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                                                                                                                   (SMALL CAP) 
   15th April ’ 2010 
Long Term Buy
CMP Rs 388
Indoco remedies Ltd. is a Mumbai based pharmaceutical company which deals in formulations,
Target price Rs 465 contract manufacturing and Active Pharmaceutical Ingredients (API).
Estimated EPS Rs 34.17
Projected PE 9-12
Key Highlights
Investment period 6-12 months
• The company has many projects in hand (Watson Pharmaceuticals, USA and Aspen
Stock  Info (TTM Basis) Pharmacare) which are expected to contribute in a big way to the company’s future
Sector Pharmaceuticals revenues.
Market cap Rs. 374.56 cr • The company is available at 1.71x of its book value of Rs. 226.57, with the improved
Face value  10.00
company’s earning visibility, we expect the stock will attract more value.
Book value 226.57
EPS   30.74
Cash EPS 40.27 Future Outlook
Dividend 52.50
Sales Growth 5.2%
At Current market price of Rs 388, the stock is available at P/E of 11.35x of its FY10E earnings,
RONW 13.56%
and 6.95x of its FY11E earnings. We recommend BUY with target price of Rs 465 given that
52 week H/L 423.95/120
Avg. Daily Vol (2wk)13978 company’s future shows potential.
Suresh G Kare  Particulars (In crores)  FY09  FY10E*  FY11E* 
Incorporation 1947
Net Sales 353.92  414.30  546.18 
Listed At BSE/NSE
Equity capital 12.29 cr Other Income 3.93  2.00  3.40 
Total Income 357.85  416.30  549.58 
Why to Invest in Shares of Indoco  Expenditure 307.71  344.63  427.34 
Remedies Ltd……………….….Page8 
  EBITDA 50.14  71.67  122.24 
Interest 5.85  5.02  11.00 
PBDT 44.29  66.65  111.24 
Key Highlights & Future 
Depreciation 11.16  6.67  13.35 
Company Profile………………..Page2  Profit Before Tax 33.13  59.98  97.89 
Peer Comparison…….…………Page3  Tax 1.69  17.99  29.37 
Financials of the  
Profit After Tax 31.44  41.99  68.52 
Equity Share Capital 12.29  12.29  12.29 
Basic EPS 25.58  34.17  55.75 
Mr. Rajesh Gupta Cash EPS 34.66  39.59  66.62 
(Chief Investment Officer) 60.
Operating Profit Margins 14.38%  17.54%  22.67% 
Prakash C. Pandey
(AVP-Portfolio Management) Net Profit Margins 9.01%  10.28%  12.71% 
Tanisha Jolly Net Sales is adjusted of stock adjustment
(Research Associate)  Source: Company Reports, Fairwealth Research Estimate

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  Indoco Remedies Ltd. 
             Buy‐ Riddhi Siddhi Gluco Bio 



Incorporated in the year 1947, Indoco remedies Ltd. is a Mumbai based

pharmaceutical company that focuses on formulations, with some
presence in contract manufacturing and research. It also deals in Active
Pharmaceutical Ingredients (API) that is manufactured by a group
company. The company has its presence in the therapeutic segments
which includes anti-infective, anti-cold preparation, ophthalmic, anti-
spasmodic, stomatology, anti-inflammatory and anti-fungal.

Source: Capitaline Database

The company ranks:‐ 

VIIIth Rank  Opthalmic 
XIIth Rank  Dentists 
XXIIIrd Rank  Prescription Generation 
XVIth Rank  Paediatricians 
XVIIIth Rank 
So Gynaecologists 

The company’s top 10 brands contributes 61% to the

total turnover.
Following are some company’s brands:-
Therapeutic  Market 
Brand  Rank  Source: Company’s Annual Report
Category  Share 
Anti‐ Cold  2  10.09  The International business contributes over 27 % to the
total revenue. Domestic Business contributes around
Cyclopam  Antispasmodics  1  52.41 
73% to the total revenue of the company. The company
Vepan  Anti‐Infectives  1  17.62  has its presence across 50 countries.
Renolen  Saline  1  40.69 
Mydriatic & 
Homide  1  92.24 
Source: Company Report 

