Equity Research INDIA

October 9, 2019

ICICI Securities Limited Pharmaceuticals & Healthcare

is the author and
distributor of this report
India market to remain growth driver; US continues to languish
Q2FY20 results preview We expect the pharma and healthcare companies under our coverage to report a
tepid quarter ended Sep'19 in terms of earnings. However, steady performance is
expected on revenue and EBITDA fronts supported by the domestic market. US
revenues would remain muted with an estimated 6% decline QoQ due to
Recommendations increased competition with faster approvals, delay in product approvals with
Alembic Pharma (ADD) increasing compliance issues, and single-digit price erosion. We estimate India
Alkem (BUY) business growth to be in early double digits as seen in the secondary sales data.
Apollo Hospitals (ADD) We forecast the EBITDA margin of covered companies at ~19% (flat YoY)
Aster DM (BUY) supported by India business and cost-control measures. Overall, we expect our
Aurobindo (BUY) coverage universe to report 10.3% revenue and 10.1% EBITDA growth YoY.
Cadila Healthcare (BUY)  India secondary sales: The Indian pharma market witnessed growth recovery with
11.9% in value terms for Sep’19 (source: AWACS). Volumes contributed 3.5%,
Cipla (HOLD) prices contributed 5.6% and new introductions contributed 2.9%. Portfolio under FDC
Dr Lal Pathlabs (ADD) witnessed a volume decline of 69.4%, but NLEM grew 8.0%. We expect primary
Dr Reddy’s (REDUCE) sales growth for companies under our coverage to be in low double digits, YoY.
Glenmark (ADD)  US generics: US sales are expected to be down 6.0% QoQ in Q2FY20. Sun, Cipla,
Cadila, Lupin, Alembic and Torrent largely contributed to this decline due to loss of
Healthcare Global (BUY)
sales in their key products. However, Aurobindo, Dr Reddy’s and Alkem are expected
JB Chemicals & Pharma to sustain their revenues. Stringent regulatory hurdles in the wake of USFDA
(BUY) crackdown on non-compliant facilities remain an overhang for new product approvals
Jubilant Life Sciences despite a healthy pipeline of pending ANDA’s.
(BUY)  Companies to watch: We expect strong results from: 1) Aurobindo on consistent
Lupin (HOLD) product approvals with ramp-up in injectables portfolio; 2) Dr Reddy’s with new
Natco (BUY) launches and effective cost-control measures; and 3) Alkem on strong seasonality in
Shilpa Medicare (HOLD) the domestic market.
Strides Pharma Science  Factors to watch: The key factors to watch in Q2FY20 numbers and management
(BUY) commentary would be: i) growth consistency in India for the industry and respective
companies, ii) update on USFDA issues affecting several companies, iii) price
Sun Pharma (HOLD) erosion in base US business on increased competition, and iv) growth in emerging
Thyrocare Technologies markets with steady demand.
(ADD) Quarterly summary
Torrent Pharma (BUY) Sales EBITDA Adj. PAT
Company
% Chg % Chg % Chg
(Rs mn) Q2FY20E (YoY) (QoQ) Q2FY20E (YoY) (QoQ) Q2FY20E (YoY) (QoQ)
Alembic Pharma 10,377 (7.9) 9.4 2,049 (32.2) (8.9) 1,294 (35.3) (13.1)
Alkem 21,130 10.1 14.2 4,015 10.2 51.8 2,928 15.1 57.9
Apollo Hosp. 27,402 14.1 6.5 3,288 21.0 11.6 529 (14.5) NA
Aster DM 21,041 14.5 3.7 2,378 89.5 6.3 148 24.5 355.0
Aurobindo 55,819 17.5 2.5 11,443 11.5 (0.2) 6,689 0.9 4.2
Cadila 33,801 16.0 (3.1) 6,762 7.4 (2.6) 3,329 (10.8) (5.9)
Cipla 43,234 7.8 8.4 8,106 15.4 (10.4) 3,795 0.7 (20.6)
Dr Lal Pathlabs 3,684 16.0 9.9 1,013 16.7 6.5 702 23.4 18.8
Dr Reddy's 41,769 10.0 8.7 8,563 15.7 17.8 4,584 (1.1) (30.8)
Glenmark 26,740 3.6 15.1 4,281 (2.7) 16.7 1,772 (10.0) 40.2
HCG 2,844 15.9 5.8 348 4.0 (22.3) (62) NA NA
JB Chemicals 4,614 14.1 3.4 900 9.6 (6.2) 573 11.4 (7.7)
Jubilant Life 24,100 6.2 10.5 4,820 7.1 10.9 2,209 5.0 19.4
Research Analysts: Lupin 43,349 9.7 (1.9) 7,153 30.1 (16.9) 2,365 (11.1) (22.0)
Natco Pharma 5,457 0.4 10.8 2,019 (8.4) 5.5 1,553 (14.9) 8.4
Sriraam Rathi Shilpa Medicare 1,858 14.5 15.4 409 8.9 41.9 275 26.3 74.8
Sriraam.rathi@icicisecurities.com
Strides Shasun 6,997 (4.5) 2.0 1,259 26.4 1.9 448 2,034.5 30.0
+91 22 6637 7574
Sun Pharma 77,544 11.8 (7.4) 16,090 5.1 (19.4) 9,701 (2.6) (30.1)
Vinay Bafna
vinay.bafna@icicisecurities.com Thyrocare 1,196 15.2 7.9 449 4.3 14.0 268 5.9 17.8
+91 22 6637 7339 Torrent Pharma 20,046 5.8 (0.9) 5,312 6.7 (1.8) 2,029 1.1 (6.0)
Source: I-Sec research
Please refer to important disclosures at the end of this report
Healthcare ICICI Securities

