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NiveshDaily
January 27, 2017
INDICES
Indices Previous (day) Close % chg From Research Desk
Sensex 27708.1 1.2 %
Nifty 8602.8 1.5%
(As on 26th January, 2017)
Result Preview
Indoco Remedies Ltd. | Rating: HOLD | Target: Rs 352
Bharat Electronics Ltd. | Rating: BUY | Target: Rs 1916
Result Update
Maruti Suzuki (MSIL)
Alembic Pharmaceuticals (ALPM)
Result Today
Daljeet S. Kohli
Head of Research
Tel: +91 22 66188826
daljeet.kohli@indianivesh.in
IndiaNivesh Securities Limited | Research Analyst SEBI Registration No. INH000000511
IndiaNivesh Research 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel: (022) 66188800
IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.
Daljeet S. Kohli Result Preview
Head of Research
Tel: +91 22 66188826
daljeet.kohli@indianivesh.in Indoco Remedies Ltd. | Rating: HOLD | Target: Rs 352
Rs. Mn. Q3FY17E Q2FY17 Q3FY16 Q‐o‐Q % Y‐o‐Y%
Revenues 2801 2764 2546 1.3 10
EBIDTA 371 373 391 ‐0.6 ‐5.1
Adj Net Profit 219 221 204 ‐1 7.3
Margin % Margin % Margin % Basis Points (BPS)
EBITDA % 13 13 15 ‐25 ‐211
PAT % 8 8 8 ‐18 ‐19
Source: Company, IndiaNivesh Research
Demonetisation to impact domestic formulation sales. No new approval & launch in US may
lead to muted quarter with growth of only 10% Y‐Y. Await clarity on resolution of USFDA issues
on Goa facility & new approvals/launches in US/Europe
Valuation:
At CMP of Rs.271, the stock is trading at P/E of 18x for FY17E and 15x for FY18E respectively.
We have HOLD rating on stock with target price of Rs.352
IndiaNivesh Research January 27, 2017
Bharat Electronics Ltd. | Rating: BUY | Target: Rs 1916
Particulars
3QFY2017 2QFY2017 3QFY2016 yoy (%) ch. qoq (%) ch.
(Y/E mn)
Revenues 17,562 17,946 15,172 15.80% ‐2.10%
EBITDA 3,179 3,384 2,865 11.00% ‐6.10%
PAT 3,126 3,462 2,896 8.00% ‐9.70%
EPS (Rs/share) 13.9 15.5 12.07 15.20% ‐10.30%
Source: Company, IndiaNivesh Research
During 1HFY2017 BEL won the following orders: (1) Homeland security, (2) Navigational
complex system, (3) Electronic Warfare Suite (Shakti, Nayan), (4) Advanced Composite
Communication System, worth Rs 51.3bn. The Electronic Warfare Shakti suite project is
awarded by Indian Army (related to P‐71 Tank) and Nayan Communications Intelligence
(COMINT) has been awarded by Indian Navy.
BEL & ECIL were awarded Rs 10bn order to supply EVM’s (BEL’s share not
announced; expect BEL’s share to be at Rs 5bn) in Dec‐16. Including this order win, we expect
BEL to report a total of Rs 20bn of order wins during 3QFY2017.
Traction in the Akash Missiles project should help BEL report 15.8% yoy growth in standalone
revenues to Rs 17.56bn. Considering shift in business mix towards systems business, we expect
EBITDA margins on yoy basis to decline from 18.9% to 18.1%. Considering lower other income
(owing to lower interest income, as share buyback was completed during the quarter), we
expect yoy PAT margins to decline from 19.1% a year ago to 17.8% in 3QFY2017.
Also, we expect an announcement on the stock split front along with the results.
Valuation:
At CMP of Rs 1,514, BEL stock is trading at FY2018/19E, P/E multiple of 21.5x and 18.2x,
respectively. Given the huge pipeline of projects for awarding, where BEL stands a good chance
of winning, OB/LTM sales ratio of 4.7x, top‐line/bottom‐line CAGR of 13.8%/14.2% during
FY2017‐19E, strong BS, RoE expansion scenario (from 15.5% in FY2016 to 19.0% in FY2019), we
assign 1‐year forward P/E multiple of 23.0x to our FY2019E, EPS estimate of Rs 83.3/share.