The company currently has four manufacturing units- two in Mumbai and two in Goa and R&D center in Mumbai. The solid dosage
facility in Goa has been accredited by UK-Medicines and Healthcare Products Regulatory Agency (MHRA), and the sterile plant of
Goa has been designed as per US Food and Drug Administration (FDA) norms. On the selling front, it has a marketing network of
1,248 medical representatives. 

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  Indoco Remedies Ltd. 
             Buy‐ Riddhi Siddhi Gluco Bio 


Indoco Ind-Swift Surya Themis  RPG Strides

Particulars (In crores)
Remedies Ltd. Lab Pharma Medicare  Lifesciences Arcolab
Market Cap 392.17 188.54  232.82  157.98  105.51  1426.40 
Sales 374.46 730.73 975.39 212.23  147.16  769.44 
PBIDT 53.55 134.29 154.65 20.26  27.45  40.28 
Net Profit 37.78 46.28 66.86 12.74  7.42  57.25 
PBIDTM (%) 14.30 18.38 15.86 9.55 18.65 5.23
PATM (%) 10.09 6.33 6.85 6.00 5.04 7.44
EPS 30.74 16.62 46.21 15.83  5.16  9.39 
P/E 10.38 4.07  3.48  12.40  14.22  35.50 
EV/PBIDT 7.82 4.06 4.69 11.60  5.89  62.25 
Equity 12.29 27.85 14.47 8.05  11.50  42.79 
Dividend Yield 1.64 1.38 0.75 0.00  1.63  0.00 
Dividend Annualised 52.50 10.00 12.00 0.00  15.00  0.00 
Equity/sales  0.03  0.04  0.01  0.04  0.08  0.06 
Source: Capitaline Database
The industry P/E is 27.46 and the company is trading at a P/E of 10.38 on TTM Basis. The company has EPS of 30.74 which is one
of the best in the industry. The company pays highest dividend i.e. 52.50 annually amongst its peers.

Particulars (In crores) Dec-09 Dec-08 Var% Y-o-Y Sep-09 Var% Q-o-Q
Net Sales 95.7  77.92  22.82  95.43  0.28 
Add: Other Income 0.27  0.66  ‐59.09  0.76  ‐64.47 
Total Income 95.97  78.58  22.13  96.19  ‐0.23 
Less: Expenditure 84.53  72.59  16.45  83.05  1.78 
PBIDT 11.44  5.99  90.98  13.14  ‐12.94 
Less: Interest 0.6  1.74  ‐65.52  0.66  ‐9.09 
PBDT 10.84  4.25  155.06  12.48  ‐13.14 
Less: Depreciation 3.04  2.8  8.57  2.89  5.19 
PBT 7.8  1.45  437.93  9.59  ‐18.67 
Less: Tax 0.07  0.82  ‐91.46  0.34  ‐79.41 
PAT 7.73  0.63  1126.98  9.25  ‐16.43 
EPS 6.29  0.51  1126.98  7.53  ‐16.43 
CEPS 8.76  2.79  213.99  9.88  ‐11.29 
OPM% 11.95%  7.69%  ‐  13.77%  ‐ 
NPM% 8.08%  0.81%  ‐  9.69%  ‐ 
Source: Capitaline Database
Bottom line of Indoco Remedies rose 1126.98% to Rs 7.73 crore in the quarter ended December 2009 as against Rs 0.63 crore
during the previous quarter ended December 2008. The top line rose 22.82% to Rs 95.70 crore in the quarter ended December 2009
as against Rs 77.92 crore during the previous quarter ended December 2008. During the quarter, domestic formulation sales are up
by 37.26% to Rs. 66.63 crores over the corresponding quarter last year. The employee cost during the quarter has gone up to Rs.
2.29 crores. The power and fuel cost also rose by Rs. 1.02 crore over the same period previous year.