Domestic market trends: Secondary data

AWACS data for Sep’19 shows that the India pharma market (IPM) had a growth rate
of 9.8% in value terms over the year (MAT Sep’19). Adjusting for seasonality and free
samples, the industry grew at similar levels (9.6%) for the 12 months ended Sep’19.
Chronic products portfolio grew at 13.0% while acute (incl. sub-chronic) portfolio grew
at 11.7% over the year.

Top-growing categories (MAT Sep’19):

 Anti-infectives and respiratory grew 8.4% and 7.6% YoY respectively.
 Chronic products segment continued to drive sales in the markets growing at an
overall 13.0% with 12.6% growth in cardiovascular and 14.9% growth in anti-
diabetic segments, YoY.
 Gastro-intestinal and derma sales grew 8.5% and 8.7% YoY while VMN and
Neuro/CNS grew 9.2% and 9.7%, respectively.
 Pain/Analgesics, anti-neoplastics and gynaec grew 9.2%, 10.0% and 8.5% YoY
respectively.
 The urology and ophthalmology segments registered 15.4% and 9.1% growth YoY
respectively.
Winners in domestic sales growth (top 20 companies in the Indian market) with MAT in
excess of 11% (with bonus units) are: Lupin, Mankind, Alkem, Torrent, Intas, Emcure,
Aristo, Sanofi India, Dr Reddy’s, and IPCA. Losers in domestic sales growth (sales
growth less than 9%) are: Sun, Macleods, and Pfizer.
Table 1: Domestic growth rate of key companies
YoY growth (%)
Jul'19 Aug'19 Sep'19 Avg. Jul-Sep'19 MAT Sep'19
Industry 13.2 9.4 11.9 11.5 9.8
Sun + Ranbaxy 11.6 9.7 12.9 11.4 7.7
Abbott + Abbott HC + Novo 13.1 9.9 13.9 12.3 9.6
Cipla 12.9 4.6 5.9 7.8 9.0
Zydus + Biochem 17.0 9.7 14.4 13.7 10.1
Lupin 18.7 13.0 19.3 17.0 15.3
Mankind 19.2 14.5 14.5 16.1 13.9
Alkem + Cachet + Indchemie 19.8 20.8 14.5 18.4 12.7
Torrent 13.1 7.5 17.5 12.7 11.9
Intas 17.2 12.8 13.5 14.5 14.5
Glaxo 24.6 18.6 22.9 22.0 11.8
Macleods 13.6 9.1 9.7 10.8 8.7
Emcure + Zuventus 18.0 11.5 17.9 15.8 11.5
Aristo 29.9 26.9 21.3 26.0 16.2
Sanofi India 16.6 14.4 11.4 14.1 13.0
Dr. Reddys 19.1 14.7 24.0 19.3 12.7
Pfizer 11.4 3.1 9.4 8.0 7.0
Glenmark 10.4 5.8 9.3 8.5 9.3
USV 11.4 6.6 9.4 9.1 9.4
Micro + Bal 13.2 6.9 8.5 9.5 9.0
Ipca 16.3 6.1 9.2 10.5 18.6
Note: Abbott includes Novo, Cadila includes Biochem, Alkem includes Cachet and Indchemine and Emcure
includes Zuventus
Source: AWACS data, I-Sec research

