HSBC On India Pharma & Hospitals 4QFY24 Preview We Expect A Healthy

Downloaded from Capital IQ by Karthik Rajagopal (karthik.rajagopal@spglobal.com) at S&P Global Market Intelligence Inc.
on Saturday Apr 20 2024 03:19:14 AM,

Sessionid:ory4mnpfgwcbzlct2nni00aq
18 April 2024
Equities
India Pharma & Hospitals Pharma and Healthcare
4QFY24 preview: We expect a healthy quarter India
◆ Pharma: good 4Q for most of the names we cover with Damayanti Kerai*
Analyst, India Healthcare
healthy sales in the US offsetting slow India sales growth HSBC Securities and Capital Markets (India) Private
Limited
◆ Hospitals: we expect healthy quarter for Apollo and Max damayantikerai@hsbc.co.in
+91 22 6164 0692
Health; 4Q is usually a low quarter for Rainbow Children’s
Gaurang Sakare*
◆ We prefer Aurobindo, Torrent, Cipla, Apollo and Rainbow – Associate, Healthcare Research
HSBC Securities and Capital Markets (India) Private
all rated Buy; we update estimates and target prices Limited
gaurang.sakare@hsbc.co.in
+91 94 2257 7832
We expect a decent quarter for most of the pharma names we cover, with key US Shubhangi Gupta*, Ph.D.
launches (e.g., gRevlimid) and stable US generic pricing offsetting adverse seasonality in Analyst, Life Sciences & Healthcare Research
HSBC Securities and Capital Markets (India) Private
India (domestic) sales. We forecast mid-single-to-low-double-digit y-o-y sales growth for Limited
the India segment for most of the covered names in 4Q (vs market growth of 9.4% y-o-y). shubhangi.gupta@hsbc.co.in
+91 80 4555 2143
In the US, gRevlimid remains the major sales contributor for Dr Reddy’s, Aurobindo,
Zydus, Sun Pharma, and Cipla, driving notable q-o-q sales delta for Sun and Zydus.
* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is
Overall, we estimate y-o-y increases of 12.5% in revenue, 25.4% in EBITDA, and 38.4% not registered/ qualified pursuant to FINRA regulations
in PAT for our pharma coverage. Depending on gRevlimid sales, Dr Reddy’s, Aurobindo,
Sun, and Zydus could positively surprise in 4Q.
We expect a good quarter for Apollo and Max Health, with a sequential pick-up in
occupancy and ARPOB (average revenue per operating bed), though there could be
some impact on patient footfalls due to four extended weekends during 4Q. For Apollo,
we expect y-o-y growth of 18.5% in revenue, 33.1% in EBITDA and 88.2% in PAT, led
by the core hospital segment and operating leverage benefits in the Pharmacy segment
(incl. 24/7 digital health). For Max Health, we expect 30% revenue, 32.6% EBITDA and
28.7% PAT growth y-o-y. For Rainbow, 4Q is a seasonally low period due to school
examinations, followed by summer breaks, and we assume EBITDA margin of 30.3%
(-481bp q-o-q) due to adverse seasonality and costs associated with new beds.
Ratings unchanged; target prices and estimates updated: In pharma, we like names
with clarity on near- to medium-term drivers and visible efforts towards long-term drivers
(incl. differentiated products). We prefer three Buy-rated pharma stocks: Aurobindo
(visibility on US generics business including recovery in generic injectables), Torrent
Pharma (strong business model), and Cipla (concerns largely priced in for its key awaited Institutional Investor Survey 2024
US launches). In hospitals, we prefer Apollo Hospitals (growth visibility in the core 2 – 26 April
hospital segment and 24/7 digital platform) and Rainbow Children’s Medicare (niche
Click to vote
paediatric story).
Key Buy rated names

Current _______ TP _______ Market cap 3m ADTV _________ FY24-26e CAGR __________
Company Ticker Currency price New Old Rating Upside (USDbn) (USDm) Revenue EBITDA Adj. PAT
Aurobindo Pharma ARBP IN INR 1,085.30 1,340 1,240 Buy 23.5% 7.6 36 6.1% 11.5% 15.4%
Torrent Pharma TRP IN INR 2,519.85 2,960 2,855 Buy 17.5% 10.2 8 14.8% 17.3% 27.9%
Cipla CIPLA IN INR 1,381.40 1,600 1,585 Buy 15.8% 13.4 28 10.4% 11.2% 9.1%
Apollo Hospitals APHS IN INR 6,303.15 7,475 7,100 Buy 18.6% 10.9 39 21.5% 34.4% 41.0%
Rainbow Children’s
Medicare RAINBOW IN INR 1,320.65 1,570 1,415 Buy 18.9% 1.6 4 25.4% 24.3% 29.4%
Source: HSBC Estimates, Refinitiv Datastream. Priced as of close at 15 April 2024
Disclosures & Disclaimer Issuer of report: HSBC Securities and Capital

Markets (India) Private Limited
This report must be read with the disclosures and the analyst certifications in
the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Research at:
https://www.research.hsbc.com
For the exclusive use of Karthik Rajagopal (karthik.rajagopal@spglobal.com) at S&P Global Market Intelligence Inc.
2
1: HSBC India Healthcare coverage summary

Mcap 3m-ADTV CMP* TP Old TP Up/Down-
Company BBG Ticker (USDbn) Rating (USDm) (INR) (INR) (INR) side _____ EPS (INR) _____ ________ PE (x) ______ ___ EV/EBITDA (x) ____ ROCE ___ FY24-FY26e CAGR _
Pharma FY24e FY25e FY26e FY24e FY25e FY26e FY24e FY25e FY26e FY26e Revenue EBITDA PAT
Alkem ALKEM IN 6.8 Hold 16 4,715.65 4,915 4,640 4.2% 159.0 177.8 204.1 29.6 26.5 23.1 24.3 20.9 18.1 18.0% 10.1% 14.4% 13.3%
Alembic ALPM IN 2.3 Hold 3 968.55 890 835 -8.1% 29.6 37.5 48.3 32.7 25.9 20.1 20.4 16.3 12.8 16.3% 11.5% 24.4% 27.6%
Aurobindo ARBP IN 7.6 Buy 36 1,085.30 1,340 1,240 23.5% 53.9 62.4 71.7 20.1 17.4 15.1 10.7 9.4 8.1 11.6% 6.1% 11.5% 15.4%
Biocon BIOS IN 3.8 Hold 24 265.25 265 255 -0.1% 1.5 8.8 17.6 n/m 30.2 15.1 16.6 12.5 8.9 6.9% 24.0% 34.7% 241.3%
Cipla CIPLA IN 13.4 Buy 28 1,381.40 1,600 1,585 15.8% 51.8 52.8 61.7 26.7 26.2 22.4 17.6 16.5 13.9 15.6% 10.4% 11.2% 9.1%
Divi's Lab DIVI IN 11.8 Reduce 23 3,716.55 3,065 2,940 -17.5% 58.0 85.4 106.8 64.0 43.5 34.8 44.8 32.0 25.4 17.5% 16.8% 32.3% 35.6%
Dr Reddy's DRRD IN 12.0 Hold 29 6,010.85 6,690 6,310 11.3% 328.2 331.6 338.1 18.3 18.1 17.8 11.3 10.2 9.3 14.9% 6.3% 3.0% 1.5%
Glenmark GNP IN 3.5 Buy 14 1,044.00 1,220 1,100 16.9% 16.4 52.7 72.7 63.8 19.8 14.4 21.0 11.7 8.7 15.8% 14.6% 52.1% 110.7%
Ipca Lab IPCA IN 4.0 Buy 8 1,327.65 1,505 1,335 13.4% 23.7 40.7 57.9 56.1 32.6 22.9 26.7 20.0 14.8 14.1% 15.8% 33.5% 56.4%
Lupin LPC IN 8.8 Hold 23 1,609.10 1,630 1,465 1.3% 41.6 47.3 60.7 38.7 34.0 26.5 21.1 18.4 14.5 14.3% 12.7% 18.3% 20.8%
Sun Pharma SUNP IN 44.2 Buy 50 1,540.05 1,790 1,790 16.2% 40.1 47.8 56.0 38.4 32.2 27.5 27.5 23.6 20.2 16.8% 10.7% 14.4% 18.1%
Torrent Pharma TRP IN 10.2 Buy 8 2,519.85 2,960 2,855 17.5% 48.6 62.0 77.6 51.9 40.7 32.5 26.2 21.9 18.5 21.5% 14.8% 17.3% 27.9%
Zydus Lifescience ZYDUSLIF IN 11.3 Hold 14 935.15 890 750 -4.8% 35.2 35.9 38.5 26.6 26.0 24.3 17.4 15.8 14.3 15.0% 9.6% 8.2% 4.7%
Average 41.2 30.1 25.0 23.6 19.7 16.5 16.0%
Mcap 3m-ADTV CMP* TP Old TP Up/Down-
Company (USDbn) Rating (USDm) (INR) (INR) (INR) side __ EBITDA margins __ ___ EV/EBITDA (x) ____ _ FY24-FY26e CAGR __
Hospitals FY24e FY25e FY26e FY24e FY25e FY26e FY26e Revenue EBITDA PAT
Apollo Hospitals APHS IN 10.9 Buy 39 6,303.15 7,475 7,100 18.6% 12.5% 14.2% 15.3% 39.1 28.0 21.4 21.1% 21.5% 34.4% 41.0%
Max^ Healthcare MAXHEALT IN 9.7 Hold 34 833.35 790 725 -5.2% 28.3% 28.5% 28.2% 40.2 31.0 25.3 18.2% 26.1% 25.9% 23.4%
Medicare RAINBOW IN 1.6 Buy 4 1,320.65 1,570 1,415 18.9% 32.8% 32.1% 32.2% 32.4 25.4 20.8 16.5% 25.4% 24.3% 29.4%
Average 39.6 29.1 23.1 19.5%
Source: HSBC estimates, Refinitiv Datastream (*based on closing price of 15 April 2024; ^ based on pro forma financials including partnered healthcare facilities)
Equities ● Pharma and Healthcare

