Hikal Ltd (HIKAL)

CMP: | 147 Target: | 190 (29%) Target Period: 12 months BUY

August 2, 2019

Crop protection propels growth but margins miss…

Q1 revenues grew 23.8% YoY to | 403.2 crore (I-direct estimate: | 368.4
crore) on account of 15.2% YoY growth in pharma segment to | 203.9 crore
Particulars

Result Update
(I-direct estimate: | 212.4 crore) and 34.1% YoY growth in crop protection
segment to | 199.3 crore (I-direct estimate: | 156.1 crore). EBITDA margins Particular Amount
contracted 163 bps YoY to 17.0%, (I-direct estimate: 18.5%), fall in gross Market Cap | 1811 crore
margins (43.4% vs. 49.4% in Q1FY19) was partly offset by decline in other Debt (FY19) | 661 crore
Cash (FY19) | 32 crore
expenditure. EBITDA grew 13% YoY to | 68.5 crore (I-direct estimate: | 68.1
EV | 2440 crore
crore. Net profit grew 58.4% YoY to | 25.2 crore (I-direct estimate of | 18.5
52 week H/L (|) 207/135
crore). Delta vis-à-vis EBITDA was mainly due to lower interest cost and Equity capital | 24.7 crore
depreciation. Face value |2
Key Highlights
Expertise in APIs to drive pharma growth
 Q1FY20 results were higher than I-
Hikal ventured into the pharma API business by virtue of acquisition of direct estimates on revenues and net
Novartis’ Panoli plant in 2000. In a short span of time, banking on its profit front while EBITDA margins
chemistry skills, the company has been able to tap incremental customers were lower mainly due to lower-than-
via the CDMO route. Hikal also operates as a dedicated API supplier as it expected margins reported in crop
expands its portfolio. We expect the pharma segment to grow at a CAGR of protection segment
13.0% in FY19-21E to | 1199 crore on the back of new offerings and repeat
business from CDMO customers.  The company has been dealing with
high profile MNCs
Crop protection growth to piggyback on client relationship

ICICI Securities – Retail Equity Research

 With proven capabilities and
Hikal started operations as a crop protection company in 1991 after
management pedigree, we believe
acquiring Merck’s facility in Mahad. Since then, it has come a long way with
Hikal offers a compelling value
a predominantly CDMO focused business model catering mainly to global
proposition as it continues to expand
innovators. Over the years, the company has increased its product offerings
in both pharma and crop protection
with a foray into niche products and specialty chemicals. We expect crop
segments
protection segment to grow at 17.8% CAGR in FY19-21E to | 903 crore due
to sustained product offerings and optimum capacity utilisation.  This bodes well in the current
scenario when Chinese supply
Valuation & Outlook disturbances are likely to create
opportunities for Indian players
Key takeaways from Q1 numbers were strong growth in crop protection,
steady growth in pharma but lower blended level margins that are  Maintain BUY
attributable to a product mix and plant related expenses. The management
Research Analyst
still remains conservative on the revenue growth guidance front (10-15% in
FY20 maintained) as the focus is likely to be on high margin products Siddhant Khandekar
besides a close watch on capacities. With proven capabilities and siddhant.khandekar@icicisecurities.com
management pedigree, we believe Hikal offers a compelling value Mitesh Shah
proposition as it continues to expand in both pharma and crop protection mitesh.sha@icicisecurities.com
segments with separate focus and a calibrated approach. This bodes well in
the current scenario when Chinese supply disturbances are likely to create
opportunities for Indian players both in APIs and crop protection CDMO. We
arrive at a valuation of | 190 based on 14x FY21E EPS of | 13.6.

Key Financial Summary

(| Crore) FY18 FY19 FY20E FY21E CAGR (FY19-21E) %
Revenues 1296.1 1589.6 1827.6 2127.0 15.7
EBITDA 241.7 298.1 317.6 403.0 16.3
EBITDA Margins (%) 18.6 18.8 17.4 18.9
Adjusted PAT 77.2 103.1 125.0 167.2 27.3
EPS (|) 6.3 8.4 10.1 13.6
PE (x) 23.5 17.6 14.5 10.8
EV to EBITDA (x) 10.0 8.2 7.9 6.2
Price to book (x) 2.7 2.4 2.1 1.8
RoE (%) 11.5 13.6 14.5 16.5
RoCE (%) 12.2 14.3 14.8 17.2
 Result Update | Hikal Ltd ICICI Direct Research

