RESULTUPDATE

HEALTHCAREGLOBALENTERPRISES
Extendsstrongperformance
IndiaEquityResearch|Pharmaceuticals

Despitedemonetization,HealthcareGlobals(HCG)Q3FY17revenueand EDELWEISS4DRATINGS
EBITDA grew 23% and 25% YoY, respectively. While existing oncology AbsoluteRating BUY
centersposted13%YoYgrowthinrevenues,strongrampupcontinuedat RatingRelativetoSector Performer
new centres and they helped cut EBITDA loss to INR14mn (versus RiskRatingRelativetoSector Medium
INR18mn QoQ). Last leg of ongoing expansion (till Q1FY18) is on track, SectorRelativetoMarket Equalweight
andnewcenterscontinuetobreakevenfaster.Inaddition,performance
at some centers that were earlier performing suboptimally, like
MARKETDATA(R:,B:HCGIN)
Vijaywada (+72% YoY) for instance, is improving. HCG is positioned for
CMP :INR238
robust EBITDA growth owing to strong therapy tailwind and EBITDA
TargetPrice :INR310
marginlevers.MaintainBUYwithTPofINR310(18xFY19EEV/EBITDA). 52weekrange(INR) :265/167
Shareinissue(mn) :85.1
Robustquarter Mcap(INRbn/USDmn) :20/301
Demonetisation couldnt take the sheen off HCGs growth for the quarter. Avg.DailyVol.BSE/NSE(000) :216.8
Oncology/fertilitygrew22%/33%YoY.EBITDAmargin,at14.8%,remainedsteadyboth
YoY/ QoQ. EBITDA grew 25% YoY/2% QoQ. Existing centers reported EBITDA of SHAREHOLDINGPATTERN(%)
INR274mn (up 26% YoY), while new centers reported lower loss of INR14mn versus Current Q2FY17 Q1FY17
INR18mn last quarter. Milanns registrations and IVF cycles grew 34%/42%, Promoters* 24.6 24.6 24.6
respectively.PATstoodatINR54mn,versusINR49mnlastquarterandlossofINR22mn MF's,FI's&BKs 36.1 36.1 34.9
lastyear.CapexwasINR467mn,andnetdebtnowstandsatINR2.67bn,whichwillpeak FII's 14.3 14.3 15.2
at~INR4bnbyFY18duetocurrentphaseofexpansion. Others 25.0 25.0 25.3
*Promoterspledgedshares : NIL
(%ofshareinissue)
Gradualmarginexpansiontocontinue
HCGisontracktoadd3oncocentersand2MilanncentersbyQ1FY18.Thecompanys PRICEPERFORMANCE(%)

specialtymixisalreadyrichversusothers,anditnowseekstoenhanceitschannelmix EWPharma
Stock Nifty
Index
to both bolster growth (more international patients and growing daycare centres
acrossAfrica)andimprovemargins(lessgovernmentbusiness).WhileEBITDAmargin 1month (3.2) 6.4 1.6
of existing facilities in FY16 stood at ~18% and is improving, EBITDA breakeven for 3months (4.0) 2.6 0.4
newerhospitalsisnowhappeningatrelativelyfasterpace(<12months). 12months NA 18.7 (3.6)

Outlookandvaluations:Soonmaturing;maintainBUY

We estimate revenue CAGR of 24% over FY1619 and EBITDA margin to remain flat,
translatinginto~24%EBITDACAGR.RoCEwillimproveby320bpsto10%.Wemaintain
BUY/SO with TP of INR310 (18x FY19E EV/EBITDA, 20% discount to 1year forward
DeepakMalik
sectormultiple). +912266203147
Financials (INRmn) deepak.malik@edelweissfin.com
YeartoMarch Q3FY17 Q3FY16 %change Q2FY17 %change FY16 FY17E FY18E

RahulSolanki
Netrevenues 1,762 1,435 22.8 1,740 1.2 5,820 7,290 9,283 +912266233317
EBITDA 260 208 25.2 254
2.4 897 1,099 1,344 rahul.solanki@edelweissfin.com