18 April 2024
Downloaded from Capital IQ by Karthik Rajagopal (karthik.rajagopal@spglobal.com) at S&P Global Market Intelligence Inc. on Saturday Apr 20 2024 03:19:14 AM,
18 April 2024
4QFY24e preview
Our expectations for 4QFY24 (quarter ending 31 March 2024)

Pharma coverage: We expect a decent quarter for most of the pharma names we cover, with
key US launches (e.g., gRevlimid) and stable US generic pricing offsetting adverse seasonality
in the India (domestic) sales. Materials costs largely remained stable in our view though there
could some incremental freight costs due to adverse geopolitical developments (e.g. the Red
Sea situation). We forecast mid-single-to-low-double-digit y-o-y sales growth for the India
segment for most of the covered names in 4Q (vs market growth of 9.4% y-o-y). In the US
segment, gRevlimid should remain a major sales driver for Dr Reddy’s, Aurobindo, Zydus, Sun
Pharma, and Cipla, with notable q-o-q sales delta for Sun and Zydus. Overall, we estimate y-o-y
increases of 12.5% in revenue, 25.4% in EBITDA, and 38.4% in PAT for our pharma coverage.
Hospitals coverage: 4Q is a usually a stronger quarter for hospitals with a sequential pick-up in
occupancy and ARPOB (average revenue per operating bed). However, 4QFY24e could see
impact on patient footfalls due to four extended weekends during the quarter.
We expect a good quarter for Apollo and Max Health. For Apollo, we expect yoy growth of
18.5% in revenue, 33.1% in EBITDA and 88.2% in PAT, driven by the core hospital segment
and operating leverage benefits in the Pharmacy segment (incl. 24/7 digital health). For Max
Health, we expect 30% revenue, 32.6% EBITDA and 28.7% PAT growth y-o-y. For Rainbow,
4Q is a seasonally low period due to school examinations, followed by summer vacations, thus
lower footfalls. We assume EBITDA margin of 30.3% (-481bp q-o-q) due to adverse seasonality
and costs associated with new beds for Rainbow.
2: HSBC India healthcare coverage – 4QFY24e expectations summary

INRm 4QFY24e 4QFY23 3QFY24 % y-o-y % q-o-q
Pharma coverage
Net revenues 628,331 558,515 609,537 12.5% 3.1%
EBITDA 146,110 116,512 139,160 25.4% 5.0%
EBITDA margin 23.3% 20.9% 22.8%
Adj. net profit 89,680 64,789 84,621 38.4% 6.0%
Hospitals coverage
Net revenues 74,539 61,702 68,756 20.8% 8.4%
EBITDA 13,313 10,222 12,028 30.2% 10.7%
EBITDA Margin 17.9% 16.6% 17.5%
Adj. net profit 7,351 5,171 6,454 42.2% 13.9%
Source: HSBC estimates, Company data
We present our expectations for stocks under coverage in Exhibits 3-5 below.
3
4
3: HSBC India pharma coverage 4QFY24e expectations (1/2)

Company INRm unless stated 4QFY24e 4QFY23 3QFY24 % y-o-y % q-o-q Remarks
Alkem Lab Net revenues 31,825 29,026 33,239 9.6% -4.3% We expect the India segment’s sales (c69% of its total sales) to grow 7.3% y-o-y amid usual seasonal
EBITDA 4,023 3,533 7,076 13.9% -43.1% weakness seen during 4Q. We assume US sales of USD79m (c21% of total sales) in 4QFY24, growth of
EBITDA margins 12.6% 12.2% 21.3% 10% y-o-y but decline of 4% q-o-q.
Adj. PAT 2,905 1,740 6,463 67.0% -55.1%
India (domestic) sales 21,572 20,113 22,328 7.3% -3.4%
US sales (USDm) 79 71 82 10.4% -4.1%
Alembic Pharma Net revenues 16,370 14,065 16,306 16.4% 0.4% For the India segment (c33% of revenues), we assume sales growth of 10.6% y-o-y.
EBITDA 2,589 2,233 2,664 15.9% -2.8% We assume US sales to remain range-bound on lack of significant launches (most of its recent launches
EBITDA margins 15.8% 15.9% 16.3% are competitive).
Adj. PAT 1,457 1,624 1,805 -10.3% -19.3%
US sales (USDm) 56 43 57 29.0% -2.3%
Aurobindo Pharma Net revenues 72,843 64,730 73,518 12.5% -0.9% For the US segment (c50% of its total sales), we assume total sales of USD435m (up 17.4% y-o-y but
EBITDA 15,613 10,022 16,013 55.8% -2.5% decline of 4.6% q-o-q due to temporary closure of injectables lines). Of total US sales of USD435m, we
EBITDA margins 21.4% 15.5% 21.8% assume gRevlimid sales contribution of cUSD40m (vs cUSD30m in 3Q) and generic injectables sales of
Adj. PAT 8,645 4,836 8,911 78.8% -3.0% USD68m (decline of 16.8% q-o-q due temporary closure of production lines for few weeks during 4Q ).
US sales (USDm) 435 370 456 17.4% -4.6% We expect its EBITDA margin to largely remain flat (-35bp q-o-q).
Biocon Net revenues 40,160 35,989 35,990 11.6% 11.6% We expect biosimilars sales of USD277m (c56% of total sales in 4Q), up 18.9% y-o-y and 8.1% q-o-q
EBITDA 9,126 8,223 5,721 11.0% 59.5% excluding licensing income. We build in 7.4% y-o-y growth for Research services (c26% of total sales)
EBITDA margins 22.7% 22.8% 15.9% and 2.1% y-o-y growth for Generics sales (c19% of total sales) in 4QFY24e.
Adj. PAT 3,459 551 -1,720 n/m n/m
Biosimilar sales (USDm) 277 233 256 18.9% 8.1%
Cipla Net revenues 63,239 57,393 66,038 10.2% -4.2% We expect its India segment’s sales (c40% of total revenue) to grow 11% y-o-y in 4Q.
EBITDA 13,178 11,737 17,475 12.3% -24.6% We expect gRevlimid sales of USD25-30m in 4Q, similar to 3Q. We expect its overall US sales to largely
EBITDA margins 20.8% 20.5% 26.5% remain steady in USD220-230m helped by gRevlimid, market share ramp-up for lanreotide 505b2 and
Adj. PAT 8,033 7,081 12,150 13.4% -33.9% stabilising market share for albuterol inhaler.
India (domestic) sales 25,066 22,590 28,590 11.0% -12.3% We assume EBITDA margin of 20.8% (down c560bp q-o-q, on usual impact of adverse seasonality in
US sales (USDm) 222 204 230 8.9% -3.4% both the major segments - the US and India).
Divi’s Lab Net revenues 21,996 19,508 18,550 12.8% 18.6% We build in revenue growth of 5.5% y-o-y for generics segment (c48% of revenues), 20.6% y-o-y for
EBITDA 6,324 4,876 4,890 29.7% 29.3% Custom synthesis (c44% of revenues) and 18.7% y-o-y of nutraceuticals (c9% of revenues) in 4Q.
EBITDA margins 28.8% 25.0% 26.4% Custom Synthesis growth should be driven by scale-up in supplies from two key contrast media projects.
Adj. PAT 4,787 3,210 3,580 49.2% 33.7% EBITDA margins in 4Q should gain from better mix (led by pick-up in supplies for contrast media) and
easing materials costs.
Dr Reddy’s Net revenues 71,466 60,328 72,148 18.5% -0.9% For the India segment (c15% of revenue), we assume muted trends to continue in 4QFY24e with sales
EBITDA 20,394 13,189 20,180 54.6% 1.1% growth of 4.2% y-o-y amid usual low seasonality seen during the quarter.
EBITDA margins 28.5% 21.9% 28.0% For the US segment (c47% of revenue), we assume total sales of USD406m of which gRevlimid should
Adj. PAT 12,654 8,122 13,866 55.8% -8.7% contribute sales of cUSD110m (vs USD100-105m in 3Q).

