31 December 2015

Update | Sector: Healthcare

BSE SENSEX
26,118

S&P CNX
7,946

Cadila Health
CMP: INR328

TP: INR380 (+16%)

Buy

Moraiya facility receives warning letter; earnings to be hit

Early resolution is critical, given that Moraiya remains one of the key facilities for CDH
with 60% of US sales.
Even though corrective plans were in place, warning letter means additional efforts are
needed for plant to become USFDA compliant.
Apart from Moraiya facility, CDH has also received warning letter for Ahmedabad-based
API facility. However, it currently does not supply any product from this plant and has
withdrawn all DMF filings.
Delay in key product approvals due to warning letters is likely to result in ~23% cut in
FY17 EPS and 18% cut in FY18 EPS.

Bloomberg

CDH IN

Equity Shares (m)

1,023.7

M.Cap. (INR b) / (USD b) 335.8/5.1

52-Week Range (INR)

454/285

1, 6, 12 Rel.Per (%)

-18/-4/8

Avg Val (INR m)

284

Free float (%)

25.2

Slowdown in product approvals to continue

Sales

97.6 111.5 133.2

EBITDA

22.4

23.4

32.0

Net Profit

15.5

14.9

21.5

Adj.EPS (INR)

15.1

14.5

21.0

EPS Gr. (%)

29.4

-3.7

44.5

The management stated that warning letter includes two main observations: 1)
Product-specific batch failure, 2) SOP-related issue. USFDA had inspected Moraiya
facility in September 2014 and noted four key 483 observations. Since then, CDH has
not received any approval for Moraiya plant products. Though no new approvals are
expected for products from Moraiya facility in FY17, management expects ~15 ANDA
approvals over the next 15-18 months (v/s the earlier expectation of ~25-30 ANDA
approvals)primarily from other USFDA approved facilities.

BV/Sh. (INR)

52.6

62.8

79.5

Moraiya the largest USFDA-approved facility for Cadila

RoE (%)

31.2

25.2

29.5

RoCE (%)

29.7

26.7

33.2

Payout (%)

23.9

29.0

20.2

21.7

22.6

15.6

Apart from Nesher and JVs, Cadila has three USFDA-approved formulation facilities
Moraiya, SEZ and Baddi. Moraiya facility remains the biggest and contributes more
than 60% of US sales. Of the total 159 pending ANDAs, 74 are from this facility,
reflecting huge dependence on one facility. The Baddi-based facility was approved
recently (May-15) by USFDA and production is expected to ramp up going ahead.
USFDA also approved the SEZ facility in 2QFY16 and product approvals are expected
to start coming through from this facility in coming quarters.

Financials & Valuation (INR billion)

Y/E MAR

2016E 2017E 2018E

Valuations
P/E (x)
P/BV (x)

6.2

5.2

4.1

EV/EBITDA(x)

15.4

14.6

10.3

Div. Yield (%)

0.9

1.1

1.1

Estimate change
TP change
Rating change

Site transfer plan in place; to transfer four key products

Management highlighted that it has already site transferred nine products from
marketed portfolio and is likely to file for four more products in 1HCY16, including
Asacol HD and Prevacid ODT. Given that Asacol HDs AG version would be launched in
July 16, probability of FTF launch of this drug is low in our view. Having said that,
transdermal patches that are expected to get approvals over next two years would
not be transferred to any other facility.

Delay in key US launches to impact earnings

We have cut our FY17/18 EPS by 23%/8%, as we believe Moraiya resolution will take
another 12 months. Deferral of key launches to 2HCY16 and incremental hit on
margins would lead to earnings cut over the next two years. Having said that, site
transfers and launches from other facilities in the US and steady growth in Indianbranded business would drive growth in near term. We maintain Buy on CDH but with
lower TP of INR380 @ 18x FY18E P/E (v/s INR505 @ 22x 1H FY17E P/E earlier).