Exhibit 1: Variance Analysis

| crore Q1FY20 Q1FY20E Q1FY19 Q4FY19 YoY (%) QoQ (%) Comments
YoY growth and beat vis-à-vis I-direct estimates mainly due to robust
Revenue 403.2 368.4 325.6 457.5 23.8 -11.9
growth in crop protection segment
Raw Material Expenses 228.3 188.0 164.7 260.3 38.6 -12.3
Gross Margins (%) 43.4 49.0 49.4 43.1 -602 bps 27 bps YoY decline mainly due to change in product mix
Employee Expenses 42.2 40.5 36.2 36.2 16.4 16.4
Other Expenditure 64.2 71.8 64.0 77.0 0.3 -16.6
Operating Profit (EBITDA) 68.5 68.1 60.6 84.0 13.0 -18.4
YoY decline and miss vis-à-vis I-direct estimates due to 1) change in
EBITDA (%) 17.0 18.5 18.6 18.4 -163 bps -136 bps product mix, 2) increase in insurance premium and 3) plant related
expanses
Interest 12.1 13.7 16.0 12.6 -24.7 -4.7
Depreciation 20.3 27.1 22.6 23.2 -10.0 -12.5
Other Income 0.7 0.0 1.4 0.1 -50.4 1,260.0
PBT 36.8 27.4 23.4 48.2 57.2 -23.5
Tax 11.6 8.9 7.5 14.8 54.7 -21.8
Tax Rate (%) 31.5 32.5 32.0 30.8 -1.6 2.3
Reported PAT 25.2 18.5 15.9 33.3 58.4 -24.3
Adjusted PAT 25.2 18.5 15.9 33.3 58.4 -24.3
Delta vis-à-vis EBITDA and beat on I-direct estimates mainly due to
EPS (|) 2.0 1.5 1.3 2.7 58.4 -24.3
lower interest cost and depreciation
Key Metrics
Pharma 203.9 212.4 177.0 259.2 15.2 -21.3 YoY growth mainly driven by volume gains
YoY growth and beat on I-direct estimates mainly due to strong volume
Crop Protection 199.3 156.1 148.6 198.4 34.1 0.5
growth
Source: ICICI Direct Research

Exhibit 2: Change in Estimates

FY20E FY21E Comments
(| Crore) Old New % Change Old New % Change
Revenue 1,822.0 1,827.6 0.3 2,124.4 2,127.0 0.1
EBITDA 344.1 317.6 -7.7 424.4 403.0 -5.0
EBITDA Margin (%) 18.9 17.4 -151 bps 20.0 18.9 -103 bps Changed as per management guidance
PAT 122.3 125.0 2.2 170.9 167.2 -2.2
EPS (|) 9.9 10.1 2.2 13.9 13.6 -2.2
Source: ICICI Direct Research

Exhibit 3: Change in Estimates

Current Earlier Comments
(| crore) FY18 FY19 FY20E FY21E FY20E FY21E
Pharma 752.8 939.1 1,042.2 1,198.6 1,088.9 1,252.2
Crop Protection 547.3 650.5 785.4 903.2 733.2 843.2 Changed mainly due to better-than-expected sales in Q1FY20
Source: ICICI Direct Research

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 Result Update | Hikal Ltd ICICI Direct Research