India (domestic) sales 10,624 10,194 11,800 4.2% -10.0% Excluding gRevlimid, we assume base US sales to remain stable in USD285-295m a quarter range. We
assume EBITDA margin of 28.5%, up 57bp q-o-q with higher gRevlimid sales largely offsetting lower
US sales (USDm) 406 312 401 30.0% 1.1% sales in India.
Source: HSBC estimates, Company data
18 April 2024
4: HSBC India pharma coverage 4QFY24e expectations (2/2)
Glenmark Pharma Net revenues 32,217 33,737 25,067 -4.5% 28.5% Focus during 4Q remains on receipt of proceeds from the Glenmark Lifescience deal and subsequent
EBITDA 4,954 6,050 -1,444 -18.1% -443.0% reduction in debt.
EBITDA margins 15.4% 17.9% -5.8% Operationally, we expect 4Q to be a recovery quarter for its India formulation business after restructuring
Adj. PAT 2,063 1,315 -3,715 56.9% -155.5% in the prior quarter. We assume India segment sales (c25% of total sales) growth of 10.7% y-o-y in 4Q.
India (domestic) sales 9,167 8,284 2,622 10.7% 249.6% Europe and RoW markets should continue to see healthy momentum while the US segment waits for
US sales (USDm) 97 104 92 -6.4% 6.0% recovery.
Ipca Lab Net revenues 19,690 15,116 20,529 30.3% -4.1% We expect India formulations sales (c45% of total sales) to grow 8.1% y-o-y in 4Q. In the exports
EBITDA 3,227 1,810 3,313 78.2% -2.6% segment, generic markets (18% of total sales) should sustain momentum driven by UK, Europe and
EBITDA margins 16.4% 12.0% 16.1% other key markets and we build in c29% y-o-y growth in 4Q.
Adj. PAT 1,803 765 1,119 135.7% 61.2%
Lupin Net revenues 50,156 44,301 51,974 13.2% -3.5% We expect its US segment sales of USD210m (c37% of its total sales) in 4QFY24e to grow 20.1% y-o-y
EBITDA 9,922 6,041 10,220 64.3% -2.9% (flat q-o-q) driven by traction in key launches (e.g. gSpiriva, gProlensa, albuterol inhaler), marginally
EBITDA margins 19.8% 13.6% 19.7% offset by higher competition in gSuprep. For its India business (c33% of total sales), we assume sales
Adj. PAT 5,455 2,622 5,971 108.0% -8.7% growth of 10.1% y-o-y.
India (domestic) sales 16,285 14,786 17,251 10.1% -5.6% We build in EBITDA margin of 19.8% for 4Q (steady q-o-q; +615bp y-o-y from a low base) led by key US
US sales (USDm) 210 175 212 20.1% -0.8% launches, stable US generic pricing and easing raw materials prices.
Sun Pharma Net revenues 125,116 109,307 123,807 14.5% 1.1% We expect the India segment’s sales (c30% of total revenue) to grow 8.4% y-o-y in 4Q. For the US
EBITDA 32,494 28,293 33,523 14.8% -3.1% segment, we expect sales of USD492m (c33% of total revenue), with USD40-42m of sales contribution
EBITDA margins 26.0% 25.9% 27.1% from gRevlimid (vs negligible contribution in 2Q and 3Q).
Adj. PAT 24,055 21,831 24,690 10.2% -2.6% We assume US specialty sales of USD230m in 4Q (vs USD248m in 3Q) and base generics sales (excl.
India (domestic) sales 36,460 33,641 37,785 8.4% -3.5% specialty, Taro and gRevlimid) sales to remain range-bound in USD120-130m level a quarter.
US sales (USDm) 492 430 477 14.5% 3.2% We expect EBITDA margin of 26%, down 111bp q-o-q with higher opex (including R&D) and change in
Taro Pharma 99 111 101 -10.3% -1.1% sales mix largely offsetting benefits from gRevlimid.
Generics (ex-Taro) 163 106 128 53.9% 27.0%
Specialty sales 230 213 248 7.9% -7.3%
Torrent Pharma Net revenues 28,697 24,910 27,320 15.2% 5.0% We expect the India segment’s sales (c53% of total revenue) to grow 19.1% y-o-y in 4Q, led by
EBITDA 9,012 7,370 8,690 22.3% 3.7% continued traction in key brands and the acquired Curatio portfolio. For Brazil (c14% of total revenue, the
EBITDA margins 31.4% 29.6% 31.8% second largest branded generic segment after India), 4Q is usually the strongest and we assume
Adj. PAT 4,547 2,970 3,920 53.1% 16.0% revenue growth of 21.6% y-o-y. We expect healthy momentum to continue for the Germany segment
India (domestic) sales 14,976 12,570 14,150 19.1% 5.8% (c10% of total revenue) while the US segment (c10% of total revenue) should see a gradual pick-up.
US sales (USDm) 34 34 33 -0.1% 2.9% We assume its EBITDA margin to remain largely steady at c31.5%.
Zydus Lifesciences Net revenues 54,555 50,106 45,052 8.9% 21.1% We expect the India segment’s sales (c26% of total revenue) to grow 5.8% y-o-y in 4Q. For the US
EBITDA 15,252 13,136 10,840 16.1% 40.7% segment (46% of total revenue), we expect sales of USD295m (+7% y-o-y; +34% q-o-q) in 4Q with
EBITDA margins 28.0% 26.2% 24.1% USD80m sales contribution from gRevlimid. Base US sales (excluding gRevlimid) should remain steady
Adj. PAT 9,818 8,122 7,582 20.9% 29.5% in USD215-225m level a quarter.

US sales (USDm) 295 275 221 7.3% 33.5%
Source: HSBC estimates
18 April 2024
5
6
5: HSBC India hospitals coverage 4QFY24e expectations

Apollo Hospitals Net revenues 50,973 43,022 48,506 18.5% 5.1% We assume 4QFY24e to be a seasonally strong quarter for the core hospitals business (though there
EBITDA 6,500 4,882 6,137 33.1% 5.9% could be impact of extended weekends due to holidays). We expect occupancy of 66-67% during 4Q
EBITDA margins 12.8% 11.3% 12.7% (vs 67% in 3QFY24).
Adj. PAT 2,720 1,445 2,453 88.2% 10.9% Other segments – HealthCo (pharmacy distribution and 24/7 online health platform) and AHLL (retail
Hospitals 25,627 21,946 24,636 16.8% 4.0% health including diagnostic) − should see a healthy quarter. We assume spend of INR1.8bn (INR1.6bn
HealthCo (pharmacy of operating costs and cINR0.2bn of ESOP charges) for the Apollo 24/7 platform, up c14% q-o-q. We
distribution+24/7) 21,782 17,992 20,493 21.1% 6.3% expect GMV of INR8.35bn (+26.6% q-o- q) for the 24/7 platform.
AHLL (retail health) 3,735 3,084 3,378 21.1% 10.6%
Total revenues 50,973 43,022 48,507 18.5% 5.1%
Max Healthcare^^ Net revenues 20,157 15,510 16,890 30.0% 19.3% 4Q is generally a strong quarter for Max with healthy occupancy and ARPOB trends. For 4QFY24, we
EBITDA 5,779 4,360 4,710 32.6% 22.7% incorporate recently acquired assets (Nagpur hospital for c1.5 months and Lucknow hospital for 23
EBITDA margins 28.7% 28.1% 27.9% days). We build in revenue of INR20.4bn (+30.2% y-o-y; +20.2% q-o-q) and EBITDA margin of 28.7%
Adj. PAT 4,107 3,190 3,380 28.7% 21.5% (+56bp y-o-y and +78bp q-o-q) on improving mix.
Rainbow Children’s Net revenues 3,408 3,170 3,360 7.5% 1.4% 4Q is a seasonally low quarter for Rainbow due to school examinations during Feb-March, followed by
Medicare summer vacations, hence lower patient footfalls. Occupancy during 4Q should also see impact of
EBITDA 1,034 980 1,181 5.5% -12.4% addition of 280 beds.
EBITDA margins 30.3% 30.9% 35.1% We expect Rainbow to see occupancy of 45% during 4QFY24 (vs 50.8% in 3QFY24) and ARPOB of
Adj. PAT 524 536 621 -2.2% -15.7% INR51.6k in 4Q (vs INR55.8k in 3QFY24).
We assume EBITDA margin of 30.3%, c481bp decline q-o-q due to adverse seasonality and costs
associated with new beds. On y-o-y basis, we assume margins to decline 58bp in 4QFY24e (unlike
previous year, Rainbow didn’t see incidence of viral fever cases in 4Q).
Source: HSBC estimates (^^data based on proforma financials which include partnered healthcare facilities (PHFs) ; our Financials & Valuation page for Max Health shows consolidated financials which exclude PHFs)