EBITDAmargin(% 14.8 14.5 28bps 14.6 16bps 15.4 15.1 14.5 ArchanaMenon
Adjustedprofit 54 (22) NA 49 8.3 75 101 98 +912266203020
archana.menon@edelweissfin.com
DilutedP/E(x) 268.3 199.8 207.6

EV/EBITDA(x) 25.0 20.4 16.7
ROACE(%) 6.7 5.6 6.4 February8,2017
EdelweissResearchisalsoavailableonwww.edelresearch.com,
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset. EdelweissSecuritiesLimited
 Pharmaceuticals

Q3FY17concallhighlights
Q3, seasonally a subdued quarter due to festivals and vacations, this time round clocked
good growth despite demonetisation. Management doesnt expect long term impact of
demonetisation.
ConsolEBITDAmargin:Existingcenters17.3%,EBITDAup25.6%YoY.

Oncology
Revenuemovedup22%YoY.ExistingHCGcentersgrew12.8%.
EBITDA margin: 1.5% improvement at existing centers (excluding new centers) to 21.9%
from20.4%inQ3FY16.
Saw14.4%increaseinoccupiedbeddays,6.7%increaseinARPOB.
Strong growth in Gujarat (41% YoY), good ramp up of Bhavnagar, Gulbarga, Baroda, and
Vizag,etc.,(lossofINR14.4mn).Lossesatlatest2centersreducedBaroda(Q1FY17)and
Vizag(Q1FY17)stillnotatbreakeven.Butthingsareasperexpectationforthosecenters
aswell.
Karnataka: Continuing shift in payor profile, moderate impact of demonetisation, offset
partlybycontinuingadoptionoftechnology.
BengaluruCOE:100plusroboticsurgeryprocedurescompleted,50bedsreducedYoYalong
withcontinuedfocusonimprovingpayorprofile,EBITDAmarginexpansionof3.4%YoYto
26.4%drivenbyservicemix,RoCEin9MFY17increasedto20.5%versus16.0%in9MFY16
Gujarat: Vadodara center ramping up as expected, EBITDA margin of existing centers at
18.1%,marginimprovementacrosstheregion.
East:Shiftinpayorprofileunderway,continuingpatientgrowthatCuttack.
Didnottakenanypricehikesinthequarter,16%ARPOBgrowthatKarnatakaisdrivenby
mixanddecreaseinALOS
Statusofnewcenters:
Kanpur:Readytostart;confidentthatinfrastructureandpartnerareexcellent.
Borivali:Almostreadytostart.
Nagpur:Expectsquickrampup.
GoingforsizeableexpansioninAhmedabadTomotherapy,newbeds,etc.

Milann
Revenuemovedup33%YoY.
Successful launch of Chandigarh center (Q3FY17), new centers have come up in Delhi
(Q4FY16) and Bengaluru (Q2FY16 and Q1FY17). Upcoming new centers at Cuttack
(Q4FY17E)andAhmedabad(Q1FY18E).
Delhicenterisdoingwell.

Others
NetdebtINR2.67bn,bankdebtINR1.77bn;hassignificantsurplusdebtcapacity.
Thecompanyexploreshedgingalternativesfromtimetotimeifcantcoverforexexpenses
withforexreceipts.

2 EdelweissSecuritiesLimited
 HealthCareGlobalEnterprisesLimited

Chart1:Revenuegrowthimproves
2,000 25.0

1,600 20.0

1,200 15.0

(INRmn)

(%)
800 10.0

400 5.0

0 0.0
Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17

Revenue RevenueGrowth(%)

Chart2:EBITDAmarginsteady

300 25.0

240 20.0

180 15.0
(INRmn)

(%)
120 10.0

60 5.0

0 0.0
Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17

EBITDA EBITDAMargin(%)

Chart3:Profitcontinuestoimprove
70

50

30
(INRmn)

10

(10)

(30)
Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17

PAT

Source:Company,Edelweissresearch

3 EdelweissSecuritiesLimited
 Pharmaceuticals

Table1:HCGcentersRevenue
Cluster Q3FY17 Q3FY16 Growth(%)
Karnataka 725 670 8.2
Gujarat 473 336 40.8
EastIndia 117 100 17.0
TamilNadu 71 58 22.4
NorthIndia 71 67 6.0
Maharashtra 105 47 123.4
AndhraPradesh 61 52 17.3
Total 1,623 1,330 22.0
Source:Company,Edelweissresearch

