
750 600 570.2 18.1 27.9 587.1 622.1 26.9 660.2 21.7 16.9 666.8 30 25 20 15 10 5 0 Q4FY12 Q1FY13 APIs
[

SSPs and non-cephs/non-SSPs APIs grew 14% and 11% respectively. The company filed two DMFs with the USFDA and 22 DMFs with other regulatory authorities during the quarter

| crore

The . API business grew 17% to | 667 crore driven by 26% growth in Cephalosporin APIs business. The growth in

450 300 150 0

Q2FY13

Q3FY13 YoY growth (%)

Q4FY13

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 4

Exhibit 12: Trends in quarterly financial performance

(| Crore) Revenues RM Cost % of revenue Gross Profit Gross Profit Margin (%) Employee cost % of revenue Other expenditure % revenues Total Expenditure % of revenue EBITDA EBITDA Margins (%) Depreciation Interest cost Other Income Forex & EO PBT Tax Expense Tax rate (%) PAT Minority Interest PAT after Minority Interest EPS (|) Source: Company, ICICIdirect.com Research Q1FY12 1076.9 573.3 53.2 503.6 46.8 123.2 11.4 216.5 20.1 912.9 84.8 163.9 15.2 45.2 14.6 2.9 -316.7 -209.6 -86.8 41.4 -122.8 0.0 -122.8 NA Q2FY12 1075.3 599.4 55.7 475.9 44.3 132.7 12.3 228.6 21.3 960.7 89.3 114.6 10.7 46.2 20.7 6.0 -185.4 -131.7 -51.6 39.1 -80.2 0.0 -80.2 NA Q3FY12 1284.5 705.5 54.9 579.0 45.1 140.8 11.0 247.1 19.2 1093.4 85.1 191.2 14.9 55.2 27.4 4.9 -144.5 -31.0 -2.4 7.7 -28.6 0.0 -28.5 NA Q4FY12 1190.7 641.6 53.9 549.1 46.1 139.1 11.7 269.7 22.6 1050.3 88.2 140.4 11.8 53.9 35.2 5.9 102.1 159.3 51.9 32.6 107.4 -0.6 108.0 3.7 Q1FY13 1214.4 647.4 53.3 567.0 46.7 154.3 12.7 273.0 22.5 1074.7 88.5 139.8 11.5 58.8 33.1 2.2 -206.5 -156.4 -27.4 17.5 -129.0 -0.1 -128.9 NA Q2FY13 1500.4 756.5 50.4 743.9 49.6 167.0 11.1 326.6 21.8 1250.2 83.3 250.3 16.7 59.8 33.5 6.6 117.6 281.1 59.1 21.0 222.0 -0.4 222.4 7.6 Q3FY13 1570.1 782.2 49.8 787.9 50.2 166.8 10.6 362.0 23.1 1311.0 83.5 259.1 16.5 60.8 33.1 5.6 -73.4 97.5 6.5 6.6 91.0 -0.8 91.8 3.2 Q4FY13 1570.4 804.7 51.2 765.7 48.8 175.2 11.2 350.4 22.3 1330.3 84.7 240.1 15.3 69.3 31.6 14.1 -1.3 152.0 44.5 29.3 107.5 -1.1 108.6 3.7

Exhibit 13: Assumption for sales

(| crore) USA YoY Growth (%) EU & ROW YoY Growth (%) ARV YoY Growth (%) Total Formulations YoY Growth (%) SSPs YoY Growth (%) Cephs YoY Growth (%) Non-Pen Non-Cephs YoY Growth (%) Total APIs YoY Growth (%) Dossier Income YoY Growth (%) Gross Sales YoY Growth (%) FY12 1183.6 -0.5 647.5 15.8 766.7 13.9 2597.8 7.3 628.9 11.4 751.7 -11.3 687.0 76.1 2067.6 14.7 59.9 -76.6 4725.3 5.5 FY13 1752.6 48.1 884.3 36.6 750.3 -2.1 3387.2 30.4 765.2 21.7 937.3 24.7 833.7 21.4 2536.2 22.7 76.0 26.9 5999.4 27.0 FY14E 2311.2 31.9 1061.2 20.0 808.8 7.8 4181.2 23.4 841.7 10.0 1031.0 10.0 1000.4 20.0 2873.2 13.3 60.0 -21.1 7114.4 18.6 FY15E 2773.5 20.0 1220.3 15.0 849.3 5.0 4843.1 15.8 925.9 10.0 1134.1 10.0 1150.5 15.0 3210.5 11.7 60.0 0.0 8113.6 14.0