18 April 2024
18 April 2024
6: 4QFY24 earnings calendar

Name Ticker Earnings release date Confirmed/Tentative?
Syngene International Ltd SYNG IN April 24, 2024 Confirmed
Glenmark Life Sciences Ltd GLS IN April 26, 2024 Tentative
Laurus Labs Ltd LAURUS IN April 26, 2024 Tentative
GlaxoSmithKline Pharmaceutical GLXO IN May 1, 2024 Confirmed
Ajanta Pharma Ltd AJP IN May 3, 2024 Tentative
Alembic Pharmaceuticals Ltd ALPM IN May 3, 2024 Tentative
Dr Reddy's Laboratories Ltd DRRD IN May 7, 2024 Confirmed
Lupin Ltd LPC IN May 9, 2024 Tentative
Poly Medicure Ltd PLM IN May 9, 2024 Tentative
Cipla Ltd CIPLA IN May 10, 2024 Confirmed
Dr Lal PathLabs Ltd DLPL IN May 10, 2024 Tentative
Rainbow Children's Medicare Lt RAINBOW IN May 14, 2024 Tentative
Suven Pharmaceuticals Ltd SUVENPHA IN May 15, 2024 Tentative
Biocon Ltd BIOS IN May 16, 2024 Confirmed
Granules India Ltd GRAN IN May 16, 2024 Tentative
Max Healthcare Institute Ltd MAXHEALT IN May 16, 2024 Tentative
Metropolis Healthcare Ltd METROHL IN May 16, 2024 Tentative
Abbott India Ltd BOOT IN May 17, 2024 Tentative
Alkem Laboratories Ltd ALKEM IN May 17, 2024 Tentative
Eris Lifesciences Ltd ERIS IN May 17, 2024 Tentative
Glenmark Pharmaceuticals Ltd GNP IN May 17, 2024 Tentative
Jubilant Pharmova Ltd JUBLPHAR IN May 17, 2024 Tentative
Krishna Institute of Medical S KIMS IN May 17, 2024 Tentative
Narayana Hrudayalaya Ltd NARH IN May 17, 2024 Tentative
Zydus Lifesciences Ltd ZYDUSLIF IN May 17, 2024 Tentative
Concord Biotech Ltd CONCORDB IN May 20, 2024 Tentative
Divi's Laboratories Ltd DIVI IN May 20, 2024 Tentative
Gland Pharma Ltd GLAND IN May 22, 2024 Tentative
Sun Pharma Advanced Research SPADV IN May 22, 2024 Tentative
Fortis Healthcare Ltd FORH IN May 23, 2024 Tentative
Aster DM Healthcare Ltd ASTERDM IN May 24, 2024 Tentative
FDC Ltd/India FDCLT IN May 24, 2024 Tentative
JB Chemicals & Pharmaceuticals JBCP IN May 24, 2024 Tentative
Piramal Pharma Ltd PIRPHARM IN May 24, 2024 Tentative
Sun Pharmaceutical Industries SUNP IN May 24, 2024 Tentative
Aurobindo Pharma Ltd ARBP IN May 27, 2024 Tentative
Caplin Point Laboratories Ltd CLPL IN May 27, 2024 Tentative
Global Health Ltd/India MEDANTA IN May 27, 2024 Tentative
Ipca Laboratories Ltd IPCA IN May 29, 2024 Tentative
Natco Pharma Ltd NTCPH IN May 29, 2024 Tentative
Vijaya Diagnostic Centre Pvt L VIJAYA IN May 29, 2024 Tentative
Apollo Hospitals Enterprise Lt APHS IN May 30, 2024 Tentative
AstraZeneca Pharma India Ltd ASTR IN May 30, 2024 Tentative
Mankind Pharma Ltd MANKIND IN May 30, 2024 Tentative
Torrent Pharmaceuticals Ltd TRP IN May 30, 2024 Tentative
Source: Bloomberg, Company data, HSBC
Change in estimates
We make estimates changes for FY24-26e for most of the covered names, in line with the
current visibility on revenue growth across different business segments, gross margins,
operating costs as well as items below EBITDA (depreciation, interest costs, tax, non-operating
income etc.). Most companies see changes in estimates at less than or close to 5%; though, we
make notable changes for Biocon, Dr Reddy’s, Ipca, Lupin, Zydus Lifesciences, and Rainbow
Children’s Medicare Ltd., as explained below.
In this report, we roll forward the valuations for our covered names to March 2026e, from
December 2025e.
For Dr Reddy’s, we mainly increase our sales estimates for gRevlimid in the US based on our
analysis of export shipment data for the product. Higher gRevlimid sales should result in better
7
18 April 2024
margins and PAT. These changes lead to EPS increase of 8.3%, 6.9% and 5.2% for FY24e,
FY25e and FY26e, respectively.
For Biocon, we lower our FY24-26 estimates for biosimilars sales (c58% of 9MFY24 sales) in
view of very slow pick-up of adalimumab and litigation overhang for aflibercept launch in the US.
We also build in a more gradual pick-up in generic sales (c20% of 9M sales). We inch up our
assumptions for operating costs (including R&D, SG&A) in view of its efforts towards stepping
up presence in the global biosimilars market. These changes lead to EBITDA cut of 4.9%, 5.0%
and 2.9% for FY24e, FY25e and FY26e, respectively. At EPS level, our FY24 estimate is cut by
48.6% on negative operating leverage led by higher interest and depreciation costs. Our EPS
estimates for FY25e and FY26e see cuts of 14.6% and 9.5%, respectively.
For Ipca Lab, we build in higher sales assumption for Generic exports market on the back of
strong pick-up seen in the UK and other European markets. We also assume its key India
formulations business to sustain mid-teens growth. Higher revenue growth and better
absorption of operating costs lead to better operating leverage. These changes lead to EPS
increase of 6.0% and 8.7% for FY25e and FY26e, respectively.
For Lupin, we assume better gross margins for FY24e led by gSpiriva and other notable new
launches (e.g., gProlensa). Higher operating leverage leads to 7.1% increase in our EPS
estimate for FY24e.
For Zydus Lifesciences, we mainly build in better gross margins for FY24-26e to account for
gains from notables US launches (e.g., gRevlimid, injectables etc). This largely accounts for the
12%, 8.8% and 7.2% increase in EPS estimate for FY24e, FY25e and FY26e, respectively.
For Rainbow Children’s Medicare, we mainly build in a more gradual pick-up in operating
costs related to senior management hiring, addition of clinical and non-clinical staff at new units,
operating expense for new centres and better control on discretionary costs (e.g. marketing
cost). These changes lead to EPS increase of 3.8%, 7.8% and 7.5% for FY24e, FY25e and
FY26e, respectively.
8
18 April 2024
7: HSBC India Pharma coverage: Change in estimates (1/2)

INRm ___________ New estimates __________ ___________ Old estimates __________ _____________ Variance _____________
FY24e FY25e FY26e FY24e FY25e FY26e FY24e FY25e FY26e
Alembic Pharma
Revenues 63,480 70,894 78,930 63,480 70,894 78,930 0.0% 0.0% 0.0%
EBITDA 9,315 11,445 14,419 9,315 11,445 14,419 0.0% 0.0% 0.0%
EBITDA margin 14.7% 16.1% 18.3% 14.7% 16.1% 18.3%
Adj. PAT 5,826 7,364 9,489 5,826 7,364 9,489 0.0% 0.0% 0.0%
EPS (INR) 29.64 37.47 48.27 29.64 37.47 48.27 0.0% 0.0% 0.0%
EPS − HSBC vs Consensus -0.4% 2.2% 8.6%
Alkem Lab
Revenues 129,143 142,411 156,534 128,982 142,352 157,075 0.1% 0.0% -0.3%
EBITDA 22,458 25,769 29,388 21,909 25,643 29,191 2.5% 0.5% 0.7%
EBITDA margin 17.4% 18.1% 18.8% 17.0% 18.0% 18.6%
Adj. PAT 19,017 21,255 24,404 17,274 20,782 23,841 10.1% 2.3% 2.4%
EPS (INR) 159.05 177.77 204.11 144.47 173.81 199.40 10.1% 2.3% 2.4%
EPS − HSBC vs Consensus 2.3% -1.1% -1.5%
Aurobindo Pharma
Revenues 287,060 305,283 322,950 283,840 299,180 316,925 1.1% 2.0% 1.9%
EBITDA 57,172 63,739 71,028 55,380 60,291 67,415 3.2% 5.7% 5.4%
EBITDA margin 19.9% 20.9% 22.0% 19.5% 20.2% 21.3%
Adj. PAT 31,454 36,449 41,884 30,081 34,992 39,991 4.6% 4.2% 4.7%
EPS (INR) 53.86 62.42 71.72 51.51 59.92 68.48 4.6% 4.2% 4.7%
Biocon
Revenues 143,265 176,130 220,405 143,939 176,838 220,557 -0.5% -0.4% -0.1%
EBITDA 27,673 36,390 50,190 29,092 38,313 51,667 -4.9% -5.0% -2.9%
EBITDA margin 19.3% 20.7% 22.8% 20.2% 21.7% 23.4%
Adj. PAT 1,790 10,422 20,845 3,484 12,199 23,043 -48.6% -14.6% -9.5%
EPS (INR) 1.51 8.77 17.55 2.93 10.27 19.40 -48.6% -14.6% -9.5%
Cipla
Revenues 259,348 278,960 315,816 259,317 279,017 315,771 0.0% 0.0% 0.0%
EBITDA 62,930 66,111 77,754 62,441 65,907 77,467 0.8% 0.3% 0.4%
EBITDA margin 24.3% 23.7% 24.6% 24.1% 23.6% 24.5%
Adj. PAT 41,787 42,562 49,765 40,382 42,147 49,280 3.5% 1.0% 1.0%
EPS (INR) 51.82 52.78 61.71 50.07 52.26 61.11 3.5% 1.0% 1.0%
EPS − HSBC vs Consensus 1.4% -4.7% `-0.6%
Dr Reddy’s
Revenues 279,800 296,966 315,901 270,939 288,064 305,140 3.3% 3.1% 3.5%
EBITA 71,147 73,489 75,498 66,437 68,820 71,083 7.1% 6.8% 6.2%
EBITA margin 25.4% 24.7% 23.9% 24.5% 23.9% 23.3%
Adj. PAT 54,324 54,876 55,947 50,143 51,323 53,162 8.3% 6.9% 5.2%
EPS (INR) 328.24 331.58 338.05 302.98 310.11 321.22 8.3% 6.9% 5.2%
EPS − HSBC vs Consensus 3.8% -0.1% 0.7%
Divi’s Lab
Revenues 77,416 90,045 105,577 77,627 90,291 105,864 -0.3% -0.3% -0.3%
EBITDA 21,044 29,373 36,861 21,171 29,532 37,049 -0.6% -0.5% -0.5%
EBITDA margin 27.2% 32.6% 34.9% 27.3% 32.7% 35.0%
Adj. PAT 15,407 22,671 28,347 15,545 23,016 28,748 -0.9% -1.5% -1.4%
Adj. EPS (INR) 58.04 85.40 106.78 58.56 86.70 108.29 -0.9% -1.5% -1.4%
Glenmark Pharma
Revenues 123,374 143,707 162,084 122,696 142,579 160,781 0.6% 0.8% 0.8%
EBITDA 14,875 26,326 34,396 14,517 25,681 33,475 2.5% 2.5% 2.8%
EBITDA margin 12.1% 18.3% 21.2% 11.8% 18.0% 20.8%
Adj. PAT 4,616 14,870 20,501 4,567 14,485 19,942 1.1% 2.7% 2.8%
EPS (INR) 16.36 52.70 72.66 16.19 51.33 70.68 1.1% 2.7% 2.8%
Source: HSBC estimates, Refinitiv Datastream for consensus estimates
9
18 April 2024
8: HSBC India Pharma coverage: Change in estimates (2/2)