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  Indoco Remedies Ltd. 
             Buy‐ Riddhi Siddhi Gluco Bio 


Particulars (In crores) 200903 (12)  200803 (9)  200706 (12)  200606 (12)  200506 (12) 
Net Sales  348.78  262.39  324.28  241.04  192.95 
 Other Income  3.93  2.5  4.83  11.18  4.8 
 Stock Adjustments  5.14  2.96  0.9  3.26  2.51 
 Total Income  357.85  267.85  330.01  255.48  200.26 
 Less: Expenditure  307.71  224.41  269.28  206.16  155.43 
PBIDT  50.14  43.44  60.73  49.32  44.83 
 Less: Interest  5.85  3.62  5.09  3.53  3.75 
PBDT  44.29  39.82  55.64  45.79  41.08 
Less:  Depreciation  11.16  7.78  9.03  5.95  4.34 
PBT  33.13  32.04  46.61  39.84  36.74 
Less: Tax  1.69  1.95  4.57  11.46  11.61 
Net Profit  31.44  30.09  42.04  28.38  25.13 
 Less: Extraordinary Items  0.04  ‐1.57  ‐0.85  1.73  0.16 
 Adjusted Net Profit  31.4  31.66  42.89  26.65  24.97 
Equity  12.29  12.29  11.82  11.82  11.82 
EPS  25.58  24.48  35.57  24.01  21.26 
Cash EPS  34.66  30.81  41.55  27.93  23.98 
Operating Profit Margins(%)  14.38%  16.56%  18.73%  20.46%  23.23% 
Net Profit Margins(%)  9.01%  11.47%  12.96%  11.77%  13.02% 
Source: Capitaline Database
In the previous year, the company’s top line increased by 51% and the bottom line increased marginally by 4% on account of
increase in interest cost and depreciation. The company showed good results in the year 2007 with 34% increase in the top line and
48% growth in the bottom line. Thereafter, in the next year the company changed its financial year and published results for nine

Particulars( In crores) 200903 200803 200706 200606 200506
Net Worth 278.53 254.34 233.11 195.3 175.34
Loans- Term 15.79 14.77 25.97 10.95 22.65
Loans - Working Capital 39.76 19.48 9.58 22.31 27.11
Deferred Tax Liability 23.00 21.92 20.69 17.53 9.76
Total 357.08 310.51 289.35 246.09 234.86
Net Block Including WIP 192.22 173.45 168.75 109.51 85.44
Investments 0.02 0.00 0.00 11.49 45.23
Net Working Capital 164.7 136.63 120.07 124.21 102.79
Deferred Revenue Expenses 0.14 0.43 0.53 0.88 1.4
Total 357.08 310.51 289.35 246.09 234.86
Source: Capitaline Database
The net worth of the company has been increasing on a continuous basis. The working capital loan of the company has increased
from Rs.19.48 crore to Rs. 39.76 crore in the current year. The deferred tax liability of the company has risen over the past five years.
The company does not have much of investments

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  Indoco Remedies Ltd. 
             Buy‐ Riddhi Siddhi Gluco Bio 


Year of Dividend PAT (Rs Cr) % of Dividend Dividend Yield% The company has being paying high
200903 31.44 52.50 3.83 dividends over the last five years. The
dividend yield is between 1.5 to 4. The
200803 30.09 50.00 1.74 company’s focus on paying dividend gives a
200706  42.04  65.00  2.33  positive signal about the company’s vision
on creating wealth maximization.
200606  28.38  62.50  2.46 
200506  25.13  50.00  1.79 
Source: Capitaline Database

Gross Sales

The company’s sales increased from Rs. 271.89

crore in the previous year to Rs. 355.26 crore in
the current year.