Accordingly, we arrive at price target of Rs 1,916. Given the upside we recommend BUY on the
stock.
IndiaNivesh Research January 27, 2017
Maruti Suzuki (MSIL)
EBITDA misses estimates owing to higher employee cost, PAT beats
estimate owing to much higher other income. Upgrade to BUY.
Maruti Suzuki reported Q3FY17 numbers missing our estimates. PAT was higher
Current Previous owing to large other income on account of changes improvement in value of
CMP : Rs 5,825 investments warranted by IndAS, which we had understated. EBITDA was lower than
Rating : BUY Rating : HOLD our estimates owing to higher employee cost and higher RM cost. Revenue
Target : Rs 7,001 Target : Rs 6,119 increased by 12% YoY to Rs. 168.6 bn led by 3.5% volume growth and 9% YoY
(NR‐Not Rated) increase in realization to Rs. 0.48 mn.
STOCK INFO Volume grew by 3.5% YoY to 3,87,251 units, led by strong growth in UV+ Vans
INDEX segment (up 33% YoY), which was partially offset by 6% de‐growth in the mini
BSE 532500
NSE MARUTI
segment due to increased competition from Renault Kwid, Datsun rediGO and TATA
Bloomberg MSIL IN Tiago. The company has launched Ignis to combat the slowdown in this segment
Reuters MRTI.NS targeting the millennials (18‐25 age tech‐savvy customers).
Sector Auto
Face Value (Rs) 5
The company’s compact and super compact segment (Swift, Dzire, Tour, Baleno,
Equity Capital (Rs mn) 1,510 Celerio) degrew by 4%.
Mkt Cap (Rs mn) 17,59,616 Rs.mn Q3FY17 Q2FY17 Q3FY16 Q‐o‐Q % Y‐o‐Y % INSL Q3FY17e Variance(%)
52w H/L (Rs) 5,974 / 3,193
Revenue 168648 178428 150132 ‐6 12 165632 1.82
Avg Daily Vol (BSE+NSE) 7,71,207
EBIDTA 24890 30374 21452 ‐18 16 27119 ‐8.22
SHAREHOLDING PATTERN % PAT 17445 23980 11830 ‐27 47 16222 7.54
(as on Dec,2016) Source: Company Filings; IndiaNivesh Research
Promoters 56.2
Public & Others 6.7 Concall Highlights:
Sriram R
Management indicated higher depreciation charges going forward owing to
Research Associate higher maintenance capex at Gurgaon and Manesar plant.
Tel:+91 22 61151621 Financial Performance
r.sriram@indianivesh.in YE March
Net Sales EBITDA Adj.PAT Adj.EPS (Rs)
EBITDA
RoE(%) Adj.P/E(x) EV / EBITDA (x)
(Rs Mn) Margin
FY14 4,26,448 51,871 27,831 92.2 11.8 14.1 62.9 33.8
FY15 4,86,055 67,130 37,112 122.9 13.4 16.6 47.2 26.1
FY16 5,63,504 89,785 45,714 151.4 15.5 18.0 38.3 19.5
FY17E 6,68,353 1,06,660 74,751 247.5 15.7 25.0 23.4 16.2
FY18E 7,91,928 1,27,982 88,093 291.7 15.9 24.4 19.9 13.3
Source: Company, IndiaNivesh Research
IndiaNivesh Securities Limited|Research Analyst SEBI Registration No:INH0000000511
IndiaNivesh Securities Ltd 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel: (022) 66188800
IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.
Q3FY17 Result Update | Maruti Suzuki (MSIL)
Chapt er Title
Valuation and Outlook
The company’s premium hatchback (S‐Cross, Baleno) made exclusively in India, is the
first car to be exported from India to Japan. Maruti Suzuki would be the biggest
beneficiary of impending demand recovery, considering its stronghold in the entry
level segment and its current dominance in the UV segment backed by new launches
like Breeza and S‐Cross. Maruti’s new product launches are targeted towards filling
gaps in their product portfolio and these are already bearing fruits (Baleno, Breeza
and S‐Cross). The company has launched a new car “Ignis” aimed to revive the mini
segment through its premium offering. Ignis would be sold through Nexa outlets
along with Baleno and S‐Cross. With passage of GST bill and positive expectations
from the budget with respect to Automobile sector as well as boosting rural
incomes, Maruti stands to be the clear beneficiary. At CMP of Rs. 5825 the stock is
trading at PE multiple of 20x FY18E EPS. We revise our rating to BUY with a target
price of Rs 7001.