Kumar Saurabh (Kumar.Saurabh@MotilalOswal.com); +91 22 3982 5584

Amey Chalke (amey.chalke@motilaloswal.com); +91 22 39825423

Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Cadila Health

Key takeaways from the conference call

31 December 2015

Warning letters: The companys facilities in Moraiya and Ahmedabad were

inspected in September 2015 and February 2015, respectively. The inspection
culminated into several 483 observations for these facilities. However, as the
CDHs response to these 483 observations was found unsatisfactory, the USFDA
issued warning letters to both the facilities.
483 observations: Warning letter highlighted two points for Moraiya facility: 1)
Repeated product-specific batch failure (Warfarin supplies were discontinued
due to this failure) and 2) SOP-related issues. The Ahmedabad plant witnessed
GMP violations; the company has withdrawn all DMFs from the facility and is no
longer supplying to the US market.
Priorities post the warning letters: 1) Remediation of both facilities and 2) filing
for site transfer of key future products.
Asacol HD: CDH is in the process of filing for site transfer of this product. The
company has option to launch Asacol HD AG in market in July 2016. However, in
such circumstances, it will lose its right to launch generic Asacol HD under
exclusivity. The Management highlighted that generic opportunity could be
extended beyond the exclusivity period due to lack of filings. As a result, CDH
may choose to file for site transfer rather than launching AG in the market.
Site transfer: CDH has currently transferred nine products from Moraiya facility
to Ahmedabad-based SEZ facility from the existing product portfolio. The
company is also expected to site transfer four more products from future
pipeline, including Asacol HD and Prevacid ODT. CDH also clarified that it might
not site transfer transdermal patches that were expected to receive approval
over the next two years and wait for Moraiya facility to get FDA clearance.
Revenue exposure: The Moraiya facility currently supplies 60% of the total US
sales. In terms of pending product approvals, CDH has filed 74 products from
Moraiya facilitywhich includes 40% of total oral solid filings.
Other inspections: Four other key facilities (Dabasa API, Ankleshwar API, Baddi
Formulations and SEZ formulations) were also inspected in 2014/2015 and have
not received critical observations from USFDA. The SEZ facility has already
received EIR from USFDA and is expected to get product approvals very soon.
Filing and launch timelines delayed: The company indicated that ANDAs filing
and launches will be delayed until the issue is resolved. However, the company
could continue its filing from other facilities.

Cadila Health
Exhibit 1: Past US FDA enforcement action on Indian companies
Ahmedabad

Nature of
facility
API

Date of
action
31-Dec-2015

Moraiya

Formulations

31-Dec-2015

NA

19-Dec-2015

NA

Company

FDA Action

Unit

Cadila

Warning Letter

Cadila

Warning Letter

Date of Resolution in
resolution
(months)
x
NA

Sun pharma

Warning Letter

Halol

Formulations

Dr. Reddy's

Warning Letter

Srikakulam, AP

API

6-Nov-15

NA

Dr. Reddy's

Warning Letter

Miryalaguda, TL

API

6-Nov-15

NA

Dr. Reddy's

Warning Letter

Visakhapatnam, AP

Formulations

6-Nov-15

NA

IPCA Labs

Import Alert

Silvassa, Gujrat

Formulations

25-Mar-15

NA

IPCA Labs

Import Alert

Formulations

25-Mar-15

NA

Sun Pharma

Import Alert

API

13-Mar-14

NA

IPCA Labs

Import Alert

Pithampur, MP
Karkhadi,
Gujarat
Ratlam, MP

API

23-Jan-15

NA

Ranbaxy

Ban

Taonsa

API

24-Jan-14

NA

Ranbaxy

Import Alert

Mohali

Formulations

13-Sep-13

NA

Strides
Arcolab

Warning Letter

Bangalore

Injectable formulations

11-Sep-13

NA

Wockhardt
Jubilant
Life Sciences
Dr. Reddy's

Import Alert

Waluj, India

Formulations

24-May-13

NA

Warning Letter

Canada

Formulations

27-Feb-13

NA

Import Alert

Mexico

API

6-Jul-11

27-Jul-12

12.9

Cadila

Warning Letter

Moraiya

Formulations

6-Jun-11

17-Jul-12

13.6

Aurobindo

Warning Letter

Unit III

Formulations

23-May-11

4-Jun-12

12.6

Aurobindo

Import Alert

Unit VI

Formulations

27-Feb-11

28-Mar-13

25.3

Sun Pharma

Warning Letter

Able Labs

31-Aug-10

19-Sep-11

12.8

Ranbaxy

Warning Letter

Ohm Labs

Formulations

24-Dec-09

NA

Sun Pharma

Product Seizure

Michigan,
Caraco

Formulations

26-Jun-09

28-Aug-12

38.6

Lupin

Warning Letter

Mandideep

Formulations

14-May-09

20-Jan-10

8.4

Cipla

Form '483

Bangalore

API

20-Apr-09

31-Aug-09

4.4

Ranbaxy
Taro
Pharma
Ranbaxy

AIP

Formulations

26-Feb-09

NA

Formulations

5-Feb-09

25-Apr-11

27.0

Warning Letter

Paonta Sahib
Brampton,
Canada
Batamandi

API

17-Sep-08

NA

Ranbaxy

Import Alert

Dewas

Formulations

17-Sep-08

NA

Warning Letter

Source: Company, MOSL

31 December 2015

Cadila Health

Story in charts
Exhibit 2: Sales trend

Exhibit 3: India business to grow at 12% CAGR

Formulations (INR b)