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Healthcare ICICI Securities
Chart 1: Growth drivers for Sep’19

Vol growth Price growth New product growth

0.6
0.6
2.9 4.7 3.3
6.2
5.6 5.6
8.0
(%) 3.5 2.9
4.9

IPM (11.9) NLEM (13.2) NON-NLEM (11.8) SCH. PARA-19 (11.7)

Source: AIOCD AWACS data, I-Sec research

Chart 2: Quarterly growth drivers (YoY)

Vol growth Price growth New product growth

2.8

3.6 3.7 3.6 3.4

2.9
5.5
(%)

5.0
4.8 4.9
6.3
5.1
3.2
1.0 1.3 1.6
(0.9) 0.1

Qtr Jun'18 Qtr Sep'18 Qtr Dec'18 Qtr Mar'19 Qtr Jun'19
Source: AIOCD AWACS data, I-Sec research

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Healthcare ICICI Securities

Company-specific factors
 Alembic Pharma: i) Decline in the US on a high base of one-off opportunities last
year, ii) domestic performance would improve with the industry, and iii) fall in
contribution from one-off opportunities would lead to lower gross and EBITDA
margins.
 Alkem Labs: i) Expect recovery in the domestic business on the back of
seasonality, ii) expect US revenues to be muted with competition in a few key
products, and iii) seasonality-driven domestic performance would elevate EBITDA
margin.
 Apollo Hospitals: i) Occupancy improvement and new bed additions to result in
hospital revenue growth, ii) new store additions to aid growth in pharmacies, and
iii) improving occupancy at new hospitals and loss reduction in AHLL to improve
profitability.
 Aster DM Healthcare: i) Improving occupancy and bed additions to Indian
hospitals to aid revenue growth, ii) GCC would witness lower growth due to
seasonality of expat population, and iii) improving ARPOB and loss reduction at
new hospitals to improve profitability.
 Aurobindo: i) Lower approvals would limit US generics growth, ii) EU would
continue strong performance, iii) stable growth in EM and APIs, and iv) higher
expenses with increasing remedial measures on plants to keep margins in check.
 Cadila Healthcare: i) Lack of meaningful launches with competition in key
products would cause decline in the US, ii) India business growth is expected to
be moderate, iii) consumer business to be strong with consolidation of Heinz, and
iii) margins would be moderate with change in product mix.
 Cipla: i) US to witness sequential decline on high base of Sensipar, ii) growth in
the respiratory portfolio in EU while SAGA remains muted with low tender funding,
iii) domestic growth affected by the ongoing restructuring exercise, and iv) EBITDA
margins would fall with lower contribution from higher-margin products.
 Dr Lal Pathlabs: i) Patient volume growth led by new labs to drive mid-teen
growth in revenues with stable realisation, and ii) expenditure towards new labs in
Kolkata and regional labs around it would keep margins muted.
 Dr Reddy’s: i) New launches in the US offset by competition in key products
would keep revenue growth muted, ii) India business growth to recover in tandem
with the industry, iii) proprietary business continues to witness good traction, and
iv) higher US contribution to support margins, but higher tax rate to affect PAT.
 Glenmark: i) Lack of meaningful launches coupled with price erosion in the base
business would lead to decline in US sales, ii) emerging markets would grow with
improving demand, ii) domestic business to outpace the industry, and iii) stable
revenue mix would result in stable margins.
 Healthcare Global: i) New bed additions to affect profitability despite revenue
growth, ii) newer registrations to aid growth in Milann, and iii) higher costs
attached to newer beds and clinics to weigh on margins.