Income Statement (Standalone)
Y E March (Rs m) FY14 FY15 FY16 FY17E FY18E
Net sales 4,26,448 4,86,055 5,63,504 6,68,353 7,91,928
Growth (%) 0 14 16 19 18
Operating expenses (3,86,047) (4,32,577) (4,87,678) (5,71,718) (6,75,824)
Operating profit 40,400 53,479 75,826 96,634 1,16,103
Other operating income 11,471 13,651 13,959 10,025 11,879
EBITDA 51,871 67,130 89,785 1,06,660 1,27,982
Growth (%) 22.6 29.4 33.7 18.8 20.0
Depreciation (20,844) (24,703) (28,239) (27,958) (31,738)
Other income 7,317 8,316 4,619 24,000 24,000
EBIT 38,344 50,742 66,165 1,02,702 1,20,244
Finance cost (1,759) (2,060) (815) (1,000) (1,200)
Exceptional item 0 0 0 0 0
Profit before tax 36,586 48,682 65,350 1,01,702 1,19,044
Tax (current + deferred) (8,755) (11,570) (19,636) (26,951) (30,951)
Profit / (Loss) for the period 27,831 37,112 45,714 74,751 88,093
Associates, Min Int 0 0 0 0 0
Reported net profit 27,831 37,112 45,714 74,751 88,093
Extraordinary item 0 0 0 0 0
Adjusted net profit 27,831 37,112 45,714 74,751 88,093
Growth (%) 16 33 23 64 18
Source: Company, IndiaNivesh Research
Balance Sheet (Standalone)
Y E March (Rs m ) FY14 FY15 FY16 FY17E FY18E
Share capital 1,510 1,510 1,510 1,510 1,510
Reserves & surplus 2,08,270 2,35,532 2,68,561 3,25,820 3,93,299
Net Worth 2,09,780 2,37,042 2,70,071 3,27,330 3,94,809
Minority Interest 0 0 0 0 0
Total Liabilities 89,711 93,658 1,17,144 1,36,606 1,57,824
Non‐current liabilities 16,613 5,428 4,244 9,018 11,018
Current Liabilities 73,098 88,230 1,12,900 1,27,588 1,46,806
Total Liabilities and Equity 2,99,491 3,30,700 3,87,215 4,63,936 5,52,633
Non Current Assets 2,29,431 2,65,192 3,10,953 3,28,995 3,73,257
Net Block 1,34,118 1,41,421 1,37,747 1,41,789 1,52,051
Non‐current Investments 1,01,179 1,28,581 1,77,947 1,91,947 2,25,947
Deferred tax Assets (5,866) (4,810) (4,741) (4,741) (4,741)
Current Assets 70,060 65,508 76,262 1,34,941 1,79,376
Inventories 17,059 26,150 31,321 46,175 54,584
Sundry Debtors 14,137 10,698 12,986 15,255 18,076
Cash & Bank Balances 6,297 183 391 36,250 62,566
Other current Assets 3,672 3,256 2,502 3,342 3,960
Loans & Advances 28,895 25,221 29,062 33,919 40,190
Total (Assets) 2,99,491 3,30,700 3,87,215 4,63,936 5,52,633
Source: Company, IndiaNivesh Research
Cash Flow Statement (Standalone)
Y E March (Rs m) FY14 FY15 FY16 FY17E FY18E
Profit before tax 36,586 48,682 65,350 1,01,702 1,19,044
Depreciation 20,844 24,703 28,239 27,958 31,738
Change in working capital 12,552 17,820 13,704 (7,358) 1,100
Total tax paid (6,976) (12,626) (19,705) (26,951) (30,951)
Others (5,559) (6,256) (3,804) (23,000) (22,800)
Cash flow from operations (a) 57,447 72,324 83,784 72,350 98,130
Capital expenditure (20,844) (24,703) (28,239) (27,958) (31,738)
Change in investments (30,396) (27,402) (49,366) (14,000) (34,000)
Others (38,319) (42,112) (43,809) (24,428) (24,428)
Cash flow from investing (b) (89,559) (94,218) (1,21,414) (66,386) (90,166)
Free cash flow (a+capex) 36,603 47,621 55,545 44,393 66,392