DF Revenues (INR b)

API (INR b)

16.9

5
5

3
28

3
33

39

3
48

57

71

12.2

22.6
12.5

12.1
6.1

79

106

16

19

23

25

27

FY10

FY11

FY12

FY13

FY14

FY15

Source: Company, MOSL

Exhibit 4: US business to bounce back in FY18E

US Revenues (USD m)

63

142

212

261

FY10

FY11

FY12

277
6
FY13

Brazil Revenues (INR b)

12
593
6

652

20.6

-4

10

560

FY14

FY15 FY16E FY17E FY18E

802

17.7

22.9

-1

11

11

12

FY10

FY11

FY12

FY13

FY14

Source: Company, MOSL

Exhibit 7: Earnings to recover in FY18E (post FDA resolution)

21.0

Core EPS (INR/ share)

One Off

24.1

0
0

18

22

23

32
2
5

FY15 FY16E FY17E FY18E

Source: Company, MOSL

31 December 2015

17

-4

16.6

10

17

FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

EBITDA Margin
20.6

FY16E FY17E FY18E

10

23

Exhibit 6: Margins to be impacted in FY17E

22.2

38

YoY Growth (%)

Source: Company, MOSL

21.9

34

24

357

EBITDA (INR b)

30

Exhibit 5: Brazil business to recover from regulatory issues

Growth (%)

29

23

12.0

Source: Company, MOSL

57

50

12.0

8.6

14

126

FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

YoY Growth (%)

1
6

1
6

0
6

12

15

15

21

FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16E FY 17E FY 18E

Source: Company, MOSL

Cadila Health
Exhibit 8: Rich ANDA pipeline
ANDA filed

Exhibit 9: R&D expense to remain elevated

ANDA pending

R&D expense (INR b)

270

227
106

92

52

47
FY09

FY10

176

148

131

FY11

100

81

66

FY12

FY13

% of sales

139

FY14

159

YTD

FY11

FY12

FY13

FY14

2
FY10

RoE (%)
35.8

26.7

Gross Block (INR b)

30.4
22.9

23.7

25.2

25.2
24.9

17.9

31.2
29.7

29.5

2.3

FY11

FY12

FY13

10

FY15 FY16E FY17E FY18E

2.5

Fixed Asset turnover

2.1

2.2

2.3

2.3

25

29

32

37

2.1

2.0

2.2

46

54

61

26.7

18.6

FY14

FY15 FY16E FY17E FY18E

Source: Company, MOSL

31 December 2015

33.2

16
FY10

Exhibit 11: Steady asset turnover ratio

RoCE (%)
30.8

Source: Company, MOSL

37.4
27.5

Source: Company, MOSL

Exhibit 10: Return ratios to be impacted in FY17E

18

FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

Source: Company, MOSL

Cadila Health

Financials and valuations

Income Statement
Y/E March
Net Sales
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income - Rec.
PBT before EO Expense
EO Expense/(Income)
PBT after EO Expense
Current Tax
Deferred Tax
Tax
Tax Rate (%)
Reported PAT
Less: Minority Interest
Net Profit
PAT Adj for EO Items
Change (%)
Margin (%)

(INR Million)
2011
46,306
25.6
36,044
77.8
10,262
22.2
1,269
8,993
699
131
8,425
0
8,425
1,064
0
1,064
12.6
7,361
251
7,110
6,333
24.6
13.7

2012
52,633
13.7
41,795
79.4
10,838
20.6
1,579
9,259
1,211
-107
7,941
0
7,941
1,130
0
1,130
14.2
6,811
286
6,525
5,660
-10.6
10.8

2013
63,579
20.8
52,327
82.3
11,252
17.7
1,847
9,405
1,262
-55
8,088
0
8,088
1,188
0
1,188
14.7
6,900
364
6,536
6,536
15.5
10.3

2014
72,241
13.6
60,239
83.4
12,001
16.6
2,012
9,989
1,181
786
9,594
172
9,423
1,060
0
1,060
11.2
8,363
326
8,037
8,208
25.6
11.4

2015
86,514
19.8
68,672
79.4
17,841
20.6
2,873
14,969
613
554
14,910
83
14,827
2,594
0
2,594
17.5
12,233
377
11,856
11,939
45.5
13.8

2016E
97,596
12.8
75,232
77.1
22,364
22.9
2,962
19,401
452
1,719
20,668
-429
21,097
5,676
0
5,676
26.9
15,421
395
15,025
15,454
29.4
15.8