The company’s revenue are expected to grow in

the near future to the account of new projects
i.e. with Watson Pharmaceutical, USA and Aspen

Source: Fairwealth Research  Net Sales $ PAT

The company’s topline increased from Rs 262.39

crore in the year 2008 to Rs. 348.78 crore by
32.9% in the year 2009. Whereas the bottomline
increased marginally by 4.48% to Rs 31.44 crore
from Rs. 30.09 crore.

                                                                                                                                                        Source: Fairwealth Research 

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  Indoco Remedies Ltd. 
             Buy‐ Riddhi Siddhi Gluco Bio 
Comparison of the stock price with Small Cap Index 

The company’s stock price has been

performing in line with the Small cap Index. The
stock price is appreciating in comparison to the
Small Cap Index.

Source: Fairwealth Research 
Industry Turnover v/s Company Turnover 
  The Pharmaceutical-Bulk Drugs &
Formulations M/S Industry turnover in the
year 2009 was Rs. 8189.15 crore and that of
the company was Rs. 355.26 crore.

The company’s turnover is approx 3% of that

of the total Industry Turnover. 

Equity & Book Value

Source: Fairwealth Research

The Equity of the company has remained
constant from the last two years to Rs. 12.29
crore. The book value is rising since the last
five years. In the current year, the book value
of the company was Rs. 226.57 as compared to
206.88 in the previous year.

Source: Fairwealth Research

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  Indoco Remedies Ltd. 
             Buy‐ Riddhi Siddhi Gluco Bio 

Debt-Equity Ratio v/s Equity

The equity of the company has remained same for

the last two years. The debt – equity ratio has also
increased from 0.14 to 0.17 in the current year due
to restructuring by the company.

Source: Fairwealth Research

RONW V/S Price/ Book Value EPS On TTM Basis

Source: Fairwealth Research

Source: Fairwealth Research

The company’s RONW has decreased from 16.48 to 11.8 in The EPS of the company has not been consistently
the year 2009. The P/BV ratio has also declined from 1.39 in increasing. In 200906, it declined to 19.21 but in the
the year 2008 to 0.61 in the year 2009.
next quarter it increased to 24.97.

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  Indoco Remedies Ltd. 
             Buy‐ Riddhi Siddhi Gluco Bio 


Why to invest in shares of Indoco Remedies Ltd.?


The Global Pharmaceutical market likely to witness products worth 123 billion dollars loosing patents by 2012, the generics
driven Indian drugs industry could be benefitted to the tune of around 18.4 billion dollars.

The Indian pharmaceutical industry, has grown from a mere Rs 1500 crores turnover in 1980 to about $19 billion (over Rs.
78,000 crores) in 2008.The country now ranks 3rd in terms of volume of production (10%of global share) and 14th largest by
value (1.5%).During 2008-09, the Indian pharmaceutical sector performed creditably. It registered a domestic sale of
Rs.35,367.50 crore as against Rs. 32,605.70 crore last year, thereby recording a growth of 10.1%. This achievement comes in
the wake of the global economic slowdown currently being experienced specially in U.S. & Europe.

Pharma is one sector which promises to grow in both Developed and Developing Markets. Global Pharma Industry grew at a
pace of 6% in 2009 to reach an estimated figure of USD 725 billion. Developed economies like US, Japan and Europe which
account for 85% of global Pharma markets grew by 4% Emerging markets continue to witness 12%+ growth.
India though accounts for 2% of the global markets, it is ahead of many developed countries in terms of ANDA filing, Drug
Master file registrations, Contract Research and Manufacturing(CRAMS), Approved Facilities for manufacturing and Research.
Indian companies are already making great strides in the global generic markets and API’s, and the sector continues to hold
great potential. The global pharmaceutical market is forecasted to touch $ 929 billion by 2012.The current spending on
healthcare (public and private) is estimated to increase to 10% GDP by 2016.The pharmaceutical market in India is expected to
grow around 12% and to be valued around USD 20 billion by 2015. The market continues to be dominated by acute therapies;
however chronic segments such as Cardiovascular, Diabetes, Central Nervous System and speciality segments like Oncology
are growing faster than the market.
At present CRAMS global market size is estimated at $20 billion, and is expected to grow to $31 billion by 2010.