Table2:HCGcentersOperatingmetrics
Q3FY17 Q3FY16 Growth(%)
Numberofcenters 19 17
Beds 1,263 1,057
Occupiedbeds 55,530 48,549 14.4
avgoccupancyrate 47.8 49.9 210bps
ALOS 2.82 2.83
ARPOB(INR/day) 29,227 27,404 6.7
Revenue(INRmn) 1,623 1,330 22.0
EBITDAmargin(%) 19.2 19.2 0bps
Source:Company,Edelweissresearch

Table3:MilannExpansionontrack
Q3FY17 Q3FY16 Growth(%)
newregistrations 1,000 748 33.7
IVFcycles 423 298 41.9
Revenue 139 104 33.7
Source:Company,Edelweissresearch

Table4:Capitalexpenditure
FY16 Q1FY17 Q2FY17 Q3FY17
HCGcenters 2,101 357 412 440
existingcenters 336 103 52 77
expansions 528 37 31 139
newcenters 1,237 217 329 224

Milanncenters 108 26 25 26
existingcenters 48 7 6 4
expansions
newcenters 60 19 19 22

Total 2,209 383 437 466

Source:Company,Edelweissresearch

4 EdelweissSecuritiesLimited
 HealthCareGlobalEnterprisesLimited

Table5:Netdebt
FY16 Q1FY17 Q2FY17 Q3FY17
Netdebt(total) 1,944 2,125 2,346 2,667
Bankdebt 694 850 1,013 1,171
VendorFinance 1,520 1,542 1,552 1,586
Capitalleases 476 476 476 495
Otherdebt 137 120 116 79
Less:cash (883) (863) (811) (664)

Debtinnewcenters 1,107 1,251 1,471 1,603

Bankdebt 315 455 553 665
vendorfinance 776 781 904 924
otherdebt 16 15 14 14

NetDebt(Excl.NewCentres) 837 874 875 1,064

Source:Source:Company,Edelweissresearch

5 EdelweissSecuritiesLimited
 Pharmaceuticals

Financialsnapshot (INRmn)
YeartoMarch Q3FY17 Q3FY16 %change Q2FY17 %change YTD17 FY17E FY18E
Netrevenues 1,762 1,435 22.8 1,740 1.2 5,177 7,290 9,283
Costofrevenue 431 359 20.2 416 3.7 1,259 1,932 2,543
Grossprofit 1,330 1,076 23.7 1,324 0.5 3,918 5,358 6,739
Otherexpenses 750 615 22.0 760 (1.3) 2,249 3,120 4,029
EBITDA 260 208 25.2 254 2.4 750 1,099 1,344
EBITDAmargin 14.8 14.5 14.6 14.5 15.1 14.5
Depreciation 149 108 38.4 144 3.6 419 598 692
EBIT 111 100 10.9 110 0.7 332 502 652
Otherincome 17 11 60.4 24 (28.0) 61 31 34
Interest 51 95 (46.4) 58 (11.3) 161 395 515
Add:Exceptionalitems (23) (100.0)
Profitbeforetax 77 (8) (1,060.0) 76 0.9 232 138 170
Provisionfortaxes 26 9 190.1 27 (2.6) 82 47 58
Minorityinterest (3) 5 NA NA (3) (10) 15
Reportednetprofit 54 (22) (344.3) 49 8.3 153 101 98
AdjustedProfit 54 (22) (344.3) 49 8.3 153 101 98
Dilutedshares(mn) 85 85 85 85 85 85
AdjustedDilutedEPS 0.6 (0.3) (344.3) 0.6 8.3 1.8 1.2 1.1
DilutedP/E(x) 199.8 207.6
EV/EBITDA(x) 20.4 16.7
ROAE(%) 1.6 1.9
Costofrevenue 24.5 25.0 23.9 24.3 26.5 27.4
Grossprofit 75.5 75.0 76.1 75.7 73.5 72.6
Totalexpenses 85.2 85.5 85.4 85.5 84.9 85.5
Operatingprofit 14.8 14.5 14.6 14.5 15.1 14.5
Reportednetprofit 3.0 (1.5) 2.8 2.9 1.4 1.1
Taxrate 34.4 (113.7) 35.6 35.5 34.0 34.0