2017E
111,496
14.2
88,082
79.0
23,414
21.0
3,324
20,090
412
1,267
20,945
0
20,945
5,655
0
5,655
27.0
15,290
415
14,875
14,875
-3.7
13.3

Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred liabilities
Total Loans
Capital Employed

2011
1,024
20,691
21,715
669
1127
11,034
34,545

2012
1,024
24,712
25,736
904
1185
21,307
49,132

2013
1,024
28,421
29,445
1193
1005
27,946
59,589

2014
1,024
33,366
34,390
1443
961
23,955
60,748

2015
1,024
41,492
42,516
1689
586
23,760
68,551

2016E
1,024
52,827
53,851
2084
586
22,260
78,782

2017E
1,024
63,274
64,298
2500
586
19,760
87,144

2018E
1,024
80,348
81,372
2935
586
17,760
102,654

Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Investments

24,004
5,331
18,673
3,963
207

35,612
6,786
28,826
4,492
242

38,726
8,470
30,256
7,356
1,145

41,380
10,142
31,238
8,915
866

46,259
12,737
33,522
7,979
1,544

55,749
15,497
40,251
4,490
1,544

63,493
18,783
44,711
2,745
1,544

70,366
22,373
47,993
1,872
1,544

Curr. Assets
Inventory
Account Receivables
Cash and Bank Balance
Loans & Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
E: MOSL Estimates

23,263
8,119
7,652
2,952
4,540
11,561
9,379
2,182
11,702
34,545

30,232
10,905
8,863
4,666
5,798
14,660
12,379
2,281
15,572
49,132

34,965
12,136
9,551
5,838
7,440
14,133
11,660
2,473
20,832
59,589

38,845
13,675
11,337
5,488
8,345
19,116
16,189
2,927
19,730
60,749

47,426
15,357
15,884
6,699
9,486
21,920
17,191
4,729
25,506
68,551

58,543
17,951
17,860
13,006
9,727
26,046
19,540
6,506
32,497
78,781

64,179
20,801
20,404
12,982
9,992
26,035
18,680
7,354
38,144
87,143

80,034
23,571
24,367
21,813
10,283
28,790
20,808
7,983
51,244
102,653

Balance Sheet

31 December 2015

2018E
133,153
19.4
101,130
76.0
32,023
24.1
3,590
28,433
367
1,985
30,052
0
30,052
8,114
0
8,114
27.0
21,938
436
21,502
21,502
44.5
16.1

(INR Million)

Cadila Health

Financials and valuations

Ratios

Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)

2011

2012

2013

2014

2015

2016E

2017E

2018E

6.2
8.2
21.2
1.3
20.8

5.5
7.9
25.1
1.5
27.1

6.4
8.2
28.8
1.5
30.5

8.0
9.8
33.6
1.8
27.1

11.7
14.4
41.5
2.4
24.1

15.1
17.6
52.6
3.0
23.9

14.5
17.8
62.8
3.6
29.0

21.0
24.5
79.5
3.6
20.2

Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)

52.5
39.7
15.3
7.4
33.2
0.4

58.8
41.1
12.9
6.6
32.2
0.5

40.5
33.1
9.7
4.8
29.2
0.6

27.9
22.6
7.8
4.0
19.5
0.7

21.5
18.5
6.2
3.5
15.2
0.9

22.4
18.3
5.2
3.0
14.4
1.1

15.5
13.3
4.1
2.5
10.2
1.1

Return Ratios (%)

RoE
RoCE

37.4
30.4

27.5
22.9

23.7
17.9

25.2
18.6

30.8
24.9

31.2
29.7

25.2
26.7

29.5
33.2

1.3
2.6
60
64
69

1.1
2.2
60
76
76

1.1
2.2
54
70
86

1.2
2.3
56
69
72

1.3
2.7
66
65
79

1.2
2.6
66
67
73

1.3
2.6
66
68
82

1.3
2.9
66
65
81

0.4

0.9

1.0

0.7

0.6

0.4

0.3

0.2

Y/E March
Oper. Profit/(Loss) bef.Tax
Interest/Dividends Recd.
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
EO Expense / (Income)
CF from Operating incl EO Exp.