a. Projects
i. The company has entered into business partnership with Watson Pharmaceuticals Inc, USA to
develop, manufacture and supply generic sterile products to Watson for the US markets. The size of
these products is $ 679 million. The alliance is expected to boost the revenue of the company.
ii. During the previous year, the company entered into an agreement to supply of anti-diabetics
Metformin tablets of Rs. 50 crore to Germany. Metformin is one of the top selling products in
Germany in terms of volume.
iii. The company has tied up with Aspen Pharmacare for long term drug supply contract. The deal is for
seven products for territory covering more than 30 countries.

b. Global Presence:
ƒ The company has its presence in more than 50 countries including UK, Germany, Spain, Hungary,
South Africa, Australia and New Zealand.

ƒ The company has capabilities to support the outsourcing needs of MNCs under collaborative
research business model by acting as Fee for service provider partner. The company is one of the
preferred outsourcing partner for a range of activities in CRAMS space.

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  Indoco Remedies Ltd. 
             Buy‐ Riddhi Siddhi Gluco Bio 

d. Marketing Divisions:
ƒ The company has six marketing divisions which particularly focus on the different specialties such as
General Practitioners, Consulting Physicians, Gynaecologists and Paediatricians.
e. Future Outlook
• The company is expected to provide with value added products to the Generic companies


¾ Domestic formulation business registered impressive growth of 37% to Rs 66.63 crore and outperformed
industry growth of 15.7% during the period. Products like Cyclopam, Oxipod, Clamcheck, Karvol Plus, Tuspel
Plus, Methycal, Aloha-XT, Cital, Carmicide, Amclaid, Mofloren have shown a positive growth in the quarter.
¾ During the previous quarter,Revenues from top 5 products of company stood at Rs 23 crore compared to Rs
15.30 crore in the corresponding previous period.
¾ The company is looking forward to have a product basket in the Opthalmic segment in U.S as well as in
European market.
¾ The company’s top 10 brands contributed 61% of the total turnover.
¾ During the year, the revenues from export formulations grew by 24% at Rs. 94.81 crore as compared to Rs.
76.53 crore for the last year.
¾ The domestic business registered a turnover of Rs. 250.39 crore. The formulations business recorded Rs.
239.60 crore sales and API Rs. 10.79 crore.
¾ International business registered a growth of 24.1% during the year 2009.
¾ The company’s revenue from formulations exports in the year 2009 grew by 23.9% at Rs. 94.81 crore as
compared to Rs. 76.53 crore in the previous year.
¾ The APIs business recorded Rs. 16.23 crore in the year 2009 as compared to Rs. 11.92 previous year.

     Notes: Figures and graph sourced from, capitaline database and annual report (200809). 
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  Indoco Remedies Ltd. 
             Buy‐ Riddhi Siddhi Gluco Bio 
This publication has been solely prepared for the information purpose and does not constitute a solicitation to any person to buy or sell a
security. While the information contained therein has been obtained from sources believed reliable investors are advised to satisfy
themselves before making any investments. Fairwealth Securities Pvt Ltd does not bear any responsibility for authentication of the
information contained in the reports and consequently is not liable for any decision taken based on the same. Further Fairwealth
Research report only provides information updates and analysis. All opinions for buying and selling are available to investors when they
are registered clients Of Fairwealth Investment advisory services. As a matter of practice, Fairwealth refrains from publishing any
individual names with its reports. As per SEBI requirements it is stated that, Fairwealth securities Pvt Ltd, and/or individuals thereof may
have positions in securities referred herein and may make purchases or sale while this report is in circulation.

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