INRm __________ New estimates __________ ___________ Old estimates ___________ _____________ Variance _____________
Ipca Lab
Revenues 76,434 88,556 102,577 75,621 87,178 100,442 1.1% 1.6% 2.1%
EBITDA 12,829 17,089 22,876 12,290 15,960 21,082 4.4% 7.1% 8.5%
EBITDA margin 16.8% 19.3% 22.3% 16.3% 18.3% 21.0%
Adj. PAT 6,001 10,335 14,687 6,041 9,751 13,511 -0.7% 6.0% 8.7%
EPS (INR) 23.65 40.74 57.89 23.81 38.44 53.25 -0.7% 6.0% 8.7%
Lupin
Revenues 198,603 221,121 252,099 197,924 220,373 251,276 0.3% 0.3% 0.3%
EBITDA 35,885 40,594 50,236 34,571 39,797 50,124 3.8% 2.0% 0.2%
EBITDA margin 18.1% 18.4% 19.9% 17.5% 18.1% 19.9%
Adj. PAT 18,848 21,420 27,494 17,601 20,769 27,451 7.1% 3.1% 0.2%
EPS (INR) 41.60 47.28 60.69 38.85 45.84 60.59 7.1% 3.1% 0.2%
EPS − HSBC vs Consensus -1.1% -5.4% -0.4%
Sun Pharma
Revenues 490,255 543,320 600,813 490,255 543,320 600,813 0.0% 0.0% 0.0%
EBITDA 131,449 150,639 172,092 131,449 150,639 172,092 0.0% 0.0% 0.0%
EBITDA margin 26.8% 27.7% 28.6% 26.8% 27.7% 28.6%
Adj. PAT 96,275 114,674 134,311 96,275 114,674 134,311 0.0% 0.0% 0.0%
EPS (INR) 40.13 47.79 55.98 40.13 47.79 55.98 0.0% 0.0% 0.0%
EPS − HSBC vs Consensus 1.9% 3.4% 6.1%
Torrent Pharma
Revenues 108,527 125,487 143,083 108,943 125,774 143,412 -0.4% -0.2% -0.2%
EBITDA 33,862 40,079 46,594 34,150 40,276 46,705 -0.8% -0.5% -0.2%
EBITDA margin 31.2% 31.9% 32.6% 31.3% 32.0% 32.6%
Adj. PAT 15,906 20,533 26,008 16,436 20,979 26,268 -3.2% -2.1% -1.0%
EPS (INR) 47.00 60.67 76.84 48.56 61.99 77.61 -3.2% -2.1% -1.0%
EPS − HSBC vs Consensus -1.3% -0.4% 2.2%
Zydus Lifesciences
Revenues 194,691 214,446 234,046 195,056 213,592 231,767 -0.2% 0.4% 1.0%
EBITDA 52,089 56,491 60,969 49,548 52,745 57,257 5.1% 7.1% 6.5%
EBITDA margin 26.8% 26.3% 26.0% 25.4% 24.7% 24.7%
Adj. PAT 36,000 36,774 39,445 32,135 33,799 36,782 12.0% 8.8% 7.2%
EPS (INR) 35.17 35.92 38.53 31.39 33.02 35.93 12.0% 8.8% 7.2%
10
18 April 2024
9: HSBC India Hospitals coverage: Change in estimates

INRm ______ New estimates ________ _______ Old estimates _______ _____ Variance ______
Apollo Hospitals
Revenues 192,126 235,401 283,500 193,175 233,958 280,960 -0.5% 0.6% 0.9%
EBITDA 24,002 33,398 43,367 24,512 32,699 42,136 -2.1% 2.1% 2.9%
EBITDA margin 12.5% 14.2% 15.3% 12.7% 14.0% 15.0%
Adj. PAT 9,149 15,451 21,459 9,474 15,005 20,672 -3.4% 3.0% 3.8%
EPS (INR) 63.67 107.53 149.34 65.93 104.42 143.86 -3.4% 3.0% 3.8%
Max Health*
Revenues 70,383 90,926 111,958 70,011 86,775 106,999 0.5% 4.8% 4.6%
EBITDA 19,949 25,943 31,597 20,357 25,144 30,697 -2.0% 3.2% 2.9%
EBITDA margin 28.3% 28.5% 28.2% 29.1% 29.0% 28.7%
Adj. PAT 13,776 17,493 20,989 13,839 16,812 20,260 -0.5% 4.1% 3.6%
EPS (INR) 14.21 18.04 21.65 14.27 17.34 20.90 -0.5% 4.1% 3.6%
EPS − HSBC vs Consensus 5.2% 14.1% 10.4%
Medicare
Revenues 12,940 16,778 20,340 13,039 16,778 20,340 -0.8% 0.0% 0.0%
EBITDA 4,241 5,389 6,548 4,135 5,144 6,256 2.6% 4.8% 4.7%
EBITDA margin 32.8% 32.1% 32.2% 31.7% 30.7% 30.8%
Adj. PAT 2,158 2,890 3,611 2,079 2,679 3,359 3.8% 7.8% 7.5%
EPS (INR) 21.26 28.47 35.57 20.48 26.40 33.10 3.8% 7.8% 7.5%
*The data in the table for Max Health shows data based on proforma financials which include partnered healthcare facilities (PHFs); our Financials & Valuation page for Max
Health shows consolidated financials which exclude PHFs.
11
18 April 2024
Valuation and risks for hospital coverage
Apollo Hospitals (APHS IN, Buy, CMP INR6,303.15, TP INR7,475 from INR7,100)
We value Apollo Hospitals using a sum-of-the-parts (SOTP) approach by assigning distinct
valuations for different segments – 27x EV/EBITDA (previously 26x) for hospitals, 22x for
pharmacy distribution and front end, 22x for AHLL, etc. – and applying the target valuation
multiples to our estimates for March 2026e.
We use a cost of equity (COE) of 8% (unchanged) to discount back the forward business values
to arrive at our fair values. Our COE of 8% is based on a risk-free rate of 3.5% (unchanged),
ERP of 5.0% (unchanged) for India, beta of 0.5 (two-year average beta, unchanged) and
inflation differential of 2.0% (unchanged) for India – except for the beta, our inputs for the COE
are as per HSBC strategists’ assumptions.
Our sum-of-the-parts target price is revised to INR7,475 (earlier INR7,100) — Exhibit 10. Our
target price implies 18.6% upside from current levels; we maintain our Buy rating on the stock
given a strong outlook for its hospitals business and the scale-up potential for Apollo 24/7 (its
digital health platform). We believe Apollo has ample levers to sustain revenue and margins
growth for its core hospitals business. We expect hospital EBITDA margins to remain steady in
the mid- to high 20s over FY24e-26e on a better case mix, improving volumes for international
patients, higher insurance coverage and cost efficiencies offsetting the impact of costs
associated with new bed additions. Tapering losses for 24/7 in recent quarters are comforting.
Downside risks include: (1) a slowdown in key clusters, such as Chennai and Hyderabad, and
a delay in the scale-up of operations in other clusters due to competition; (2) a slowdown in
international patient volumes; (3) adverse market development (either regulatory or
competition); (4) higher-than-expected increase in operating costs for the Apollo 24/7 digital
platform, which could hit the margins of its core business; and (5) failure/delays in increasing the
utilisation level for key segments in AHLL (mainly diagnostics).
10: APHS: Sum-of-the-parts valuation summary

APHS’s FY26e EV/EBITDA Fair value
INRm except per share value ownership EBITDA (x) EV Fair value* (old) Remarks
Hospitals business 100% 37,616 27 1,015,626 870,736 823,451 Our valuation multiple of 27x (earlier 26x) is at 9%
premium to the 5-yr valuation average, and we believe
this is sustainable on back of visible drivers with a
healthy margin outlook.
Pharmacy distribution 100% 10,440 22 229,686 196,918 192,138 Our valuation multiple of 22x (unchanged) is in line
Pharmacy front end 26% 1,610 22 9,034 7,746 7,746 with the market valuation for asset-light highly scalable
AHLL 68% 2,534 22 38,023 32,598 31,929 healthcare offerings, such as diagnostic labs,
pharmacies, etc. Listed diagnostic companies, such as
Dr Lal PathLab (DLPL IN, INR2,320.05, Not Rated),
Metropolis (METROHL IN, INR1,777.60, Not Rated),
etc., are trading at consensus EV/EBITDA of 20-30x
EBITDA for FY24-25e.
Indraprastha 22% 4,547 4,547 3,981 CMP implied
Total EV 1,296,916 1,112,545 1,059,244
Net debt (FY23) 35,565 35,565
Minority (FY23) 3,341 3,341
Equity valuation 1,073,638 1,020,337
No of shares (m) 144 144
Fair value TP (INR) 7,475.00 7,100.00
CMP 6,303.15 Based on closing price of 15 April 2024
Upside 18.6%
Source: HSBC estimates, Refinitiv Datastream for consensus estimates (* discounted at cost of equity)
12
18 April 2024
Rainbow Children’s Medicare (RAINBOW IN, Buy, CMP INR1,320.65, TP INR1,570 from
INR1,415)
We continue to value Rainbow using the DCF methodology to reflect its long-term growth
visibility in its paediatric care segment (c70% of revenue).
Our COE of 10% (unchanged) is based on a risk-free rate of 3.5% (unchanged), ERP of 5.0%
(unchanged) for India, beta of 0.9 (two-year average beta, unchanged) and an inflation
differential of 2.0% (unchanged) for India – except for the beta, our inputs for the COE are as
per HSBC strategists’ assumptions. Our COE value remains unchanged at 10%.
We assume a cost of debt of 10% (pre-tax) and long-term equity to debt of 65:35, both
unchanged. These assumptions lead to a WACC of 9.1% (unchanged). Our terminal growth
rate is 7.25% (unchanged; see Exhibit 11). Our revised TP of INR1,570 (earlier TP INR1,415)
implies c19% upside from its CMP. Change in our TP IS led by higher earnings estimates for
FY24-26e and better operating margins in outer years in our DCF model.
We maintain our Buy rating on the stock due to strong earnings visibility. We believe Rainbow
remains uniquely placed in the paediatric market in India on the back of its scale and
comprehensive offerings of paediatric and obstetric services, including critical ICU for
paediatrics and high-risk pregnancies.
Downside risks include: (1) a slowdown in the core Hyderabad cluster; (2) a delay in stepping
up utilisation of its new units, especially in newer markets such as Gurugram; (3) higher-than-
expected cost for setting up its Gurugram facility and any delay to its facility ramp-up; and (4)
regulatory risks (e.g., government intervention in prices for the services it offers).
11: Rainbow: DCF valuation summary