Exhibit 4: Trends in quarterly performance

(| Crore) Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 YoY (%) QoQ (%)
Total Operating Income 221.2 232.3 250.8 309.6 262.7 292.3 350.6 390.5 325.6 394.8 406.0 457.5 403.2 23.8 -11.9
Raw Material Expenses 106.9 111.5 123.2 167.5 130.3 155.3 195.6 217.8 164.7 205.8 223.0 260.3 228.3 38.6 -12.3
% of revenue 48.3 48.0 49.1 54.1 49.6 53.1 55.8 55.8 50.6 52.1 54.9 56.9 56.6
Gross Profit 114.3 120.8 127.7 142.1 132.4 136.9 155.1 172.7 160.9 189.0 183.0 197.3 174.9 8.7 -11.3
Gross Profit Margin (%) 51.7 52.0 50.9 45.9 50.4 46.9 44.2 44.2 49.4 47.9 45.1 43.1 43.4 -602 bps 27 bps
Employee Expenses 30.1 28.2 29.0 29.4 33.2 30.2 32.6 32.1 36.2 38.6 39.3 36.2 42.2 16.4 16.4
% of revenue 13.6 12.1 11.6 9.5 12.6 10.3 9.3 8.2 11.1 9.8 9.7 7.9 10.5
Other Expenses 40.7 45.4 50.4 54.5 49.6 53.0 55.6 69.1 64.0 75.2 71.0 77.0 64.2 0.3 -16.6
% of revenue 18.4 19.5 20.1 17.6 18.9 18.1 15.9 17.7 19.7 19.1 17.5 16.8 15.9
Total Expenditure 177.6 185.1 202.6 251.5 213.0 238.5 283.8 319.0 265.0 319.6 333.4 373.5 334.7 26.3 -10.4
% of revenue 80.3 79.7 80.8 81.2 81.1 81.6 80.9 81.7 81.4 81.0 82.1 81.6 83.0
EBITDA 43.6 47.2 48.3 58.1 49.7 53.8 66.9 71.5 60.6 75.2 72.6 84.0 68.5 13.0 -18.4
EBITDA Margins (%) 19.7 20.3 19.2 18.8 18.9 18.4 19.1 18.3 18.6 19.0 17.9 18.4 17.0 -163 bps -136 bps
Depreciation 17.8 17.2 17.1 17.1 21.3 21.5 21.5 21.4 22.6 23.6 23.5 23.2 20.3 -10.0 -12.5
Interest 13.2 11.3 13.7 10.0 11.7 13.1 11.9 12.5 16.0 16.4 13.4 12.6 12.1 -24.7 -4.7
Other Income 0.9 0.9 0.5 1.2 1.6 0.4 0.9 1.6 1.4 0.3 0.5 0.1 0.7 -50.4 1260.0
Forex & EO 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PBT 13.6 19.6 18.0 32.1 18.3 19.7 34.4 39.2 23.4 35.5 36.3 48.2 36.8 57.2 -23.5
Total Tax 2.0 3.3 4.1 3.2 5.0 4.3 11.1 13.9 7.5 11.1 12.6 14.8 11.6 54.7 -21.8
Tax rate (%) 14.8 16.6 23.0 9.9 27.2 22.0 32.4 35.3 32.0 31.3 34.7 30.8 31.5 -50.4 70.5
PAT 11.5 16.3 13.8 28.9 13.3 15.3 23.2 25.3 15.9 24.4 23.7 33.3 25.2 58.4 -24.3
EPS (|) 0.9 1.3 1.1 2.3 1.1 1.2 1.9 2.1 1.3 2.0 1.9 2.7 2.0 58.4 -24.3
Source: ICICI Direct Research

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 Result Update | Hikal Ltd ICICI Direct Research

Company background
Established in 1988, Hikal is predominantly a B2B player that provides
intermediates and active ingredients to global pharmaceutical, animal
health, crop protection and specialty chemical companies. For 9MFY19, Hikal is predominantly a B2B player that provides
pharma and crop protection accounted for 60% and 40%, respectively, of intermediates and active ingredients to global
operating revenues. The pharma business is currently divided almost pharmaceuticals, animal health, crop protection and
equally between generic active pharma ingredients (APIs) and contract specialty chemicals companies
development and manufacturing organisation (CDMO) businesses. Animal
health business accounts for 20-25% of CDMO business. In crop protection,
70% of revenues are derived from CDMO with the remaining from
proprietary products, specialty chemicals and specialty biocides. Hikal owns
five manufacturing facilities: Taloja, Mahad (Maharashtra), Panoli (Gujarat)
Jigani (Karnataka) and an R&D centre at Pune.
Exhibit 5: Flow chart (gross revenues of FY19)

Hikal (| 1590 crore)

Pharma (API) (| 939 Crop Protection (| 651

crore; ~60%) crore; ~40%)

Proprietary, Agro Chem

Generic (| 469 crore; CDMO (| 469 crore; CDMO (| 427 crore;
and Biocide (| 183
~30%) ~30%) ~28%)
crore; ~12%)
Source: ICICI Direct Research, Company