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Healthcare ICICI Securities
 JB Chemicals & Pharma: i) Growth in the domestic business would be higher
than the industry led by improving MR productivity, ii) RoW is expected to maintain
its trend led by consistent demand while Rus+CIS is likely to grow with strong
demand and stable currency, and iii) higher employee expenses would affect
margins.
 Jubilant Life: i) Pharma revenue growth would be led by specialty segment and
demand surge in certain products, ii) LSI segment growth would remain muted,
and iii) higher other expenses and lower contribution from LSI segment would
weigh on the margins.
 Lupin: i) Competition in Ranexa and slow ramp-up in Solosec would cause
sequential decline in US sales, ii) India business to outpace the industry, and iii)
EBITDA margin to improve YoY with strong domestic growth and effective cost
control measures.
 Natco Pharma: i) Muted export performance without any new meaningful
launches and tepid growth in Copaxone, ii) strong domestic performance (despite
weak HepC) with new products and traction in C&D therapy segments, and iii)
margins to remain stable with consistent revenue mix.
 Shilpa Medicare: i) Muted contribution from custom synthesis business, but
steady growth in the API and formulation business would support growth in mid-
teens; ii) increasing revenue contribution from formulations would improve EBITDA
margin; and iii) lower tax would result in moderate PAT performance.
 Strides Shasun: i) Revenue decline due to exit from Australia business, but US
revenues maintained as the company was only marginally affected by the
Ranitidine impurity issue; ii) other regions to remain steady; and iii) stable
profitability with consistent revenue mix.
 Sun Pharma: i) Sequential decline in US revenues despite traction in its specialty
portfolio as no key products were launched; ii) growth in domestic business to
track the industry; and iii) EBITDA margin would be affected due to front-ended
costs of the specialty portfolio.
 Thyrocare Technologies: i) Low value and high volume approach to help double-
digit volume growth in diagnostics; ii) imaging business growth at existing centres;
and iii) sequential improvement in margins with lower losses from the imaging
business.
 Torrent Pharma: i) US sales to remain stable without new launches, but steady
pick-up in sartans; ii) steady performance across other international geographies
to aid export growth; iii) India business growth to be higher than the industry with
improving performance from Unichem portfolio; and iv) EBITDA margin to remain
stable and lower tax rate to result in PAT growth.