INRm FY23 FY24e FY25e FY26e FY27e FY28e FY37e
Revenues 11,736 12,940 16,778 20,340 24,037 28,145 75,492
% y-o-y 20.5% 10.3% 29.7% 21.2% 18.2% 17.1% 7.3%
EBIT 3,061 3,177 4,043 5,045 5,976 6,860 15,098
EBIT margin 26.1% 24.6% 24.1% 24.8% 24.9% 24.4% 20.0%
NOPAT 2,550 2,506 3,209 4,004 4,743 5,420 11,928
Reinvestment 700 2,844 1,803 2,475 2,708 3,577 3,578
FCFF 1,850 -337 1,405 1,529 2,034 1,843 8,349
7.25%
Terminal growth rate (unchanged) WACC calculation Value
Kd 10.0%
DCF valuation summary Tax rate 25.17%
PV (Terminal value) 140,907
PV (CF over explicit periods) 17,443 Rf (Global) 3.5%
Enterprise value 158,350 India Inflation 2.0%
differential
- Debt and lease liabilities 5,703 Rp 5.0%
- Minority interests 50 Beta 0.90
+ Cash & investments 6,816 Ke 10.0%
Equity value 159,413 Wd 35%
Number of shares (m) 102 We 65%
Fair value TP (INR) 1,570.00 WACC 9.1%
CMP 1,320.65
Upside 18.9%
Source: HSBC estimates (*based on closing price of 15 April 2024)
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18 April 2024
Max Healthcare (MAXHEALT IN, Hold, CMP INR833.35, TP INR790 from INR725)
We value Max Healthcare using the SOTP approach to assign distinct valuations for different
segments (hospitals, Max Lab, etc.), and then apply target valuation multiples to our estimates
for March 2026e (rolled forward from our earlier estimates for December 2025e; see Exhibit 12).
We use cost of equity (COE) of 8% (unchanged) to discount back the forward business values
to arrive at our fair values. Our COE of 8% is based on a risk-free rate of 3.5% (unchanged),
ERP of 5.0% (unchanged) for India, beta of 0.5 (two-year average beta, unchanged) and
inflation differential of 2.0% (unchanged) for India – except for the beta, our inputs for the COE
Our revised target price of INR790 (from INR725) implies 5.2% downside from the current share
price. We retain our Hold rating on the stock as we look for scale-up of operations at new
hospitals (e.g. Dwarka, Shalimar Bagh) and synergies from recently acquired hospitals at
Lucknow and Nagpur.
Downside risks: (1) escalation of operating costs; (2) delays in optimising the payor mix; (3) a
delay in capacity additions and a slowdown in the volumes of international patients; (4) adverse
regulatory updates (e.g., government price controls on procedures or surgeries); and (5)
adverse changes in terms of agreements with partnered healthcare facilities (PHFs).
Upside risks: (1) a faster-than-expected reduction in beds allocated to institutional patients; (2)
higher-than-expected increase in ARPOB and occupancy levels; and (3) a better-than-expected
increase in tariffs for institutional patients.
12: Max Healthcare: Sum-of-the-parts (SOTP) valuation^^ summary

INRm except per share data FY26e EBITDA EV/EBITDA (x) EV Fair value (new)* Fair value (old) Remarks
MHIL and subsidiaries hospitals 24,358 30 730,740 626,491 564,358 Our valuation multiple of 30x
(incl. O&M) (unchanged) at a c10% premium to the
Partnered healthcare facilities 4,196 30 125,871 107,914 108,754 1-year average and we believe this is
(PHFs) justified on back of its improving
business mix.
Max Lab 213 22 4,689 4,020 3,741 Our valuation multiples of 22x
Max @Home 645 24 15,475 13,268 12,219 (unchanged) for Max Lab and 24x
(unchanged) for Max@Home are in line
with market valuations for asset-light,
highly scalable healthcare offerings
such as diagnostic labs and
pharmacies. Listed diagnostic
companies, such as Dr Lal PathLab
(DLPL IN, INR2,320.05, Not Rated),
Metropolis (METROHL IN, INR1,777.60,
Not Rated), etc., are trading at
consensus EV/EBITDA of 20-30x
EBITDA for FY24-25e.
Total EV 876,775 751,693 689,072
Net debt (3QFY24) -12,950 -12,950 Based on data for period ending 31
December 2023
Equity valuation 764,643 702,022
Fair value TP (INR) 790.00 725.00
CMP (INR) 833.35 Based on closing price of 15 April 2024
Upside/Downside -5.2%
Source: HSBC estimates, Refinitiv Datastream for consensus Note: *discounted forward value at cost of equity. ^^ based on pro forma financials which include partnered healthcare facilities/PHFs, F&V shown is based on consolidated
financials which exclude PHF
14
18 April 2024
13: Max Healthcare – (pro-forma* based) financials overview