Exhibit 6: Time Line

Year Milestone
1988 Hikal incorporated
1991 First manufacturing at Mahad, begins operations - signs long term agreement with Hoechst India
1995 Signs long term manufacturing and supply agreement with Merck, US for large volume Agrovet active ingredient
1997 Manufacturing of active ingredient for Merck begins at Taloja site
2000 Acquires manufacturing site from Novartis in Panoli, Gujarat
2001 Acquires R&D and manufacturing site in Bangalore. Maiden entry in pharmaceutical business
2002 First pharmaceutical API DMF filed in US
2003 New API plant commissioned at Bangalore. Multi-purpose pharmaceutical intermediate plant commissioned at Panoli
2005 Signs long term supply agreement with a multinational crop protection company
2006 Signs long term supply contract with global innovator company for commercial supply of APls
2007 Signs long term contract API manufacturing supply agreement with leading animal health company
2008 IFC (World Bank) invests 8.27% equity into company
2009 Acoris (R&D centre), Pune becomes operational
2009 Signs long term supply contract for on patent molecule with global crop protection innovator company
2013 Signs long term supply agreement for human health products with global biopharmaceutical company
2014 Pharmaceutical sites Panoli & Bangalore receive EUGMP approval
2015 New development & launch plant in Bangalore commissioned for new products from pharmaceutical division
2017 Commissions new state-of-the-art plant at Mahad for leading global crop protection innovator company

Source: ICICI Direct Research, Company

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 Result Update | Hikal Ltd ICICI Direct Research

Exhibit 7: Revenues to grow at CAGR of 16% over FY19-21E Exhibit 8: Pharma to grow at CAGR of 13% over FY19-21E
2500 1400
CAGR 15.7% 2127.0 CAGR 13.0% 1198.6
CAGR 19.8% 1200 CAGR 18.2% 1042.2
2000 1827.6
1589.6 939.1
1000
1500 1296.1 752.8
800
1013.9 569.1 610.7
925.7 600
1000
400
500
200
0 0
FY16 FY17 FY18 FY19 FY20E FY21E FY16 FY17 FY18 FY19 FY20E FY21E
Revenues (| crore) Pharma (| crore)
Source: ICICI Direct Research, Company Source: ICICI Direct Research, Company

Exhibit 9: Crop to grow at CAGR of 18% over FY19-21E Exhibit 10: EBITDA & margins
1000 903.2 450 403.0 20.0
CAGR 17.8%
785.4 400 19.5 19.5
CAGR 22.2% 317.6
800 350 19.2 298.1
650.5 18.9 19.0
300 18.8
547.3 241.718.6 18.5
600 250 194.3
423.3 180.8 18.0
200
356.5 17.5
400 150 17.4
100 17.0
200 50 16.5
0 16.0
0 FY16 FY17 FY18 FY19 FY20E FY21E
FY16 FY17 FY18 FY19 FY20E FY21E
EBITDA (| crore) EBITDA Margins (%)
Crop Protection (| crore)
Source: ICICI Direct Research, Company Source: ICICI Direct Research, Company

Exhibit 11: PAT & margins Exhibit 12: RoE & RoCE trend
180 9.0 167.2 20
160 7.9 8.0 18
17.2
140 125.06.8 7.0 16 14.5 16.5
6.7 6.5 14 14.3 14.8
120 6.0 103.1 6.0 11.2 13.6
12 12.2
100 5.0 10.7 10.6 11.5
4.5 67.7 77.2 10
80 4.0 8 7.3
60 41.2 3.0 6
40 2.0 4
20 1.0 2
0 0.0 0
FY16 FY17 FY18 FY19 FY20E FY21E FY16 FY17 FY18 FY19 FY20E FY21E

Net Profit (| crore) NPM (%) RoCE (%) RoE (%)

Source: ICICI Direct Research, Company Source: ICICI Direct Research, Company

ICICI Securities | Retail Research 5

 Result Update | Hikal Ltd ICICI Direct Research

Exhibit 13: Recommendation history vs. Consensus

250 120.0

200 100.0
80.0
150
(|)

60.0

(%)
100
40.0
50 20.0
0 0.0
Jul-16 Oct-16 Dec-16 Mar-17 May-17 Jul-17 Oct-17 Dec-17 Mar-18 May-18 Jul-18 Oct-18 Dec-18 Mar-19 May-19 Aug-19
Price Idirect target Consensus Target Mean % Consensus with BUY
Source: ICICI Direct Research; Reuters