Equity raised/(repaid) 0 0 0 0 0
Debt raised/(repaid) (4,922) (4,636) 684 4,000 2,000
Dividend (incl. tax) (4,108) (8,834) (12,685) (17,492) (20,614)
Others (1,490) (3,077) (815) (1,000) (1,200)
Cash flow from financing (c) (20,046) (16,932) (12,552) (9,718) (17,814)
Net change in cash (a+b+c) (52,158) (38,826) (50,182) (3,753) (9,849)
Reconciliation of Other balances (13,769) 18,943 69,333 1,08,945 1,45,110
Cash as per Balance Sheet 6,297 183 391 36,250 62,566
Source: Company, IndiaNivesh Research
Key Ratios (Standalone )
Y E March FY14 FY15 FY16 FY17E FY18E
Adjusted EPS (Rs) 92.2 122.9 151.4 247.5 291.7
Growth 16.3 33.4 23.2 63.5 17.8
Dividend/share (Rs) 12.0 25.0 35.0 49.5 58.3
Dividend payout ratio 13.0 20.3 23.1 20.0 20.0
EBITDA margin 11.8 13.4 15.5 15.7 15.9
EBIT margin 8.8 10.2 11.5 15.1 15.0
Net Margin 6.4 7.4 7.9 11.0 11.0
Tax rate (%) 23.9 23.8 30.0 26.5 26.0
Debt/Equity(x) 0.0 0.0 0.0 0.0 0.0
Inventory Days 15 20 20 25 25
Sundry Debtor Days 12 8 8 8 8
Trade Payable Days 43 41 45 13 11
Du Pont Analysis ‐ ROE
Net margin 6.5 7.6 8.1 11.2 11.1
Asset turnover (x) 1.5 1.5 1.6 1.6 1.6
Leverage factor (x) 1.4 1.4 1.4 1.4 1.4
ROE(%) 14.1 16.6 18.0 25.0 24.4
RoCE (%) 17.8 21.4 25.6 33.6 32.4
Valuation (x)
PER 62.9 47.2 38.3 23.4 19.9
PCE 36.0 28.3 23.7 17.0 14.6
Price/Book 8.3 7.4 6.5 5.3 4.4
EV/EBITDA 33.8 26.1 19.5 16.2 13.3
Source: Company, IndiaNivesh Research
Alembic Pharma
We expect softer quarters ahead: Maintain hold rating with downward
revised target price of 609 from earlier Rs 660.
New launches in US remain critical for growth. Q3FY17 results were below our
Current Previous estimates. We expect softer quarters ahead: Maintain hold rating with downward
CMP : Rs 586 revised target price of 609 from earlier Rs 660.
Rating : HOLD Rating : HOLD
Target : Rs 609 Target : Rs 660 Alembic Pharmaceuticals (ALPM) financial performance of 3QFY17 was below our
(NR‐Not Rated)
estimates on all front despite our already depressed expectation. High base of
previous year, loss of substantial market share & price erosion in its main product
STOCK INFO
(gAbilify) resulted in US business going down by 42% y‐y (our estimate of decline
INDEX
BSE 533573
of 45% y‐y). Since the company did not launch any new products, erosion in prices
NSE APLLTD of existing portfolio also retarded growth. Domestic Formulation (DF) business too
Bloomberg ALPM IN recorded much lower than expected growth. Against our expectation of 6% y‐y
Reuters ALEM.NS growth in DF, the company recorded only 2% y‐y growth. Demonetization was the
Sector Pharma main culprit for this below expected growth. Lower revenue coupled with high
Face Value (Rs) 2 R&D expense & employee cost resulted in 150 bps Q‐q EBITDA margin. Further
Equity Capital (Rs mn) 377
higher tax rate v/s MAT rate in previous quarters resulted in ~69% Y‐y & 32% Q‐q
Mkt Cap (Rs mn) 112,733
decline in PAT which is almost 20% lower than our estimates.