2011
10,262
131
-1,064
-2,067
7,262
0
7,262

2012
10,838
-107
-1,130
-2,156
7,445
0
7,445

2013
11,252
-55
-1,188
-4,088
5,921
0
5,921

2014
12,001
786
-1,060
752
12,480
172
12,308

2015
17,841
554
-2,594
-4,566
11,235
84
11,151

2016E
22,364
1,719
-5,676
-684
17,722
-429
18,151

2017E
23,414
1,267
-5,655
-5,670
13,355
0
13,355

2018E
32,023
1,985
-8,114
-4,269
21,625
0
21,625

(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Investments
CF from Investments

-4,579
2,683
0
-4,579

-12,261
-4,816
-35
-12,296

-6,141
-220
-903
-7,044

-4,553
7,755
279
-4,274

-4,221
6,931
-678
-4,899

-6,202
11,949
0
-6,202

-6,039
7,317
0
-6,039

-6,000
15,625
0
-6,000

Change in Networth
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity

-401
406
-699
-1,530
-132
-2,356

-945
10,508
-1,211
-1,845
58
6,565

-1,086
6,928
-1,262
-2,105
-180
2,294

-1,152
-3,741
-1,181
-2,266
-44
-8,384

-1,154
52
-613
-2,952
-374
-5,041

-395
-1,105
-452
-3,690
0
-5,642

-415
-2,085
-412
-4,428
0
-7,340

-436
-1,564
-367
-4,428
0
-6,795

326
2,507
2,833

1,714
2,952
4,666

1,172
4,666
5,838

-350
5,838
5,488

1,211
5,488
6,699

6,307
6,699
13,006

-23
13,006
12,983

8,831
12,982
21,813

Working Capital Ratios

Asset Turnover (x)
Fixed Asset Turnover (x)
Debtor (Days)
Inventory (Days)
Working Capital T/O (Days)
Leverage Ratio (x)
Debt/Equity
E: MOSL Estimates

Cash Flow Statement

Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
E: MOSL Estimates

31 December 2015

(INR Million)

Cadila Health

Corporate profile: Cadila Healthcare

Company description

Exhibit 12: Sensex rebased

Cadila is one of the largest domestic pharma

companies in India with a strong focus on the
global generics opportunity. The company is
gradually building its presence in the regulated
generic markets beginning with the US and France.
It also plans to tap some unique opportunities
through its JVs with Takeda, Hospira, Bayer and
Bharat Serums.

Exhibit 13: Shareholding pattern (%)

Exhibit 14: Top holders

Sep-15

Jun-15

Sep-14

Promoter

74.8

74.8

74.8

DII

8.4

8.0

8.1

FII

6.7

7.0

6.4

Others

10.1

10.2

10.7

Holder Name

% Holding

Life Insurance Corporation of India Ltd

Government Pension Fund Global

3.0
1.1

Note: FII Includes depository receipts

Exhibit 15: Top management

Exhibit 16: Directors

Name

Designation

Name

Name

Pankaj R Patel

Chairman & Managing Director

Pankaj R Patel

Mukesh M Patel*

Sharvil P Patel

Deputy Managing Director

Sharvil P Patel

Nitin Raojibhai Desai*

H Dhanrajgir*

Dharmishta N Rawal*

*Independent

Exhibit 17: Auditors

Name
Mukesh M Shah & Co
Dalwadi & Associates

31 December 2015

Exhibit 18: MOSL forecast v/s consensus

Type
Statutory
Cost Auditor

EPS
(INR)

MOSL
forecast

Consensus
forecast

Variation
(%)

FY16
FY17
FY18

15.1
14.5
21.0

14.9
18.4
22.6

1.3
-21.2
-7.2

Cadila Health

NOTES

31 December 2015

Disclosures

This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company(ies) and/sector(s), if any, covered in the report and may be distributed
by it and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. ThisCadila
research report
does not
Health
constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for
public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal
recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider
whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as
up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.

MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a
some companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or
its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this
material may educate investors on investments in such business. The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other
parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on the profitability of MOSt which may include earnings from investment banking and other business.
MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders,
and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary
trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing
among other things, may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position
in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation
or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with
respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations
made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as
such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set
of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or
employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of
its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is
based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSts interpretation of the data, information and/or opinions
provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or
summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to
update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way
responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time,
any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on
this report or for any necessary explanation of its contents.
Most and its associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any
compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.
Most and its associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities
mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the
report.
Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412
There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be
directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation
of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues
Disclosure of Interest Statement
Analyst ownership of the stock
Served as an officer, director or employee

Cadila Health
No
No

A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.

For U.S.

Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In
addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the
United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or
intended for U.S. persons.
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major
institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning
agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL,
and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore

Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors
Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to
accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Kadambari Balachandran
Email : kadambari.balachandran@motilaloswal.com
Contact : (+65) 68189233 / 65249115
Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931

Motilal Oswal Securities Ltd

31 December 2015

Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com

10