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Healthcare ICICI Securities
Table 2: Estimates for Q2FY20
(Rs mn) Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20E % YoY % QoQ Comments
Alembic Pharma
Revenue 11,271 10,182 9,270 9,489 10,377 (7.9) 9.4 i) Decline in the US on a high base of one-off
EBITDA 3,023 2,422 1,780 2,249 2,049 (32.2) (8.9) opportunities last year, ii) domestic performance
EBITDA Margin (%) 26.8 23.8 19.2 23.7 19.8 (700)bps (390)bps would improve with the industry, and iii) fall in
PAT 2,001 1,698 1,240 1,489 1,294 (35.3) (13.1) contribution from one-off opportunities would lead to
EPS (Rs) 10.6 9.0 6.6 7.9 6.9 64.7 (99.5) lower gross and EBITDA margins.
Alkem i) Expect recovery in the domestic business on the
Revenue 19,189 19,250 18,542 18,495 21,130 10.1 14.2 back of seasonality, ii) expect US revenues to be
EBITDA 3,642 3,118 2,373 2,645 4,015 10.2 51.8 muted with competition in a few key products, and
EBITDA Margin (%) 19.0 16.2 12.8 14.3 19.0 - 470bps iii) seasonality-driven domestic performance would
PAT 2,545 2,025 1,740 1,855 2,928 15.1 57.9 elevate EBITDA margin.
EPS (Rs) 21.3 16.9 14.6 15.5 24.5 115.1 (98.7)
Apollo Hospitals i) Occupancy improvement and new bed additions
Revenue 20,901 21,690 24,995 25,719 27,402 31.1 6.5 to result in hospital revenue growth, ii) new store
EBITDA 2,578 2,679 2,796 2,947 3,288 27.5 11.6 additions to aid growth in pharmacies, and iii)
EBITDA Margin (%) 12.3 12.3 11.2 11.5 12.0 (30)bps 50bps improving occupancy at new hospitals and loss
PAT 790 869 849 (118) 529 (33.0) (548.6) reduction in AHLL to improve profitability.
EPS (Rs) 5.7 6.2 6.1 (0.8) 3.8 67.0 (103.2)
Aster DM i) Improving occupancy and bed additions to Indian
Revenue 18,369 21,501 22,010 20,286 21,041 14.5 3.7 hospitals to aid revenue growth, ii) GCC would
EBITDA 1,255 2,632 3,504 2,237 2,378 89.5 6.3 witness lower growth due to seasonality of expat
EBITDA Margin (%) 6.8 12.2 15.9 11.0 11.3 450bps 30bps population, and iii) improving ARPOB and loss
PAT 119 1,003 2,093 33 148 24.5 355.0 reduction at new hospitals to improve profitability.
EPS (Rs) 0.2 2.0 4.1 0.1 0.3 124.5 (99.1)
Aurobindo i) Lower approvals would limit US generics growth,
Revenue 47,514 52,697 52,922 54,446 55,819 17.5 2.5 ii) EU would continue strong performance, iii) stable
EBITDA 10,260 10,864 10,603 11,464 11,443 11.5 (0.2) growth in EM and APIs, and iv) higher expenses
EBITDA Margin (%) 21.6 20.6 20.0 21.1 20.5 (110)bps (60)bps with increasing remedial measures on plants to
PAT 6,632 6,925 6,134 6,417 6,689 0.9 4.2 keep margins in check.
EPS (Rs) 11.3 11.8 10.5 11.0 11.4 100.9 (99.8)
Cadila i) Lack of meaningful launches with competition in
Revenue 29,149 35,983 37,266 34,886 33,801 16.0 (3.1) key products would cause decline in the US, ii)
EBITDA 6,297 8,697 7,963 6,943 6,762 7.4 (2.6) India business growth is expected to be moderate,
EBITDA Margin (%) 21.6 24.2 21.4 19.9 20.0 (160)bps 10bps iii) consumer business to be strong with
PAT 3,732 5,340 4,539 3,536 3,329 (10.8) (5.9) consolidation of Heinz, and iii) margins would be
moderate with change in product mix.
EPS (Rs) 3.6 5.2 4.4 3.5 3.3 89.2 (99.9)
Cipla i) US to witness sequential decline on high base of
Revenue 40,119 40,075 44,040 39,890 43,234 7.8 8.4 Sensipar, ii) growth in the respiratory portfolio in EU
EBITDA 7,022 7,077 9,611 9,046 8,106 15.4 (10.4) while SAGA remains muted with low tender funding,
EBITDA Margin (%) 17.5 17.7 21.8 22.7 18.8 130bps (390)bps iii) domestic growth affected by the ongoing
PAT 3,771 3,322 5,203 4,782 3,795 0.7 (20.6) restructuring exercise, and iv) EBITDA margins
would fall with lower contribution from higher-margin
EPS (Rs) 4.7 4.1 6.5 6.0 4.7 100.7 (99.9) products.