52w H/L (Rs) 700 / 513
Avg Daily Vol (BSE+NSE) 63,877
In our earlier notes we had mentioned that new product launches in US are most
SHAREHOLDING PATTERN % critical for the company to offset loss of gAbilify business. The management
(as on Mar,2016) intended to launch at least 6‐8 products in US in FY17 but unfortunately in
Promoters 72.68 9MFY17, it has been able to launch just 1 new product in US. In the post Q3FY17
Public 27.32
results concall the management has mentioned about its intention to launch 3‐4
STOCK PERFORMANCE(%) 3m 6m 12m products in Q4FY17E & 6‐8 products in FY18E. ALPM has been spending on
ALPM IN Equity (11.1) 1.3 (5.1) building 3 facilities (Onco, general injectable & derma products) which instill
SENSEX (1.4) (1.4) 13.2 confidence in us about long term strong growth trajectory of the company.
Source: Bloomberg, IndiaNivesh Research However these facilities will start contributing to financials only after 2019. Till
ALPM IN Equity v/s SENSEX then launches in US will be critical for growth.
We have tweaked our estimates for FY17E full year & FY18E to factor 9MFY17
performance, slower pace of launches in US & higher tax rate due to difference in
accounting treatment of inventories shipped to company’s subsidiaries in US &
resultant impact on consolidated financials. At CMP of Rs 586, the stock is trading
at 28x FY17E EPS of 20.6 and 21x FY18E EPS of Rs27.7. In view of likely muted
performance over next 1 year the stock may languish around this level. We
maintain our target PE multiple of 22xFY18E to arrive at target price of Rs 609
Source: Bloomberg, IndiaNivesh Research
(previous target was Rs 660). We maintain HOLD rating on the stock.
Daljeet S. Kohli
Head of Research Rs.mn Q3FY17 Q3FY16 Q2FY17 Y‐y (%) Q‐q (%) INSPL Est. Variance (%)
Tel: +91 22 66188826 Sales 7,770 9,309 8,794 (16.5) (11.6) 8,127 (4.4)
daljeet.kohli@indianivesh.in EBIDTA 1,454 3,840 1,778 (62.1) (18.2) 1,585 (8.3)
Adjusted PAT 844 2,690 1,236 (68.6) (31.7) 1,050 (19.6)
Reported PAT 861 2,694 1,187 (68.0) (27.4) 1,050 (18.0)
Source: Company, IndiaNivesh Research
Financial Performance
YE March EBITDA
Net Sales EBITDA Adj.PAT Adj.EPS (Rs) RoE(%) Adj.P/E(x) EV / EBITDA (x)
(Rs Mn) Margin
FY14 18,632 3,577 2,355 12.5 19.2 40.0 47.9 31.7
FY15 20,561 4,060 2,858 15.2 19.7 36.6 39.4 28.3
FY16 31,812 10,385 7,521 39.9 32.6 60.5 15.0 10.5
FY17E 31,526 5,961 3,884 20.6 18.9 22.1 29.0 18.2
FY18E 35,746 7,807 5,219 27.7 21.8 24.5 21.6 13.7
Source: Company, IndiaNivesh Research
IndiaNivesh Securities Limited|Research Analyst SEBI Registration No:INH0000000511
IndiaNivesh Securities Ltd 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel: (022) 66188800
IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.
Q3FY17 Result Update | Alembic Pharma
Chaper Title
India branded sales impacted by demonetization & reduction in prices of Azithral
while US sales declined due to significant decline in GAbilify sales & no new
launches. API sales aided overall growth: ALPM recorded total sales at Rs 7.77 bn
(down 16.5% y‐y, down 11.6% Q‐q) for the quarter. International formulation sales
declined 42% y‐y while India Branded sales, grew by meager 2% y‐y. India sales were
down due to twin impact of demonetization & price reduction in one of the key
products for the company (Azithral) while international sales were down mainly due
to significant loss of market share & price erosion in gAbiligy. ALPM records US
partner sales with one quarter lag. According to management sales in US have not
seen any pick up in Q3FY17 too hence Q$fY17E is also likely to see similar de‐growth
in US business. The company has not launched any new product in US in Q3FY17.