Source: Company, ICICIdirect.com Research;

ICICI Securities Ltd | Retail Equity Research

Page 5

Valuation
With clearances for unit III/VI/XII and approval for unit IV, the company is witnessing incremental approvals and is well poised to launch multiple products in the US. The Q4 performance has once again vindicated the overall recovery, which was visible in Q2 and Q3. The huge debt pile, however, will continue to remain a stumbling block. Since most of it is forex denominated, the falling rupee will only hit more, albeit notionally. Our new target price now stands at | 200 based on 6x FY15E EV/EBITDA. Key risks- 1) Delay in product approvals.
Exhibit 14: One year forward EV/EBITDA
21000 18000 15000 (| crore) 12000 9000 6000 3000 0 Mar-06 Nov-06 Jul-07 Mar-08 Nov-08 Jul-09 Mar-10 Nov-10 Jul-11 Mar-12 Nov-12 EV 14.9x 13.0x 11.2x 8.4x 5.7x

Source: Company, ICICIdirect.com Research

Exhibit 15: One year forward P/E

450 375 300 225 150 75 0 Mar06 Oct06 May07 Dec07 Price
[ [

Jul08

Feb09 18.1x

Sep09

Apr10 14.4x

Nov10 8.2x

Jun11

Jan12 5.7x

Aug12

Mar13

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

Exhibit 16: One year forward PE of company vs. BSE Healthcare Index
35 30 25 20 x 15 10 5 0 Nov-10 Aug-12 Oct-06 Dec-07 Jun-11 Sep-09 Jan-12 Feb-09 Apr-10 Mar-06 May-07 Mar-13 Jul-08
61% discount

Aurobindo

Healthcare

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

Financial summary
Profit and loss statement
(Year-end March)/ (| Crore) Net Sales Growth (%) Raw Material Expenses Employee Expenses Other Manufacturing Expenses Total Operating Expenditure EBITDA Growth (%) Interest Depreciation Other Income PBT before Exceptional Items Less: Forex & Exceptional Items PBT Total Tax PAT before MI Minority Interest PAT Adjusted PAT Growth (%) EPS EPS (Adjusted) FY12 4,627.4 5.6 2,519.8 535.7 961.8 4,017.3 610.1 -36.4 97.8 200.5 19.8 331.5 544.5 -213.0 -88.8 -124.1 -0.6 -123.5 334.2 -37.7 -4.2 11.5 FY13E 5,855.3 26.5 2,990.8 663.3 1,312.2 4,966.2 889.1 45.7 131.3 248.8 28.5 537.5 163.4 374.0 82.7 291.3 -2.5 293.8 421.1 26.0 10.1 14.5 FY14E 6,965.0 19.0 3,552.2 766.2 1,462.7 5,781.0 1,184.1 33.2 110.9 274.7 20.0 818.4 0.0 818.4 163.7 654.8 0.0 654.8 654.8 55.5 22.5 22.5 FY15E 7,943.2 14.0 4,051.0 873.8 1,628.4 6,553.2 1,390.1 17.4 92.9 294.2 20.0 1,023.0 0.0 1,023.0 255.7 767.2 0.0 767.2 767.2 17.2 26.4 26.4