Dr Lal Pathlabs
Revenue 3,175 2,925 3,011 3,352 3,684 16.0 9.9 i) Patient volume growth led by new labs to drive
EBITDA 868 656 692 951 1,013 16.7 6.5 mid-teen growth in revenues with stable realisation,
EBITDA Margin (%) 27.3 22.4 23.0 28.4 27.5 20bps (90)bps and ii) expenditure towards new labs in Kolkata and
PAT 569 458 492 591 702 23.4 18.8 regional labs around it would keep margins muted.
EPS (Rs) 6.8 5.5 5.9 7.1 8.4 123.4 (98.6)
Dr Reddy's i) New launches in the US offset by competition in
Revenue 37,978 38,500 38,359 38,435 41,769 10.0 8.7 key products would keep revenue growth muted, ii)
EBITDA 7,403 8,156 6,391 7,267 8,563 15.7 17.8 India business growth to recover in tandem with the
EBITDA Margin (%) 19.5 21.2 16.7 18.9 20.5 100bps 160bps industry, iii) proprietary business continues to
PAT 4,634 4,504 2,884 3,930 4,584 (1.1) 16.6 witness good traction, and iv) higher US
contribution to support margins, but higher tax rate
EPS (Rs) 27.9 27.1 17.4 23.7 27.6 98.9 (99.3) to affect PAT.

Glenmark i) Lack of meaningful launches coupled with price

Revenue 25,813 25,550 25,635 23,229 26,740 3.6 15.1 erosion in the base business would lead to decline
EBITDA 4,401 4,347 3,891 3,669 4,281 (2.7) 16.7 in US sales, ii) emerging markets would grow with
EBITDA Margin (%) 17.0 17.0 15.2 15.8 16.0 (100)bps 20bps improving demand, ii) domestic business to outpace
PAT 1,969 2,052 1,476 1,264 1,772 (10.0) 40.2 the industry, and iii) stable revenue mix would result
in stable margins.
EPS (Rs) 7.0 7.3 5.2 4.5 6.3 90.0 (99.5)

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Healthcare ICICI Securities
(Rs mn) Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20E % YoY % QoQ Comments
HCG
Revenue 2,453 2,489 2,579 2,689 2,844 15.9 5.8 i) New bed additions to affect profitability despite
EBITDA 335 289 322 449 348 4.0 (22.3) revenue growth, ii) newer registrations to aid growth
EBITDA Margin (%) 13.7 11.6 12.5 16.7 12.3 (140)bps (440)bps in Milann, and iii) higher costs attached to newer
PAT 2 (62) (87) (180) (62) (4,202.5) (65.7) beds and clinics to weigh on margins.
EPS (Rs) 0.0 (0.7) (1.0) (2.1) (0.7) (4,102.5) (99.6)
JB Chemicals i) Growth in the domestic business would be higher
Revenue 4,043 3,521 4,189 4,461 4,614 14.1 3.4 than the industry led by improving MR productivity,
EBITDA 821 726 650 960 900 9.6 (6.2) ii) RoW is expected to maintain its trend led by
EBITDA Margin (%) 20.3 20.6 15.5 21.5 19.5 (80)bps (200)bps consistent demand while Rus+CIS is likely to grow
PAT 514 464 468 621 573 11.4 (7.7) with strong demand and stable currency, and iii)
higher employee expenses would affect margins.
EPS (Rs) 6.4 5.5 5.8 7.7 7.1 111.4 (98.9)
Jubilant Life i) Pharma revenue growth would be led by specialty
Revenue 22,695 23,771 23,856 21,819 24,100 6.2 10.5 segment and demand surge in certain products, ii)
EBITDA 4,502 4,933 4,450 4,346 4,820 7.1 10.9 LSI segment growth would remain muted, and iii)
EBITDA Margin (%) 19.8 20.8 18.7 19.9 20.0 20bps 10bps higher other expenses and lower contribution from
PAT 2,104 2,608 1,350 1,850 2,209 5.0 19.4 LSI segment would weigh on the margins.
EPS (Rs) 13.5 16.8 8.5 11.6 13.9 102.6 (99.3)
Lupin i) Competition in Ranexa and slow ramp-up in
Revenue 39,511 42,946 44,063 44,184 43,349 9.7 (1.9) Solosec would cause sequential decline in US
EBITDA 5,496 6,992 9,303 8,602 7,153 30.1 (16.9) sales, ii) India business to outpace the industry, and
EBITDA Margin (%) 13.9 16.3 21.1 19.5 16.5 260bps (300)bps iii) EBITDA margin to improve YoY with strong
PAT 2,660 1,372 3,173 3,031 2,365 (11.1) (22.0) domestic growth and effective cost control
measures.
EPS (Rs) 5.9 3.0 7.0 6.7 5.2 88.9 (99.8)
Natco Pharma i) Muted export performance without any new
Revenue 5,435 5,567 4,557 4,923 5,457 0.4 10.8 meaningful launches and tepid growth in Copaxone,
EBITDA 2,205 2,084 1,483 1,913 2,019 (8.4) 5.5 ii) strong domestic performance (despite weak
EBITDA Margin (%) 40.6 37.4 32.5 38.9 37.0 (360)bps (190)bps HepC) with new products and traction in C&D
PAT 1,825 1,595 1,208 1,432 1,553 (14.9) 8.4 therapy segments, and iii) margins to remain stable
with consistent revenue mix.
EPS (Rs) 9.9 8.6 6.7 8.0 8.7 87.5 (99.4)
Shilpa Medicare i) Muted contribution from custom synthesis
Revenue 1,623 1,734 1,995 1,610 1,858 14.5 15.4 business, but steady growth in the API and
EBITDA 375 262 374 288 409 8.9 41.9 formulation business would support growth in mid-
EBITDA Margin (%) 23.1 15.1 18.7 17.9 22.0 (110)bps 410bps teens; ii) increasing revenue contribution from
PAT 218 185 242 157 275 26.3 74.8 formulations would improve EBITDA margin; and iii)
lower tax would result in moderate PAT
EPS (Rs) 2.7 2.3 3.0 2.0 3.4 126.3 (97.8) performance.