Hence we expect Q4FY17 to remain soft in terms of US sales as compared to Q3FY17.
However, Domestic formulation sales growth may pick up as the effect of
demonetization reduces. As per management DF sales have started recovering from
3rd week of January. API sales grew by 64% y‐y on back of some large orders.
However this high growth in API sales is abnormal & not sustainable. Management
expects this growth to normalize by end of Q1FY18E.
Gross margin further declined 430 bps Y‐y but increased 84 bps Q‐q due to better
product mix. ALPM delivered gross margin of 73.6% for the quarter v/s 77.9% in
Q3FY16 & 72.7% in Q2FY17. The decline in gross margin is due to 84 bps (y‐y)
decrease in material cost. Increased R&D spends higher employee & other expenses
led to 2254 bps y‐y decline in EBITDA margin. On Q‐q basis, EBITDA margin declined
by 150 bps aided by decline in other expenses but offset by increase in employee
costs & significant jump in R&D expenses. As % of sales R&D expenses in Q3FY17 was
15% v/s 7.5% in Q3FY16 & 12.4% in Q2FY17. For full year R&D expense is likely to be
in the range of Rs 4‐4.5 bn on account of increased number of projects primarily for
US market. ALPM guided for Rs10bn to be spent on capex over FY17E‐FY19E (out of
which Rs 6bn is earmarked for FY17E) on account of setting up facilities for oncology
injectable, general injectable & derma products.
New launches in US important & critical for International generics growth in
Q4Y17E & FY18E: gAbilify has been the key product driving growth in US markets for
ALPM since last more than a year however with new players coming in ALPM is
continuously losing market share in this product. Besides this its base business is also
witnessing price erosion as is the case with many of its peers. The company intends
to make up this business loss through new launches. However, we wish to highlight
that in Q3FY17 ALPM was not able to launch any new product. The management has
maintained guidance of launch of 6‐8 new products in FY18E & at least 3‐4 products
in Q4FY17E. This implies that over next few months the company will have to
aggressively launch new products. In our view stock price will keenly follow the news
on new launches
ALPM filed 4 ANDAs in Q3FY17, taking the cumulative ANDA filing to 85. ALPM has
33 ANDAs pending for approval at the end of 3QFY17. ALPM management intends to
launch total of 6‐8 products in US in FY18E & 3‐4 in Q4FY17E & expect to increase
the pace of filings for US from FY18E onwards.
Domestic Formulation (DF) sales growth bounced back sharply aided by
seasonality: DF sales came in at Rs2.94 bn for the quarter showing a growth of only
2% y‐y decline of 13% Q‐q. DF business was negatively impacted by demonetization
& reduction prices of Azithhral. Within DF, Specialty segment grew at 6% y‐y.
However the management expects DF sales to come back on normal trajectory in a
couple of months from now. They have already witnessed pickup in sales from 3rd
week of January. Due to larger contribution of Acute segment in DF sales of ALPM it
was perhaps more severely impacted by demonetization than its peers. Therapeutic
category‐wise, cardiology, gynecology nephro, & opthalmo led overall y‐y growth in
DF.
Change in financial estimates: In order to factor in 9MFY17 performance & slow
pace of new launches in US & price erosion in US base business, we have tweaked
our financial estimates for FY17E & FY8E. Higher R&D spends & taxes result in
sharper reduction in bottom line than top line.