6 EdelweissSecuritiesLimited
 HealthCareGlobalEnterprisesLimited

CompanyDescription
HealthCare Global Enterprises (HCG) is a provider of speciality healthcare in India with 4
broadverticals:

Cancer: Operates Indias largest cancer care network with 17 comprehensive cancer
centers (CCCs) under the HCG brand, 3 freestanding diagnostic centers and 1
chemotherapycenter

Infertility:Operates5fertilitycentresundertheMilannbrand

Runs2multispecialtyhospitals

UndertheTriestabrand,runsacancerfocuseddiagnosticandclinicaltrialmanagement
centre

EachofitsCCCsoffer,atasinglelocation,comprehensivecancerdiagnosisandtreatment
services (including radiation, medical oncology and surgical treatments). The freestanding
diagnosticcentresanddaycarechemotherapycentresofferdiagnosisandmedicaloncology
services,respectively.

HCG is well equipped to deliver quality cancer care to patients across India in a seamless
manner. It relies on a network of physicians across the country specialising in medical,
radiationandsurgicaloncology,anditsintegratedmultidisciplinaryandtechnologyfocused
approach relies on close collaboration among oncologists, nuclear medicine physicians,
pathologistsandradiologists.

InvestmentTheme
HCG,afocusedoncologyplayer,ispoisedtobenefitfromstronggrowthinthetherapy.Also,
HCGs hub and spoke model is at the cusp of rapid EBITDA scale up as: (i) several of its
comprehensive cancer centers are set to mature; and (ii) it has one of the best specialty
mixes and is looking at enhancing its channel mix. Ergo, owing to strong therapy tailwind
andEBITDAmarginlevers,HCGispositionedforrobustEBITDAgrowth.

KeyRisks
Successofbusinesshingesonnetworkexpansion

Subsidiariesmayditheronprofitability

Specialistphysicianscoulddisassociate

Risinginfrastructurecostscouldrestrictinvestment

7 EdelweissSecuritiesLimited
 Pharmaceuticals

FinancialStatements
KeyAssumptions Incomestatement (INRmn)
YeartoMarch FY16 FY17E FY18E FY19E YeartoMarch FY16 FY17E FY18E FY19E
Macro Grossrevenues 5,759 7,214 9,186 10,988
GDP(YoY%) 7.2 6.5 7.1 7.7 Netrevenue 5,759 7,214 9,186 10,988
Inflation(Avg) 4.9 4.8 5.0 5.2 OtherOperatingIncome 61 76 97 116
Reporate(exitrate) 6.8 6.0 5.8 5.8 Incomefromoperations 5,820 7,290 9,283 11,104
USD/INR(Avg) 65.0 67.5 69.0 69.0 Materialscosts 1,496 1,932 2,543 2,887
Company Employeecosts 990 1,139 1,366 1,640
EBITDAmargin(%) 15.6 15.2 14.6 15.6 OtherExpenses 2,437 3,120 4,029 4,864
Numberofbeds 1,146 1,604 1,757 1,757 EBITDA 897 1,099 1,344 1,714
NumberofnewregistrationsHCGcentres 37,242 47,233 59,933 69,520 Operatingprofit 897 1,099 1,344 1,714
Taxrate(%) (3.9) 34.0 34.0 34.0 EBIT 452 502 652 1,040
Add:Otherincome 35 31 34 42
Less:InterestExpense 376 395 515 505
Add:Exceptionalitems (61)
ProfitBeforeTax 50 138 170 577
Less:ProvisionforTax (4) 47 58 196
Less:MinorityInterest 42 (10) 15 100
ReportedProfit 12 101 98 281
ExceptionalItems (63)
AdjustedProfit 75 101 98 281
Shareso/s(mn) 85 85 85 85
AdjustedBasicEPS 0.9 1.2 1.1 3.3
Dilutedshareso/s(mn) 85 85 85 85
AdjustedDilutedEPS 0.9 1.2 1.1 3.3
AdjustedCashEPS 6.1 8.2 9.3 11.2