Strides Shasun i) Revenue decline due to exit from Australia

Revenue 7,326 7,878 8,397 6,858 6,997 (4.5) 2.0 business, but US revenues maintained as the
EBITDA 996 1,271 1,587 1,236 1,259 26.4 1.9 company was only marginally affected by the
EBITDA Margin (%) 13.6 16.1 18.9 18.0 18.0 440bps - Ranitidine impurity issue; ii) other regions to remain
PAT 21 210 395 345 448 2,034.5 30.0 steady; and iii) stable profitability with consistent
revenue mix.
EPS (Rs) 0.2 2.3 4.4 3.9 5.0 2,134.5 (98.5)
Sun Pharma i) Sequential decline in US revenues despite
Revenue 69,376 77,402 71,639 83,744 77,544 11.8 (7.4) traction in its specialty portfolio as no key products
EBITDA 15,312 18,588 10,168 19,956 16,090 5.1 (19.4) were launched; ii) growth in domestic business to
EBITDA Margin (%) 22.1 24.0 14.2 23.8 20.8 (130)bps (300)bps track the industry; and iii) EBITDA margin would be
PAT 9,956 9,938 6,359 13,875 9,701 (2.6) (30.1) affected due to front-ended costs of the specialty
portfolio.
EPS (Rs) 4.1 4.1 2.6 5.8 4.0 97.4 (100.0)
Thyrocare i) Low value and high volume approach to help
Revenue 1,039 963 1,056 1,109 1,196 15.2 7.9 double-digit volume growth in diagnostics; ii)
EBITDA 430 355 345 394 449 4.3 14.0 imaging business growth at existing centres; and iii)
EBITDA Margin (%) 41.4 36.9 32.7 35.5 37.5 (390)bps 200bps sequential improvement in margins with lower
PAT 253 202 163 227 268 5.9 17.8 losses from the imaging business.
EPS (Rs) 4.7 3.8 3.0 4.2 5.0 105.9 (97.8)
Torrent Pharma i) US sales to remain stable without new launches,
Revenue 18,940 19,880 18,560 20,220 20,046 5.8 (0.9)but steady pick-up in sartans; ii) steady
EBITDA 4,980 5,260 4,730 5,410 5,312 6.7 (1.8)performance across other international geographies
EBITDA Margin (%) 26.3 26.5 25.5 26.8 26.5 20bps (30)bps to aid export growth; iii) India business growth to be
PAT 2,008 2,156 1,158 2,160 2,029 1.1 (6.0)higher than the industry with improving performance
from Unichem portfolio; and iv) EBITDA margin to
EPS (Rs) 11.9 12.7 6.8 12.8 12.0 101.1 (99.4) remain stable and lower tax rate to result in PAT
growth.
Source: Company data, I-Sec research