Cash flow statement

(Year-end March)/ (| Crore) Profit after Tax Add: Depreciation (Inc)/dec in Current Assets Inc/(dec) in CL and Provisions Others CF from operating activities (Inc)/dec in Investments (Inc)/dec in Fixed Assets (inc)/dec in def tax assets inc/(dec) in def tax liability Inc/(dec) in MI CF from investing activities Inc / (Dec) in Equity Capital Inc / (Dec) in sec. Loan Inc / (Dec) in unsec. Loan Dividend & Dividend Tax inc/(dec) in exch. rate Fluc. inc/(dec) in Sec. Prem Acc CF from financing activities Net Cash flow Opening Cash Closing Cash FY12 -123.5 200.5 -40.1 -93.9 0.0 -56.9 -18.6 -644.6 -1.1 -119.6 1.1 -759.0 0.0 501.0 180.7 -33.8 52.2 0.0 700.0 -115.9 186.7 70.9 FY13E 293.8 248.8 -753.8 348.3 0.0 137.1 18.6 -266.2 5.4 64.2 -2.5 -328.0 0.0 200.0 156.0 -51.1 23.4 0.0 328.3 137.4 70.9 208.3 FY14E 654.8 274.7 -533.5 319.3 0.0 715.3 0.0 -176.3 0.0 0.0 0.0 -220.0 0.0 -200.0 -100.0 -68.1 0.0 0.0 -368.1 127.1 208.3 335.5 FY15E 767.2 294.2 -594.9 111.6 0.0 578.1 0.0 -155.5 0.0 0.0 0.0 -186.1 0.0 -300.0 -200.0 -85.2 0.0 0.0 -585.2 -193.2 335.5 142.3

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet
(Year-end March)/ (| Crore) Equity Capital Reserve and Surplus Total Shareholders funds Secured Loan Unsecured Loan Deferred Tax Liability Minority Interest Long term Provisions Source of Funds Gross Block Less: Acc. Depreciation Net Block Capital WIP Net Fixed Assets Net Intangible Assets Investments Inventory Cash Debtors Loans & Advances & Other CA Total Current Assets Creditors Provisions & Other CL Total Current Liabilities Net Current Assets LT L& A, Other CA Deferred Tax Assets Application of Funds FY12 29.1 2,310.5 2,339.7 1,635.6 1,460.4 3.9 10.2 4.2 5,453.9 2,784.8 797.6 1,987.2 600.0 2,587.2 252.9 38.5 1,545.6 70.9 1,240.0 389.0 3,245.4 660.1 123.6 783.7 2,461.6 108.2 5.4 5,453.9 FY13E 29.1 2,576.6 2,605.8 1,835.6 1,616.4 68.0 11.0 9.0 6,145.7 3,134.8 998.9 2,135.9 350.0 2,485.9 371.5 22.3 1,923.6 208.3 1,597.0 407.7 4,136.6 968.7 163.3 1,132.0 3,004.6 261.5 0.0 6,145.7 FY14E 29.1 3,163.3 3,192.4 1,635.6 1,516.4 68.0 11.0 9.0 6,432.4 3,434.8 1,222.3 2,212.4 150.0 2,362.4 396.5 22.3 2,121.8 335.5 1,870.1 469.9 4,797.2 1,240.3 211.0 1,451.3 3,345.9 305.2 0.0 6,432.4 FY15E 29.1 3,845.3 3,874.4 1,335.6 1,316.4 68.0 11.0 9.0 6,614.4 3,584.8 1,461.0 2,123.7 100.0 2,223.7 396.5 22.3 2,404.7 142.3 2,089.2 562.7 5,198.9 1,305.7 257.1 1,562.9 3,636.1 335.8 0.0 6,614.4