As % of FY23 FY24-26e
Revenue (INRm) FY22 FY23 FY24e FY25e FY26e revenues CAGR
MHIL & subsidiaries and silos 39,315 45,591 55,947 73,536 90,265 77.9% 27.0%
Hospitals (incl. O&M facilities) 37,149 43,017 52,783 69,505 85,203 73.5% 27.1%
Max Lab 1,063 1,174 1,456 1,776 2,132 2.0% 21.0%
Max @ Home 1,103 1,400 1,708 2,255 2,931 2.4% 31.0%
Partnered healthcare facilities (PHFs) 15,780 17,270 18,686 21,683 26,028 29.5% 18.0%
Adjustments -2,687 -4,311 -4,250 -4,293 -4,335 -7.4%
Total revenue 52,408 58,550 70,383 90,926 111,958 100.0% 26.1%
EBITDA margin FY22 FY23 FY24e FY25e FY26e
MHIL & subsidiaries and silos 24.0% 27.1% 28.3% 28.2% 27.9%
Hospitals 24.9% 28.2% 29.2% 28.9% 28.6%
Max Lab 1.2% -2.3% 7.0% 9.0% 10.0%
Max @ Home 15.0% 19.0% 19.0% 21.0% 22.0%
Partnered healthcare facilities (PHFs) 19.6% 17.0% 13.9% 15.4% 16.1%
Total EBITDA margin 26.1% 27.1% 28.3% 28.5% 28.2%
Source: Company reports, HSBC estimates (*including financials for partnered healthcare facilities/PHFs which are not part of consolidated financials shown in F&V)
Notes on financials for Max Health
Max Healthcare Institute Limited (MHIL, or ‘the listed entity’) reports standalone and
consolidated financials for the company, its subsidiaries, and managed healthcare facilities
under O&M (operation and management) agreements. The statutory filings do not include
financials for partnered healthcare facilities (PHFs).
Max provides exclusive healthcare services to PHFs in various specialties (e.g. oncology, cardiac
sciences, orthopedics) in return for a service fee, comprising a fixed fee and/or a variable
percentage of revenue under long-term agreements. Although PHFs are not owned by Max, these
are operationally no different from other hospitals in the network due to their long-term medical
service agreements (MSAs) with MHIL and its subsidiaries. Max has significant exposure to PHFs,
which accounted for c30% of total pro-forma revenue for FY23. Thus, we believe it is prudent to
base our discussions and valuations on pro-forma financials that include PHFs.
Our F&V shows data based on consolidated financials which exclude PHFs.
15
18 April 2024
Valuation and risks for pharma coverage (Buy-rated names)
Valuation Risks
Aurobindo Current price: We value its base business by discounting back the 1-year forward Downside risks include: (1) adverse FDA GMP
Pharma INR1,085.30 fair value, which is based on our target PE of 20x (Gordon growth- developments at its plants including the key Eugia 3 plant,
ARBP IN Target price: based PE, unchanged) applied to our March 2026e EPS of (2) a slowdown in base US sales and a failure to scale up
INR1,340.00 INR71.72 (rolled forward from earlier EPS estimate of INR66.23 for generic injectables sales; (3) a lower-than-expected
December 2025e). To the base business value, we add an NPV of incentives from the government; and (4) the deterioration of
Buy Upside: INR20 per share (unchanged) for the Pen G project to arrive at our gross margins due to an adverse product mix.
23.5% fair value target price of INR1,340 (up from INR1,240).
Our inputs to the Gordon growth model include:
1) a sustainable ROE of 11.8% (the average of our FY24-26e
estimates, higher than our earlier value of 11.3% due to a
4.2%-4.7% growth in EPS estimates for FY24e-26e);
2) a long-term growth rate of 6.3% (unchanged);
3) a cost of equity of 8.65% (unchanged). Our cost of equity of
8.65% is based on a risk-free rate of 3.5% (unchanged), equity
risk premium of 5.0% for India (unchanged), beta of 0.63 (two-
year average beta, unchanged) and an inflation differential of
2.0% for India (unchanged) – except for the beta, inputs for the
COE are as per HSBC strategists’ assumptions.
Our valuation multiple remains unchanged at 20x. Our target price
implies 23.5% upside. We rate the stock rating Buy as we believe
visible catalysts (e.g., stable pricing and healthy demand in the US,
progress in the R&D pipeline) should enhance its growth momentum.
Damayanti Kerai* | damayantikerai@hsbc.co.in | +91 22 61640692
Current price: We value TRP using an EV/EBITDA multiple of 24x (unchanged) Downside risks include: (1) a slowdown in India
Torrent Pharma
INR2,519.85 applied to our March 2026e EBITDA estimate of INR46.6bn (rolled formulations and Brazil sales growth; (2) a delay in new
TRP IN forward from earlier December 2025e EBITDA estimate of tender contract gains in Germany; and (3) a continued delay
Target price:
INR45bn). We then discount back the equity value by the COE to in the resolution of pending FDA issues at the Indrad plant.
INR2,960.00
derive our fair value target price of INR2,960 (from earlier TP of
Buy Upside: INR2,855); see Exhibit 14 for details. Our fair value target price
17.5% implies an upside of 17.5% from the current share price. We rate
the stock Buy on the back of its healthy growth outlook for key
markets (India and Brazil).
Current price: We value Cipla’s base business by discounting our estimate of the Downside risks include: (1) further delays in the approvals
Cipla
INR1,381.40 1-year forward fair value, which is based on our target PE multiple of and launches of gAdvair and gAbraxane in the US; (2) a
CIPLA IN 27x (Gordon growth-derived PE, unchanged) applied to our March further delay in resolution of pending FDA issues at the Goa
Target price:
2026e EPS of INR61.71 (earlier INR61.11). We add our NPV per and Indore plants; (3) a slowdown in growth for India
INR1,600.00
share value of INR21 (unchanged) for gAdvair, INR19 (unchanged) formulations business; and (4) a higher-than-expected
Buy Upside: for gRevlimid and INR20 for gSymbicort (unchanged) to the base increase in R&D and other operating costs, which could
15.8% business value to derive our TP of INR1,600 (from INR1,585). slow down the pace of operating margin improvements.
Our Gordon growth assumptions include:
a) a sustainable ROE of 15.8% (the average of our FY24e-26e
estimates, slightly higher than earlier value of 15.6%);
b) a long-term growth rate of 5.9% (unchanged); and
c) a COE of 8.2% — based on a risk-free rate of 3.5%, equity
risk premium of 5.0% for India (all unchanged), a beta of
0.54 (two-year average beta, earlier 0.53) and an inflation
differential of 2.0% for India (unchanged). Except for the
beta, inputs for the COE are as per HSBC equity strategists’
assumptions.
implies 15.8% upside from the current level. We retain our Buy
rating on the stock as we believe Cipla’s long-term outlook remains
intact in view of the build-up of its differentiated product portfolio,
synergies from the ‘One India’ initiative, and cost efficiencies.
16
18 April 2024
Valuation Risks
Current price: We value Sun’s base business by discounting the one-year Downside risks include: (1) a slower-than-expected scale-
Sun Pharma forward fair value, which is based on our target PE of 33x (Gordon
INR1,540.05 up in sales of Ilumya, Cequa, Winlevi, and other specialty
SUNP IN growth-based PE, unchanged) applied to our March 2026e EPS products in the US in the medium to long run; (2) a delay in
Target price: estimate of INR55.98 (unchanged). We add NPV of INR85 the filing and FDA approval for deuruxolitinib; (3) higher-
INR1,790.00 (unchanged) per share for specialty products to the base business than-expected cost outlays for specialty products, which
Buy Upside: value to arrive at our fair value target price of INR1,790
could put pressure on margins; (4) continued delays in the
16.2% (unchanged).
resolution of pending FDA issues at its Halol plant; and (5) a
Our NPV captures the value of Ilumya, Cequa, Winlevi and slowdown in the India formulations sales.
deuruxolitinib beyond our explicit estimates for FY24e-26e.
Our Gordon growth assumptions include:
1) a sustainable ROE of 17.2% (unchanged);
2) a long-term growth rate of 6.45% (unchanged); and
3) a COE of 8.35% (unchanged). Our COE of 8.35% is based on
a risk-free rate of 3.5% (unchanged), ERP of 5.0%
(unchanged) for India, beta of 0.57 (two-year average beta)
and inflation differential of 2.0% (unchanged) for India –
except for the beta, our inputs for the COE are as per HSBC
strategists’ assumptions.
Our target price implies 16.2% upside; we retain our Buy rating
given the solid outlook for its specialty portfolio sales.
Glenmark Current price: We value Glenmark using an EV/EBITDA multiple of 12x Downside risks include: (1) a slower-than-expected
Pharma INR1,044.00 (unchanged) applied to our March 2026e EBITDA estimate of reduction in Ichnos spend and elevated other operating
GNP IN Target price: INR34.4bn (rolled forward from earlier December 2025e EBITDA costs; (2) a slowdown in India segment growth; and (3) a
INR1,220.00 estimate of INR31.3bn). We then discount back the equity value by delay in stabilisation of US segment sales amid continued
the COE to derive our fair value target price of INR1,220 (from market challenges.
Buy Upside: INR1,100; see Exhibit 15 for details). Our fair value target price
16.9% implies upside of 16.9% from the current share price. We retain our
Buy rating on the stock on the back of multiple visible drivers for its
EBITDA margins (lower R&D spend for Ichnos Sciences, better
absorption of plant overheads etc).
Current price: We derive our target price of INR1,505 (earlier INR1,335) by Downside risks include: (1) a slowdown in India and other
Ipca Lab
INR1,327.65 discounting back the 1-year forward fair value, which is based on our key branded markets such as Russia and the
IPCA IN target PE of 28x (Gordon growth-based PE, earlier 27x) applied to our Commonwealth of Independent States (CIS); (2) a lower-
Target price:
March 2026 EPS estimate of INR57.89 (earlier INR53.25). than-expected synergies from Unichem portfolio; (3) slower-
INR1,505.00
Our assumptions for the Gordon growth model include: than-expected growth in export generics sales and API
Buy Upside: sales; and (4) a delay in product launches in the US
13.4% 1) a sustainable ROE of 14.7% (the average of our FY24e-26e
estimates, higher than earlier value of 14% on back of 6.0% and
8.7% increase in EPS estimates of FY25e and FY26e);
3) a COE of 7.75% (unchanged). Our cost of equity of 7.75% is
based on a risk-free rate of 3.5% (unchanged0), an equity risk
premium of 5.0% (unchanged) for India, a beta of 0.45
(unchanged) and an inflation differential of 2.0% for India
(unchanged) – except for the beta, inputs for the COE are as per
HSBC strategists’ assumptions.
Our valuation multiple increases to 28x from 27x due to the higher
input for ROE. Our target price implies 13.4% upside from the current
level. We retain our Buy rating for Ipca as we believe Ipca is set to
see a notable pick-up in EBITDA margins led by easing cost pressure
and operating leverage benefits.
Priced at 15 April 2024

17
18 April 2024
14: Torrent Pharma: valuation summary

INRm unless stated Value (new) Value (old) Remarks
March 2026e EBITDA 46,594 45,007 March 2026e EBITDA of INR46.6bn for March 2026e (roll-forward from December 2025e EBITDA of INR45bn).
EV/EBITDA multiple 24 24 We maintain our valuation multiple at 24x, which is 24% premium to the stock’s average valuation for the last three-
years. While the valuation appears rich versus the peer average of 15-22x, we believe the company’s superior
business mix (+70% sales from the branded generics markets, which offer consistently higher profitability and returns
versus the generics markets) and visibility on operating margins headroom justify the premium valuation for Torrent
Pharma
EV 1,118,255 1,080,172
Net debt 36,260 36,260 As of period ending 30 September 2023
Equity valuation 1,081,995 1,043,912
No. of shares (m) 338.45 338.45
Per share value (INR) 3,197 3,084
Fair value TP (INR) 2,960 2,855 Our fair value is derived by discounting the projected equity value by the cost of equity (COE) of 8.0% (unchanged).
Our COE of 8.0% is based on a risk-free rate of 3.5% (unchanged), equity risk premium of 5.0% (unchanged) for
India, beta of 0.50 (unchanged), and inflation differential of 2.0% (unchanged) for India. Except for the beta, COE
inputs are based on HSBC strategists’ assumptions.
Upside 17.5%
CMP 2,519.85 Based on closing price of 15 April 2024
15: Glenmark: valuation summary