Commonsizemetrics
YeartoMarch FY16 FY17E FY18E FY19E
Operatingexpenses 84.6 84.9 85.5 84.6
Materialscosts 25.7 26.5 27.4 26.0
Staffcosts 17.0 15.6 14.7 14.8
Otherexpenses 41.9 42.8 43.4 43.8
Depreciation 7.6 8.2 7.5 6.1
InterestExpense 6.5 5.4 5.6 4.5
EBITDAmargins 15.4 15.1 14.5 15.4
NetProfitmargins 2.0 1.3 1.2 3.4

Growthratios(%)
YeartoMarch FY16 FY17E FY18E FY19E
Revenues 11.6 25.3 27.3 19.6
EBITDA 17.6 22.6 22.3 27.5
PBT 105.4 175.6 23.2 238.4
AdjustedProfit 21.7 34.3 (3.8) 187.9
EPS 0.1 34.3 (3.8) 187.9

8 EdelweissSecuritiesLimited
 HealthCareGlobalEnterprisesLimited

Balancesheet (INRmn) Cashflowmetrics

Ason31stMarch FY16 FY17E FY18E FY19E YeartoMarch FY16 FY17E FY18E FY19E
Sharecapital 851 851 851 851 Operatingcashflow 690 1,056 1,051 1,020
Reserves&Surplus 4,511 4,612 4,710 4,991 Investingcashflow (2,022) (3,265) (1,040) (322)
Shareholders'funds 5,362 5,463 5,561 5,841 Financingcashflow 1,899 2,190 115 (200)
MinorityInterest 332 322 337 437 NetcashFlow 567 (20) 126 498
TotalBorrowings 2,660 4,860 4,960 4,660 Capex (2,133) (3,300) (500) (400)
LongTermLiabilities 39 55 65 79
Def.TaxLiability(net) (86) (86) (86) (86) Profitabilityandefficiencyratios
Sourcesoffunds 8,307 10,614 10,836 10,931 YeartoMarch FY16 FY17E FY18E FY19E
NetBlock 5,040 7,742 7,551 7,276 ROAE(%) 2.7 1.6 1.9 6.3
Goodwill 609 609 609 609 ROACE(%) 6.7 5.6 6.4 9.9
IntangibleAssets 27 27 27 27 InventoryDays 34 32 32 32
CWIP(incl.intangible) 1,551 1,551 1,551 1,551 DebtorsDays 45 43 43 43
TotalFixedAssets 6,618 9,320 9,128 8,854 PayableDays 234 234 234 234
Noncurrentinvestments 36 36 36 36 CashConversionCycle (155) (159) (159) (159)
Longtermloansandadv. 901 848 1,380 1,285 CurrentRatio 1.0 0.9 0.9 1.0
Othernoncurrentassets 79 114 131 162 GrossDebt/EBITDA 3.0 4.4 3.7 2.7
CashandEquivalents 847 828 954 1,452 GrossDebt/Equity 0.5 0.8 0.8 0.7
Inventories 134 205 241 266 AdjustedDebt/Equity 0.5 0.8 0.8 0.7
SundryDebtors 789 928 1,259 1,358 NetDebt/Equity 0.3 0.7 0.7 0.5
Loans&Advances 118 131 186 193 InterestCoverageRatio 1.2 1.3 1.3 2.1
OtherCurrentAssets 117 137 186 201
Tradepayable 1,084 1,393 1,868 1,834 Operatingratios
OtherCurrentLiab 819 1,096 1,343 1,575 YeartoMarch FY16 FY17E FY18E FY19E
Shorttermprovisions 38 53 63 76 TotalAssetTurnover 0.8 0.8 0.9 1.0
NetCurrAssetsexcash (784) (1,141) (1,403) (1,468) FixedAssetTurnover 1.2 1.1 1.2 1.5
Usesoffunds 8,307 10,614 10,836 10,931 EquityTurnover 1.3 1.3 1.6 1.8
BVPS(INR) 63.0 64.2 65.4 68.7
Valuationparameters
Freecashflow (INRmn) YeartoMarch FY16 FY17E FY18E FY19E
YeartoMarch FY16 FY17E FY18E FY19E Adj.DilutedEPS(INR) 0.9 1.2 1.1 3.3
ReportedProfit 12 101 98 281 YoYgrowth(%) 0.1 34.3 (3.8) 187.9
Add:Depreciation 444 598 692 674 AdjustedCashEPS(INR) 6.1 8.2 9.3 11.2
Interest(NetofTax) 408 261 340 333 DilutedP/E(x) 268.3 199.8 207.6 72.1
Others (247) 453 184 (203) P/B(x) 3.8 3.7 3.6 3.5
Less:ChangesinWC (72) 357 262 65 EV/Sales(x) 3.9 3.4 2.7 2.2
Operatingcashflow 690 1,056 1,051 1,020 EV/EBITDA(x) 25.0 20.4 16.7 13.1
Less:Capex 2,133 3,300 500 400
FreeCashFlow (1,851) (2,505) 211 287