Quarterly results summary
Consolidated nos (as per IND‐As )
Rs mn Q3FY17 Q3FY16 Y‐o‐Y (%) Q2FY17 Q‐o‐Q (%)
Net Sales 7,770 9,309 (16.5) 8,794 (11.6)
Total Income 7,770 9,309 (16.5) 8,794 (11.6)
Consumption of raw material 2,054 2,060 (0.3) 2,398 (14.4)
Empoyee Cost 1,305 1,175 11.1 1,187 10.0
R&D Expenses 1,167 701 66.4 1,087 7.4
Other Expenditure 1,791 1,533 16.8 2,345 (23.6)
Total Expenditure 6,316 5,469 15.5 7,016 (10.0)
EBITDA 1,454 3,840 (62.1) 1,778 (18.2)
Depreciation & Ammortization 211 217 (2.4) 206 2.5
EBIT 1,243 3,623 (65.7) 1,572 (20.9)
Interest 8 10 (27.9) 10 (21.9)
Other Income 2 28 (94.3) 5 (68.0)
Pre‐tax Profit 1,237 3,641 (66.0) 1,567 (21.1)
Tax 393 951 (58.7) 332 18.5
Net Profit (adj) 844 2,690 (68.6) 1,236 (31.7)
Other comp income 17 4 NA (49) NA
Net Profit reported 861 2,694 (68.0) 1,187 (27.4)
EPS (Rs) 4.5 14.3 (68.6) 6.5 (31.3)
O/ Shares 189 189 ‐ 190 (0.5)
Source: Company, IndiaNivesh Research
Key ratios
Q3FY17 Q3FY16bps (y‐o‐y) Q2FY17bps (q‐o‐q)
Gross Margins 73.6 77.9 (430) 72.7 84
EBITDA margin 18.7 41.2 (2,254) 20.2 (150)
Net Margin 10.9 28.9 (1,803) 14.0 (319)
Material cost/ Net sales 26.4 22.1 430 27.3 (84)
Employee Cost/ Net sales 16.8 12.6 417 13.5 330
R& D Expenses / Net sales 15.0 7.5 748 12.4 266
Other Expenditure/ Net sales 23.0 16.5 658 26.7 (362)
Tax Rate 31.8 26.1 563 21.2 1,060
Source: Company, IndiaNivesh Research
Sales composition
Gross Revenue Q3FY17 Q3FY16 Y‐o‐Y (%) Q2FY17 Q‐o‐Q (%)
Formulation 6,099 8,290 (26.4) 7,151 (14.7)
India Branded 2,942 2,883 2.0 3,383 (13.1)
India Generics 130 196 (33.7) 251 (48.2)
International Generics 3,027 5,211 (41.9) 3,517 (13.9)
API 1,663 1,012 64.3 1,643 1.2
Income Statement (Consolidated)
Y E March (Rs m) FY14 FY15 FY16 FY17E FY18E
Net sales 18,632 20,561 31,812 31,526 35,746
Growth (%) 23 10 55 (1) 13
Operating expenses (15,055) (16,501) (21,427) (25,565) (27,938)
Operating profit 3,577 4,060 10,385 5,961 7,807
Other operating income 0 0 0 0 0
EBITDA 3,577 4,060 10,385 5,961 7,807
Growth (%) 42.0 13.5 155.7 (42.6) 31.0
Depreciation (405) (444) (722) (759) (835)
Other income 32 23 55 16 20
EBIT 3,204 3,639 9,718 5,218 6,992
Finance cost (98) (18) (37) (40) (33)
Exceptional item 0 0 0 0 0
Profit before tax 3,106 3,622 9,681 5,178 6,959
Tax (current + deferred) (751) (764) (2,160) (1,295) (1,740)
Profit / (Loss) for the period 2,355 2,858 7,521 3,884 5,219
Associates, Min Int 0 0 0 0 0
Reported net profit 2,355 2,858 7,521 3,884 5,219
Extraordinary item 0 0 0 0 0
Adjusted net profit 2,355 2,858 7,521 3,884 5,219
Growth (%) 43 21 163 (48) 34
Source: Company, IndiaNivesh Research
Balance Sheet (Consolidated)
Y E March (Rs m ) FY14 FY15 FY16 FY17E FY18E
Share capital 377 377 377 377 377
Reserves & surplus 6,379 8,470 15,628 18,813 23,093
Net Worth 6,756 8,847 16,005 19,190 23,470
Minority Interest 0 0 0 0 0
Total Liabilities 5,422 7,565 8,588 9,675 10,987
Non‐current liabilities 943 724 914 914 914
Long‐term borrowings 522 188 0 0 0
Deferred tax liabilities 227 314 501 501 501
Other Long term liabilities 127 128 131 131 131
Long term provisions 67 94 282 282 282
Current Liabilities 4,479 6,841 7,674 8,761 10,073