Key ratios
(Year-end March) Per share data (|) EPS Cash EPS BV DPS Cash Per Share Operating Ratios (%) EBITDA Margin PBT / Total Operating income PAT Margin Inventory days Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) P/E EV / EBITDA EV / Net Sales Market Cap / Sales Price to Book Value Solvency Ratios Debt / Equity Debt / EBITDA Current Ratio Quick Ratio FY12 -4.2 2.6 80.4 1.0 2.4 13.2 -4.6 -2.7 118 98 52 -5.3 7.5 4.5 0.0 13.0 1.7 1.1 2.1 1.3 5.1 4.1 4.1 FY13E 10.1 18.6 89.5 1.5 7.2 15.2 6.4 5.0 108 100 60 11.3 10.6 8.8 16.8 9.2 1.4 0.8 1.9 1.3 3.9 3.7 3.5 FY14E 22.5 31.9 109.7 2.0 11.5 17.0 11.8 9.4 106 98 65 20.5 14.3 12.6 7.6 6.6 1.1 0.7 1.6 1.0 2.7 3.3 3.1 FY15E 26.4 36.5 133.1 2.5 4.9 17.5 12.9 9.7 104 96 60 19.8 16.8 13.4 6.5 5.4 0.9 0.6 1.3 0.7 1.9 3.3 3.2
[

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 8

Company Description
Aurobindo Pharma, headquartered at Hyderabad, manufactures generic pharmaceuticals and active pharmaceutical ingredients. The companys manufacturing facilities are approved by several leading regulatory agencies like USFDA, UK MHRA, WHO, Health Canada, MCC South Africa and ANVISA Brazil. Aurobindos strong product portfolio is spread over six major therapeutic/product areas encompassing antibiotics, antiretroviral, CVS, CNS, gastroenterological, and anti-allergics. The company is marketing these products globally, in over 100 countries.
Exhibit 17: Recommendation History
250 200 150 100 50 0 Jul-12 Sep-12 Oct-12 Dec-12 Price
[

Jan-13 Target Price

Feb-13

Apr-13

May-13

Source: Company, ICICIdirect.com Research

Exhibit 18: Recent Releases

Date 5-Jul-12 9-Aug-12 8-Oct-12 12-Nov-12 8-Jan-13 8-Feb-13 4-Apr-13 Event Q1FY13 Result Preview Q1FY13 Result Update Q2FY13 Result Preview Q2FY13 Result Update Q3FY13 Result Preview Q3FY13 Result Update Q4FY13 Result Preview CMP 115 102 143 179 201 184 163 Target Price 141 110 110 177 177 187 187 Rating BUY HOLD HOLD HOLD HOLD HOLD BUY

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 9

ICICIdirect.com coverage universe (Healthcare)