Peercomparisonvaluation
Marketcap DilutedP/E(X) EV/EBITDA(X) ROAE(%)
Name (USDmn) FY17E FY18E FY17E FY18E FY17E FY18E
HealthCareGlobalEnterprisesLimited 301 199.8 207.6 20.4 16.7 1.6 1.9
ApolloHospitalsEnterprise 2,559 44.0 30.6 21.7 17.9 10.3 13.7
Dr.LalPathlabsLtd 1,338 56.0 44.5 34.5 27.8 28.1 28.1
FORTISHEALTHCARELTD 1,350 152.4 169.8 22.6 27.1 2.6 2.1
MaxIndiaLimited 583 118.5 111.3 15.7 13.4 6.5 6.6
ThyrocareTechnologiesLtd 580 55.4 43.5 32.4 25.2 18.3 21.1
Median 87.3 77.9 22.5 21.7 8.4 10.1
AVERAGE 104.3 101.2 24.9 21.6 11.2 12.2
Source:Edelweissresearch

9 EdelweissSecuritiesLimited
 Pharmaceuticals

AdditionalData
DirectorsData
Dr.B.S.AjaiKumar Chairman&CEO GangadharaGanapati NonExecutiveDirector
PrakashParthasarathy NonExecutiveDirector Dr.JenniferGekChooLee NonExecutiveDirector
RajeshSinghal NonExecutiveDirector Dr.SudhakarRao NonExecutiveIndependentDirector
ShankerAnnaswamy NonExecutiveIndependentDirector SampathThattaiRamesh NonExecutiveIndependentDirector

SureshChandraSenapaty NonExecutiveIndependentDirector BhushaniKumar NonExecutiveIndependentDirector

AuditorsDeloitte,HaskinsandSells
*asperlastannualreport

HoldingTop10
Perc.Holding Perc.Holding
PIOpputunitiesFund 14.02 TempletonAssetMgmt 3.98
RelianceLifeInsurance 5.22 HDFCLifeInsurance 3.14
InternationalFinanceCorp 5.12 RelianceNPPNLifeInsLtd 1.81
SundaramAssetMgmtCo 4.48 IL&FSTrustCo 1.73
RelianceCapitalTrustee 4.31 RelianceLifeInsuranceCo 1.67
*inlastoneyear

BulkDeals
Data Acquired/Seller B/S QtyTraded Price
22Aug2016 MilestonePvtEquityFund Sell 2650000 210.01
22Aug2016 RelianceMutualFund Buy 2557005 210.00
30Mar2016 GoldmanSachsSingaporePte Sell 699714 183.39
30Mar2016 MorganStanleyMauritiusCompanyLtd Sell 443060 182.52