Short term borrowings 254 2,197 1,325 1,325 1,325
Trade payables 2,884 3,109 5,664 4,477 5,078
Other current Liabilities 606 586 525 1,464 1,660
Short term provisions 734 949 160 1,495 2,009
Total Liabilities and Equity 12,178 16,412 24,594 28,866 34,457
Non Current Assets 4,626 7,504 9,528 11,269 13,184
Net Block 4,176 5,947 8,237 9,978 11,893
Goodwill 0 353 436 436 436
Non‐current Investments 33 23 21 21 21
Long‐term loans and advances 416 1,182 834 834 834
Deferred tax Assets 0 0 0 0 0
Other non current Assets 0 0 0 0 0
Current Assets 7,552 8,908 15,066 17,596 21,273
Inventories 3,108 3,828 5,776 5,597 6,348
Sundry Debtors 2,734 3,612 3,505 4,305 4,883
Cash & Bank Balances 240 268 4,508 5,284 7,307
Other current Assets 0 0 0 0 0
Loans & Advances 1,471 1,200 1,277 2,411 2,735
Current Investments 0 0 0 0 0
Total (Assets) 12,177 16,412 24,594 28,865 34,457
Source: Company, IndiaNivesh Research
IndiaNivesh Securities Ltd 27 Jan 2017 5 of 6
Q3FY17 Result Update | Alembic Pharma
Cash Flow Statement (Consolidated)
Y E March (Rs m) FY14 FY15 FY16 FY17E FY18E
Profit before tax 3,106 3,622 9,681 5,178 6,959
Depreciation 405 444 722 759 835
Change in working capital (693) (1,646) 323 (668) (341)
Total tax paid (839) (851) (2,347) (1,295) (1,740)
Others 226 844 37 40 33
Cash flow from operations (a) 2,362 2,381 8,416 4,014 5,746
Capital expenditure (816) (2,215) (3,012) (2,500) (2,750)
Change in investments 0 10 2 0 0
Others 5 377 0 0 0
Cash flow from investing (b) (811) (1,828) (3,011) (2,500) (2,750)
Free cash flow (a+capex) 1,545 166 5,404 1,514 2,996
Equity raised/(repaid) 0 0 0 0 0
Debt raised/(repaid) (630) 1,609 (1,060) 0 0
Dividend (incl. tax) (424) (509) (216) (699) (939)
Others (417) (1,625) 108 (40) (33)
Cash flow from financing (c) (1,472) (525) (1,166) (739) (973)
Net change in cash (a+b+c) 79 29 4,240 775 2,024
Reconciliation of Other balances 0 0 0 0 0
Cash as per Balance Sheet 240 268 4,508 5,284 7,307
Source: Company, IndiaNivesh Research
Key Ratios (Consolidated )
Y E March FY14 FY15 FY16 FY17E FY18E
Adjusted EPS (Rs) 12.5 15.2 39.9 20.6 27.7
Growth 42.5 21.4 163.1 (48.4) 34.4
Dividend/share (Rs) 2.2 2.7 1.1 3.7 5.0
Dividend payout ratio 18.0 17.8 2.9 18.0 18.0
EBITDA margin 19.2 19.7 32.6 18.9 21.8
EBIT margin 17.2 17.7 30.5 16.6 19.6
Net Margin 12.6 13.9 23.6 12.3 14.6
Tax rate (%) 24.2 21.1 22.3 25.0 25.0
Debt/Equity(x) 0.1 0.3 0.1 0.1 0.1
Inventory Days 61 68 66 65 65
Sundry Debtor Days 54 64 40 50 50
Trade Payable Days 57 55 65 52 52
Du Pont Analysis ‐ ROE
Net margin 12.6 13.9 23.6 12.3 14.6
Asset turnover (x) 1.6 1.4 1.6 1.2 1.1
Leverage factor (x) 1.9 1.8 1.6 1.5 1.5
ROE(%) 40.0 36.6 60.5 22.1 24.5
RoCE (%) 33.0 29.1 50.3 19.7 22.2
Valuation (x)
PER 47.9 39.4 15.0 29.0 21.6
PCE 40.8 34.1 13.7 24.3 18.6
Price/Book 16.7 12.7 7.0 5.9 4.8
EV/EBITDA 31.7 28.3 10.5 18.2 13.7
Source: Company, IndiaNivesh Research
Result Today
Indoco Remedies Limited
Bharat Electronics Limited
IndiaNivesh Research January 27, 2017
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January 27, 2017
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