7
8
(Rs) (Rs) (Rs) (Rs) (Rs)

200
400
600
800
1000
1200
1400
1000
1200

0
200
400
600
800
400
500
600
700
800
900
0
200
400
600
800

1,500
2,000
2,500
3,000
3,500
Oct-16
Oct-16 Oct-16 Oct-16
Apr-17 Oct-16

Aurobindo
Apr-17 Apr-17 Apr-17
Healthcare

Dr Reddy’s
Oct-17 Apr-17
Price charts

Apr-18 Oct-17 Oct-17 Oct-17 Oct-17

Oct-18 Apr-18 Apr-18 Apr-18 Apr-18
Alembic Pharma

Apr-19 Oct-18 Oct-18 Oct-18 Oct-18

Jubilant LifeScience
Oct-19 Apr-19 Apr-19 Apr-19 Apr-19
Oct-19 Oct-19 Oct-19 Oct-19

Strides Pharma Science

(Rs) (Rs) (Rs) (Rs) (Rs)

300
500
700
900
1,100
1,300
1,500
1,700

200
400
600
800
Lupin
200
400
600
800
1000
1200
1400
1600
1800
2000
2200
2400

Cadila
Alkem

0
100
200
300
400
500
Oct-16 Oct-16 Oct-16 600 Oct-16
Oct-16

Glenmark
Apr-17 Apr-17 Apr-17 Apr-17
Apr-17

Sun Pharma
Oct-17 Oct-17 Oct-17 Oct-17
Oct-17
Apr-18 Apr-18 Apr-18 Apr-18 Apr-18
Oct-18
Oct-18 Oct-18 Oct-18 Oct-18
Apr-19
Apr-19 Apr-19 Apr-19 Apr-19
Oct-19
Oct-19 Oct-19 Oct-19 Oct-19

(Rs) (Rs) (Rs) (Rs) (Rs)

HCG
Cipla

200
400
600
800
1000
1200
280
380
480
580
680
780

300
400
500
600
700
800
100
150
200
250
300
350
400
800
1000
1200
1400
1600

0
50
Oct-16 Oct-16 Oct-16 Oct-16 Oct-16
Apr-17 Apr-17 Apr-17 Apr-17 Apr-17
Oct-17 Oct-17 Oct-17 Oct-17 Oct-17

Natco Pharma
Apollo Hospital

Apr-18 Apr-18 Apr-18 Apr-18 Apr-18

Oct-18 Oct-18 Oct-18 Oct-18 Oct-18
Apr-19 Apr-19 Apr-19 Apr-19 Apr-19
Oct-19 Oct-19 Oct-19 Oct-19 Oct-19

Thyrocare Technologies

 
(Rs) (Rs) (Rs) (Rs) (Rs)

100
200
300
400
500
600
700
800
900
200
250
300
350
400
450
600
700
800
900
1000
1100
1200
1300
1400
1500
100
120
140
160
180
200

700
900
1100
1300
1500
1700
1900
2100
Oct-16 Oct-16 Oct-16 Oct-16 Feb-18
Apr-17 Apr-17 Apr-17 Apr-17 May-18
Oct-17 Oct-17 Oct-17 Aug-18
Oct-17
Nov-18
Dr Lal Pathlabs

Apr-18 Apr-18 Apr-18 Apr-18

Shilpa Medicare

Torrent Pharma 
Jan-19
Oct-18 Oct-18 Oct-18 Oct-18 Apr-19
Aster DM Healthcare

Apr-19 Apr-19 Apr-19 Apr-19 Jul-19

Oct-19 Oct-19 Oct-19 Oct-19 Oct-19
ICICI Securities

JB Chemicals & Pharma

 
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