Exhibit 14: Top 10 Shareholders

RankInves tor Name Filing Date % O/S Pos ition Change
1 Kalyani Group 31-Mar 0.3 41.9m 0.0m
2 Shri Badrinath Investment Pvt. Ltd. 31-Mar 0.2 19.9m 0.0m
3 Shri Rameshwara Investment Pvt. Ltd. 31-Mar 0.1 9.8m 0.0m
4 Hiremath (Sugandha) 31-Mar 0.1 9.7m 0.0m
5 Government Pension Fund 31-Mar 0.0 2.2m 0.3m
6 Kacholia (Ashish) 31-Mar 0.0 2.1m 0.1m
7 Agarwal (Madhulika) 31-Mar 0.0 2.0m 0.1m
8 Norges Bank Investment Management (NBIM) 31-Dec 0.0 1.9m 0.0m
9 Canara Robeco Asset Management Company Ltd. 31-Mar 0.0 1.7m 0.2m
10 Hiremath (Jai) 31-Mar 0.0 1.3m 0.0m
Source: ICICI Direct Research, Reuters

Exhibit 15: Recent Activity

Buy s Sells
Inv es tor name Value ($) Shares Inv es tor name Value ($) Shares
Government Pension Fund 0.6m 0.3m IDFC Asset Management Company Private Limited -1.3m -0.5m
Agarwal (Madhulika) 0.2m 0.1m Norges Bank Investment Management (NBIM) 0.0m 0.0m
Kacholia (Ashish) 0.1m 0.1m
Source: ICICI Direct Research, Reuters

Exhibit 16: Shareholding pattern

(in %) Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
Promoter 68.8 68.8 68.8 68.8 68.8
Others 31.2 31.2 31.2 31.2 31.2
Source: ICICI Direct Research, Company

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 Result Update | Hikal Ltd ICICI Direct Research

Financial Highlights

Exhibit 17: Profit & Loss (| crore) Exhibit 18: Cash Flow Statement (| crore)
(Year-end March) FY18 FY19 FY20E FY21E (Year-end March) FY18 FY19 FY20E FY21E
Revenues 1, 296. 1 1, 589. 6 1, 827. 6 2, 127. 0 Profit/(Loss) after taxation 85.6 116.5 125.0 167.2
Growth (%) 27.8 22.6 15.0 16.4 Add: Depreciation & Amortization 85.6 92.9 82.3 102.0
Raw Material Expenses 699.0 853.8 1,032.8 1,160.3 Add: Interest Cost 46.1 56.5 52.8 54.4
Employee Expenses 128.1 150.4 174.7 212.7 Net Increase in Current Assets -140.6 -121.2 -115.3 -143.7
Other Manufacturing Expenses 227.3 287.3 302.5 351.0 Net Increase in Current Liabilities 53.5 31.6 32.0 38.9
Total Operating Expenditure 1, 054. 4 1, 291. 5 1, 510. 0 1, 724. 0 Others 8.7 9.45 0 0
EBITDA 241. 7 298. 1 317. 6 403. 0 CF from operating activities 138. 8 185. 6 176. 7 218. 7
Growth (%) 24.4 23.3 6.5 26.9 (Inc)/dec in Fixed Assets -106.0 -128.1 -160.0 -160.0
Interest 49.1 58.4 52.8 54.4 (Inc)/dec in Investments 0.0 0.0 0.0 0.0
Depreciation 85.6 92.9 82.3 102.0 Others 17.2 2.5 -0.3 -0.1
Other Income 4.5 2.3 2.1 1.1 CF from inves ting activities -88. 7 -125. 6 -160. 3 -160. 1
PBT before Exceptional Items 111. 5 149. 1 184. 6 247. 6 Inc / (Dec) in Equity Capital 0.0 0.0 0.0 0.0
Less: Forex & Exceptional Items 0.0 0.0 0.0 0.0 Inc / (Dec) in sec. Loan 37.7 19.3 50.0 0.0
PBT 111. 5 149. 1 184. 6 247. 6 Dividend & Dividend Tax -12.9 -16.4 -17.8 -17.8
Total Tax 34.3 46.0 59.6 80.5 Others -49.7 -58.4 -52.8 -54.4
PAT before MI 77.2 103.1 125.0 167.2 CF from financing activities -24. 8 -55. 4 -20. 6 -72. 2
Minority Interest 0.0 0.0 0.0 0.0 Net Cash flow 25.3 4.5 -4.2 -13.6
PAT 77. 2 103. 1 125. 0 167. 2 Opening Cash 1.9 27.2 31.7 27.5
Adjus ted PAT 77. 2 103. 1 125. 0 167. 2 Clos ing Cas h 27. 2 31. 7 27. 5 13. 9
Growth (%) 14.0 33.5 21.2 33.8 Free Cas h Flow 32. 8 57. 5 16. 7 58. 7
EPS 6.3 8.4 10.1 13.6 Source: ICICI Direct Research
Source: ICICI Direct Research