Company Apollo Hospitals Aurobindo Pharma Biocon Cadila Healthcare Divi's Laboratories Glenmark Pharma Indoco Remedies Ipca Laboratories Jubilant Life Sciences Lupin Natco Pharma Opto Circuits Strides Arcolab Sun Pharma Torrent Pharma Unichem Laboratories I-Direct Code APOHOS AURPHA BIOCON CADHEA DIVLAB GLEPHA INDREM IPCLAB VAMORG LUPIN NATPHA OPTCIR STRARC SUNPHA TORPHA UNILAB CMP TP (|) (|) 960 177 272 775 575 63 598 162 765 453 51 879 717 169 Rating M Cap (| Cr) 13,378 5,161 5,449 15,896 12,932 15,601 585 7,562 2,590 34,325 1,423 1,233 5,202 111,420 6,073 1,528 EPS (|) PE(x) EV/EBITDA (x) RoCE (%) RoNW (%) FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E 21.9 10.1 25.4 32.0 46.1 22.7 4.6 25.6 9.6 29.4 29.9 18.9 44.4 29.0 47.8 12.5 24.0 22.5 20.6 43.9 52.6 25.8 7.8 35.7 27.8 34.5 38.2 15.9 NA 40.0 55.4 15.0 31.6 26.4 23.7 57.4 62.7 33.5 9.3 44.3 37.6 41.7 NA NA NA 47.3 NA 19.0 43.9 17.5 10.7 24.2 21.1 25.3 13.7 23.3 16.9 26.1 13.4 2.7 19.8 37.0 15.0 13.4 40.1 7.9 13.2 17.7 18.5 22.3 8.1 16.8 5.8 22.2 10.5 3.2 NA 26.8 12.9 11.3 30.4 6.7 11.5 13.5 15.5 17.2 6.8 13.5 4.3 18.4 NA NA NA 22.7 NA 8.9 22.8 9.5 9.7 14.9 15.2 17.5 7.5 13.0 5.8 15.5 9.6 3.6 11.9 21.4 9.9 8.8 19.0 6.7 7.7 11.8 12.7 14.9 5.9 11.3 4.9 13.2 8.2 3.6 NA 19.6 7.8 7.3 15.0 5.5 6.5 9.3 10.4 11.9 4.9 9.1 4.5 11.0 NA NA NA 16.6 NA 5.6 11.7 10.6 14.4 19.2 28.8 19.3 13.3 24.7 12.3 30.9 19.1 17.9 12.2 34.3 27.3 17.8 13.5 14.3 17.3 20.8 28.4 22.3 15.5 24.7 13.4 32.7 19.3 15.3 NA 31.8 28.8 20.0 17.2 16.8 18.0 24.4 28.7 25.5 16.5 26.2 16.3 33.3 NA NA NA 30.3 NA 22.4 11.1 11.3 19.2 24.6 23.9 22.5 10.3 20.8 6.1 25.8 16.9 23.1 43.5 21.3 30.2 15.6 11.3 20.5 14.1 27.7 23.4 22.7 14.9 23.1 15.5 25.1 18.1 17.5 NA 24.1 28.1 16.7 13.4 19.8 14.7 29.3 23.6 24.1 15.5 23.0 17.8 24.5 NA NA NA 23.0 NA 18.6 963 HOLD 200 Buy 308 BUY 976 BUY 603 BUY 74 BUY 621 HOLD 235 BUY 833 BUY 473 BUY 64 HOLD NA UR 775 BUY 228 BUY

973 1191 BUY

1074 1087 HOLD

ICICI Securities Ltd | Retail Equity Research

Page 10

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more;

Pankaj Pandey

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

pankaj.pandey@icicisecurities.com

ANALYST CERTIFICATION
We /I, Siddhant Khandekar CA INTER Krishna Kiran Konduri MBA FINANCE Darpan Thakkar MBA FINANCE Darpan Thakkar 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 personal views about any and all of 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. Analysts aren't registered as research analysts by FINRA and might not be an associated person of the ICICI Securities Inc.

Disclosures:
ICICI Securities Limited (ICICI Securities) and its affiliates are a full-service, integrated investment banking, investment management and brokerage and financing group. We along with affiliates are leading underwriter of securities and participate in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their dependent family members from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report 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, its subsidiaries and associated companies, their directors and employees (ICICI Securities and affiliates) are 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 is acting in an advisory capacity to this company, or in certain other circumstances. This report is 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. This report and information herein is solely for informational purpose and may 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. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report 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 in this report 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 of investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. 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. ICICI Securities and its affiliates might have managed or co-managed a public offering for the subject company in the preceding twelve months. ICICI Securities and affiliates might have received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of public offerings, corporate finance, investment banking or other advisory services in a merger or specific transaction. It is confirmed that Siddhant Khandekar CA INTER, Krishna Kiran Konduri MBA FINANCE Darpan Thakkar MBA FINANCE paid in part based on the profitability of ICICI Securities, which include earnings from Investment Banking and other business.

Darpan Thakkar research analysts and the authors of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Our research professionals are

ICICI Securities or its subsidiaries collectively do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. It is confirmed that Siddhant Khandekar CA INTER, Krishna Kiran Konduri MBA FINANCE Darpan Thakkar MBA FINANCE Darpan Thakkar research analysts and the authors of this report or any of their family members does not serve as an officer, director or advisory board member of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. ICICI Securities and affiliates may act upon or make use of information contained in the report prior to the publication thereof. This report is 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.

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