*inlastoneyear

InsiderTrades
ReportingData Acquired/Seller B/S QtyTraded

NoDataAvailable
*inlastoneyear

10 EdelweissSecuritiesLimited
 RATING&INTERPRETATION

Company Absolute Relative Relative Company Absolute Relative Relative

reco reco risk reco reco Risk
ApolloHospitalsEnterprise BUY SO L AurobindoPharma HOLD SP H
CadilaHealthcare BUY SO M Cipla HOLD SP L
Divi'sLaboratories BUY SO M Dr.LalPathlabsLtd BUY SP L
Dr.ReddysLaboratories HOLD SP M FORTISHEALTHCARELTD BUY SO L
GlenmarkPharmaceuticals HOLD SP M HealthCareGlobalEnterprises BUY SP M
Limited
IpcaLaboratories REDUCE SU M Lupin HOLD SP M
MaxIndiaLimited BUY SO L NatcoPharma BUY SO M
SunPharmaceuticalsIndustries BUY SO M ThyrocareTechnologiesLtd BUY SP M
TorrentPharmaceuticals BUY SO H

ABSOLUTERATING
Ratings Expected absolute returns over 12 months

Buy More than 15%

Hold Between 15% and - 5%

Reduce Less than -5%

RELATIVERETURNSRATING
Ratings Criteria
Sector Outperformer (SO) Stock return > 1.25 x Sector return

Sector Performer (SP) Stock return > 0.75 x Sector return

Stock return < 1.25 x Sector return

Sector Underperformer (SU) Stock return < 0.75 x Sector return

Sector return is market cap weighted average return for the coverage universe
within the sector

RELATIVERISKRATING
Ratings Criteria

Low (L) Bottom 1/3rd percentile in the sector

Medium (M) Middle 1/3rd percentile in the sector

High (H) Top 1/3rd percentile in the sector

Risk ratings are based on Edelweiss risk model

SECTORRATING
Ratings Criteria
Overweight (OW) Sector return > 1.25 x Nifty return

Equalweight (EW) Sector return > 0.75 x Nifty return

Sector return < 1.25 x Nifty return

Underweight (UW) Sector return < 0.75 x Nifty return

11 EdelweissSecuritiesLimited
 Pharmaceuticals

EdelweissSecuritiesLimited,EdelweissHouse,offC.S.T.Road,Kalina,Mumbai400098.
Board:(9122)40094400,Email:research@edelweissfin.com

ManojBahety
DeputyHeadResearch
manoj.bahety@edelweissfin.com

Coveragegroup(s)ofstocksbyprimaryanalyst(s):Pharmaceuticals
ApolloHospitalsEnterprise,AurobindoPharma,CadilaHealthcare,Cipla,Divi'sLaboratories,Dr.LalPathlabsLtd,Dr.ReddysLaboratories,FORTIS
HEALTHCARELTD,GlenmarkPharmaceuticals,HealthCareGlobalEnterprisesLimited,IpcaLaboratories,Lupin,MaxIndiaLimited,NatcoPharma,Sun
PharmaceuticalsIndustries,ThyrocareTechnologiesLtd,TorrentPharmaceuticals



RecentResearch

Date Company Title Price(INR) Recos

06Feb17 DrReddy's Grossmarginrebounds;key 3,097 Hold
Laboratories launchesdelayed;
ResultUpdate
06Feb17 Divis Steadyquarter;alleyeson 760 Buy
Laboratories FDAsstanceonUnitII;
ResultUpdate
03Feb17 Torrent Steadycorebusinessgrowth; 1,314 Buy
Pharma. ResultUpdate

DistributionofRatings/MarketCap
EdelweissResearchCoverageUniverse RatingInterpretation

Buy Hold Reduce Total Rating Expectedto

RatingDistribution* 161 67 11 240 Buy appreciatemorethan15%overa12monthperiod
*1stocksunderreview
Hold appreciateupto15%overa12monthperiod
>50bn Between10bnand50bn <10bn

Reduce depreciatemorethan5%overa12monthperiod
MarketCap(INR) 156 62 11

Oneyearpricechart
300

260

220
(INR)

180

140

100
Dec16
Aug16

Oct16
Apr16

May16

Nov16
Sep16

Jan17
Mar16

Jun16

Jul16

HealthcareGlobalEnterprises

12 EdelweissSecuritiesLimited
 HealthCareGlobalEnterprisesLimited
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13 EdelweissSecuritiesLimited
 Pharmaceuticals

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14 EdelweissSecuritiesLimited
 HealthCareGlobalEnterprisesLimited

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15 EdelweissSecuritiesLimited