Exhibit 19: Balance Sheet (| crore) Exhibit 20: Key Ratios (| crore)
(Year-end March) FY18 FY19 FY20E FY21E (Year-end March) FY18 FY19 FY20E FY21E
Equity Capital 16.4 24.7 24.7 24.7 Per s hare data (|)
Reserve and Surplus 653.0 731.6 838.7 988.1 EPS 6.3 8.4 10.1 13.6
Total Shareholders funds 669.4 756.2 863.4 1,012.7 Cash EPS 5.0 6.9 8.7 12.1
Total Debt 635.1 660.9 710.9 710.9 BV 54.3 61.3 70.0 82.1
Others Liabilities 15.7 28.9 31.8 34.9 DPS 1.3 1.4 1.4 1.4
Source of Funds 1, 320. 1 1, 446. 0 1, 606. 1 1, 758. 6 Cash Per Share 12.5 20.1 26.7 35.0
Gross Block - Fixed Assets 788.3 960.3 1,040.3 1,200.3 Operating Ratios (%)
Accumulated Depreciation 154.7 247.3 329.6 431.6 Gross Margins 46.1 46.3 43.5 45.4
Net Block 633.6 713.0 710.7 768.7 EBITDA margins 18.6 18.8 17.4 18.9
Capital WIP 117.9 78.7 158.7 158.7 Net Profit margins 6.0 6.5 6.8 7.9
Net Fixed Assets 751.5 791.6 869.4 927.4 Inventory days 85.3 83.6 83.6 83.6
Investments 2.6 1.0 1.0 1.0 Debtor days 80.9 80.3 80.3 80.3
Inventory 303.1 364.2 418.8 487.4 Creditor days 50.0 37.0 37.0 37.0
Cash 27.2 31.7 27.5 13.9 Asset Turnover 1.6 1.7 1.8 1.8
Debtors 287.4 349.7 402.1 467.9 Return Ratios (%)
Loans & Advances & Other CA 0.0 0.0 0.0 0.0 RoE 11.5 13.6 14.5 16.5
Total Current Assets 690.0 830.0 941.2 1,071.3 RoCE 12.2 14.3 14.8 17.2
Creditors 177.6 161.0 185.2 215.5 RoIC 13.3 15.4 16.6 19.0
Provisions & Other CL 44.0 78.4 86.3 94.8 Valuation Ratios (x)
Total Current Liabilities 221.6 239.5 271.4 310.3 P/E 23.5 17.6 14.5 10.8
Net Current Assets 468.4 590.5 669.7 761.0 EV / EBITDA 10.0 8.2 7.9 6.2
LT L& A, Other Assets 97.2 62.8 65.9 69.2 EV / Revenues 1.9 1.5 1.4 1.2
Deferred Tax Assets (Net) 0.5 0.0 0.0 0.0 Market Cap / Revenues 1.4 1.1 1.0 0.9
Application of Funds 1, 320. 1 1, 446. 0 1, 606. 1 1, 758. 6 Price to Book Value 2.7 2.4 2.1 1.8
Source: ICICI Direct Research Source: ICICI Direct Research

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Exhibit 21: ICICI direct Coverage Universe (Healthcare)

Company I-Direct CMP TP Rating M Cap EPS (|) PE(x) RoCE (%) RoE (%)
Code (|) (|) (| cr) FY18 FY19 FY20E FY21E FY18 FY19 FY20E FY21E FY18 FY19 FY20E FY21E FY18 FY19FY20EFY21E
Ajanta Pharma AJAPHA 924 1,010 Hold 8377 53.0 43.5 47.5 60.2 17.4 21.2 19.4 15.4 30.0 21.8 20.8 22.4 23.0 17.1 16.4 18.0
Alembic Pharma
ALEMPHA 525 560 Hold 9671 21.9 31.4 29.9 24.7 24.0 16.7 17.6 21.3 18.0 19.6 17.5 15.8 18.6 21.7 17.1 14.2
Apollo Hospitals APOHOS 1387 1,450 Buy 17968 8.5 17.7 35.3 48.1 164.0 78.4 39.3 28.8 6.3 8.8 12.1 15.7 3.6 7.4 13.2 15.7
Aurobindo Pharma
AURPHA 581 715 Buy 31918 41.6 42.1 48.6 54.3 14.0 13.8 11.9 10.7 20.0 15.9 14.6 15.3 20.7 17.7 17.1 16.5
Biocon BIOCON 258 330 Buy 26160 3.1 6.2 8.2 9.1 83.2 41.6 31.6 28.4 8.1 10.9 13.4 16.1 7.2 12.2 13.4 15.2
Cadila HealthcareCADHEA 246 272 Hold 22983 17.5 18.1 16.3 18.7 14.0 13.6 15.1 13.2 16.7 13.0 11.4 12.3 20.5 17.8 14.2 14.5
Cipla CIPLA 552 580 Hold 41557 18.3 18.8 24.0 29.1 30.1 29.4 23.0 19.0 9.6 10.9 13.7 14.5 10.4 10.1 12.0 12.5
Divi's Lab DIVLAB 1635 1,760 Hold 41989 33.3 51.0 56.2 67.8 49.1 32.1 29.1 24.1 20.0 25.5 23.0 24.4 14.9 19.4 17.8 18.8
Dr Reddy's LabsDRREDD 2656 2,770 Hold 41681 57.0 114.8 163.4 157.7 46.6 23.1 16.2 16.8 6.1 11.1 16.1 15.6 7.2 13.6 16.6 14.2
Glenmark PharmaGLEPHA 455 565 Hold 11933 28.5 26.9 34.2 40.3 15.9 16.9 13.3 11.3 14.6 14.5 15.3 16.1 15.6 13.5 14.8 15.0
Hikal HIKCHE 164 190 Buy 2022 6.3 8.4 10.1 13.6 26.2 19.6 16.2 12.1 12.2 14.3 14.8 17.2 11.5 13.6 14.5 16.5
Ipca Laboratories IPCLAB 958 1,130 Buy 12271 19.0 35.1 45.6 56.4 50.5 27.3 21.0 17.0 9.1 15.4 21.3 20.5 8.9 14.2 18.2 17.1
Jubilant Life JUBLIF 469 710 Buy 6902 41.3 52.1 54.1 64.9 11.4 9.0 8.7 7.2 14.9 14.4 15.9 17.1 15.7 16.9 15.8 16.5
Lupin LUPIN 774 810 Hold 34255 20.8 16.5 30.6 40.4 37.3 46.8 25.3 19.1 10.4 9.4 12.1 13.9 6.9 5.4 9.3 11.1
Narayana Hrudalaya
NARHRU 222 250 Buy 4536 2.5 2.3 6.2 9.0 88.7 97.9 35.6 24.6 6.3 7.6 11.9 14.7 4.9 4.3 10.5 13.3
Natco Pharma NATPHA 520 595 Hold 9265 37.7 34.9 37.1 26.7 13.8 14.9 14.0 19.5 27.4 21.3 19.8 13.4 22.7 18.5 16.5 10.9
Sun Pharma SUNPHA 429 460 Hold 100890 13.0 15.9 17.9 23.4 33.1 27.1 24.0 18.3 9.8 10.4 10.5 12.8 8.2 9.2 8.4 11.2
Syngene Int. SYNINT 319 358 Hold 12000 7.6 8.3 9.9 10.3 40.6 37.4 31.3 30.0 15.1 14.8 14.5 13.8 17.7 16.8 16.8 15.0
Torrent Pharma TORPHA 1598 1,940 Buy 28243 40.1 48.9 57.9 77.6 39.9 32.7 27.6 20.6 11.2 14.2 16.0 19.8 14.7 17.5 17.1 20.1
Source: ICICI Direct Research, Bloomberg

ICICI Securities | Retail Research 8

 Result Update | Hikal Ltd ICICI Direct Research

RATING RATIONALE
ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorises them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as
the analysts' valuation for a stock

Buy: >15%;
Hold: -5% to 15%;
Reduce: -5% to -15%;
Sell: <-15%

Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICI Direct Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

ICICI Securities | Retail Research 9

 Result Update | Hikal Ltd ICICI Direct Research

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ICICI Securities | Retail Research 10