INRm except per share
value Value (new) Value (older) Remarks
March 2026e EBITDA 34,396 31,329 EBITDA of INR34.4bn for March 2026e (roll-forward from EBITDA of INR31.3bn for December 2025e)
EV/EBITDA (x) 12.0 12.0 Our valuation multiple of 12x (unchanged) is at a premium of 25% versus its average for last one year. We
believe our valuation multiple is justified in view of potential margin gains (mainly on R&D savings for Ichnos
Sciences) and debt-reduction utilising proceeds from the GLS deal.
Total EV 412,752 375,947
Net debt 33,550 33,550 Based on value as of period ending 30 September 2023
Minority 4,086 4,086
Equity valuation 375,116 338,312
Per share value (INR) 1,329 1,199
Fair value target price (INR) 1,220 1,100 Our fair value is derived by discounting forward equity value by cost of equity (COE) of 9% (unchanged).
Inputs to COE are: a) a risk-free rate of 3.5% (unchanged), b) an equity risk premium of 5.0% for India
(unchanged), c) a beta of 0.7 (two-year average beta, unchanged) and d) an inflation differential of 2.0% for
India (unchanged) – except for the beta, inputs for the COE are as per HSBC strategists’ assumptions.
Implied upside 16.9% Based on closing price of 15 April 2024
18
18 April 2024
Valuation and risks for pharma coverage (Hold and Reduce rated names)
Valuation Risks
Current price: Our target price of INR890 (previously INR835) is derived by Downside risks: (1) a decline in its India sales growth; (2) a
Alembic INR968.55 discounting back the one-year forward fair value, which is based on delay or failure to realise R&D investments in the US market
Pharma our target PE of 20x (Gordon growth-based PE, unchanged) applied and higher other operating costs persisting; (3) a larger-
Target price:
ALPM IN to our March 2026 EPS estimate of INR48.27 (rolled forward from than-expected impact of higher price erosion on US sales;
INR890.00
earlier December 2025e EPS estimate of INR45.31). and (4) adverse FDA actions at its manufacturing plants,
Downside: which could de-rail its plans to scale up US sales
-8.1% Our inputs to the Gordon growth model are as follows: significantly.
Hold
a) a sustainable ROE of 14.8% (unchanged); Upside risks: (1) a faster-than-expected recovery in US
b) a long-term growth rate of 5.3% (unchanged); and sales; (2) a better-than-expected outperformance at its India
business versus the broader market; and (3) higher-than-
c) a COE of 8.5% (unchanged). Our cost of equity of 8.5% is
expected benefits from cost rationalisation measures.
based on a risk-free rate of 3.5% (unchanged), an equity risk
premium of 5.0% for India (unchanged), a beta of 0.60 (two-
year average beta, unchanged), and an inflation differential
of 2.0% for India (unchanged) – except for the beta, inputs
for the COE are as per HSBC strategists’ assumptions.
Our valuation multiple is unchanged at 20x. Our target price implies
8.1% downside from the current price. We maintain our Hold rating
on the stock as we believe its focus on new launches (including
non-oral solid dosages) and strategic supply opportunities should
help it to benefit from operating leverage.
Current price: Our target price of INR4,915 (earlier INR4,640) is derived by Downside risks: (1) delay or failure to scale up its
Alkem Lab
INR4,715.65 discounting back our estimated one-year forward fair value, which specialty/chronic segment sales in India and a slowdown in
ALKEM IN is based on a 26x PE (Gordon growth-based PE, unchanged) the broader Indian pharma market; (2) high exposure to
Target price:
applied to our March 2026e EPS of INR204.11 (rolled forward from price-controlled drugs increases its portfolio vulnerability to
INR4,915.00
earlier December 2025e EPS estimate of INR192.67). adverse regulatory events (price cuts mandated by the
Hold Upside: government); (3) a delay or failure to receive new approvals
Our inputs to the Gordon growth model include:
4.2% in the US, essential to mitigating price erosion; and (4)
a) a sustainable ROE of 19.1% (average of our FY24-26e
estimates, higher than our earlier estimate of 18.6% due to prolonged input cost pressure on margins.
a 2.3%-10.1% increase in FY24e-26e EPS estimates); Upside risks: (1) better-than-expected volume growth for its
b) a long-term growth rate of 5.25% (unchanged); and acute therapies portfolio in India; (2) better-than-expected
c) a COE of 8.0% (unchanged) based on a risk-free rate of pick-up in sales force productivity for chronic therapies
3.5% (unchanged), equity risk premium of 5.0% for India portfolio in India; (3) better-than-expected gains from
(unchanged), a beta of 0.5 (two-year average beta; ongoing cost optimisation measures; and (4) faster-than-
unchanged); and an inflation differential of 2.0% for India
expected gains from new initiatives, e.g. Enzene.
(unchanged). Except for the beta, the inputs for the COE
implies upside of 4.2% from the current share price. We thus retain
our Hold rating on Alkem. We believe it will take a while for it to see
notable margin recovery amid the lack of growth catalysts over the
near-to-medium term.
Current price: We value Biocon using a sum-of-the-parts (SOTP) approach by Downside risks include: (1) a slower-than-expected sales
Biocon
INR265.25 assigning distinct valuations for different segments – 11x pick-up for Hulio, Semglee, Fulphila and Ogivri in the US
BIOS IN EV/EBITDA for biosimilars, 24x for research services (Syngene), and other markets; (2) manufacturing disruptions at facilities
Target price:
INR265.00 and 9x for generics – and applying the target valuation multiples to due to adverse actions by the FDA and other regulators; and
our estimates for March 2026e (rolled forward from earlier (3) continued high R&D and other costs towards biosimilar
Hold Downside: December 2025e estimates; see Exhibit 16 for details). developments, which could continue to pressure profitability.
-0.1% Upside risks include: (1) a better-than-expected sales pick-
Our target price of INR265 (earlier INR255) implies downside of
0.1%. We thus maintain our Hold rating on the stock and remain up for Hulio in the US and the EU; (2) better-than expected
watchful of market share gains for biosimilars amid the intense operating synergies from the Viatris integration; and (3)
competition landscape. better-than-expected sales and margin contribution from the
generics and research services segments.
19
18 April 2024
Valuation Risks
Dr. Reddy’s Current price: We value the company’s base business by discounting our Downside risks: (1) failure to maintain its FDA cGMP
Lab INR6010.85 estimate of the 1-year forward fair value, which is based on our compliance status at its plants; (2) lower-than-expected
DRRD IN Target price: target PE multiple of 21x (Gordon growth-derived PE, unchanged) sales from key US launches and high price erosion in the
applied to our March 2026e EPS of INR338.05 (rolled forward from generics portfolio in the US; (3) a slowdown in sales growth
INR6,690.00
earlier December 2025e EPS estimate of INR318.40) We add our in India, Russia, and other focus markets; and (4) a higher-
Hold Upside: unchanged NPV per share value of INR135 for gRevlimid to the than-expected increase in R&D expenses
11.3% base business value to derive our TP of INR6,690 (from Upside risks: (1) a better-than-expected pick-up in India
INR6,310). formulations business, (2) a higher-than-expected gains
Our inputs to the Gordon growth model include: from gRevlimid; (3) earlier-than expected benefits from R&D
1) a sustainable ROE of 18.4% (the average of our FY24e-26e and other long-term drivers
estimates, higher than earlier value of 17.5% due to 5.2%-
8.3% increase in FY24-26e EPS estimates);
2) a long-term growth rate of 4.85% (lower than earlier growth
rate of 4.95% to account for growth challenges in the US);
and
3) a COE of 8.3% (unchanged) – based on a risk-free rate of
3.5% (unchanged), an equity risk premium of 5.0% for India
(unchanged), a beta of 0.56 (two-year average beta,
unchanged) and an inflation differential of 2.0% for India
(unchanged). Except for the beta, the inputs for the COE are
as per HSBC strategists’ assumptions.
Our rounded valuation multiple remains unchanged at 21x. Our
target price implies 11.3% upside from the current share price. We
maintain our Hold rating as we believe the gRevlimid gains are
already priced in, with no other visible catalysts. Our new target
price for DRRD’s US-listed ADRs (RDY US, USD71.12) is
USD80.44 (earlier USD75.87), based on the 1:1 ratio and a spot
USD-INR rate of 83.17 (unchanged).
Current price: We derive our target price of INR1,630 (up from INR1,465 earlier) Downside risks: 1) lower-than-expected ramp-up in sales
Lupin
INR1609.10 by discounting back our 1-year forward fair value, which is based for gSpiriva in the US; 2) lower-than-expected gains from
LPC IN on our unchanged Gordon growth-based target PE of 29x (28x cost efficiency measures; and 3) lower-than-expected sales
Target price:
INR1,630.00 earlier) now applied to our March 2026e EPS estimate of INR60.69 from critical launches in India and other markets.
(rolled forward from earlier December 2025e EPS estimate of Upside risks: 1) earlier-than-expected resolution of the
Hold Upside: INR56.51). FDA warning letter at the Tarapur plant; 2) better-than-
1.3%
Our Gordon growth assumptions include the following: expected market share gains by key launches (e.g.,
1) a sustainable ROE of 14.9% (the average of our FY24-26e injectables, inhalers); and 3) better-than-expected benefits
estimates, higher than earlier value of 14.5% due to a 7.1% from cost-saving measures.
and 3.1% increase in EPS estimates for FY24e and FY25e,
respectively;
3) a cost of equity of 8.0% (unchanged). Our cost of equity of
8.0% is based on a risk-free rate of 3.5% (unchanged), an
equity risk premium of 5.0% (unchanged) for India; a beta of
0.50 (two-year average beta, unchanged), and inflation
differential for India of 2.0% (unchanged) – all cost of equity
assumptions except the beta are as per HSBC strategists’
assumptions.
Our revised target price of INR1,630 implies 1.3% upside. We thus
maintain our Hold rating. We believe consistency in management
efforts is key to bridge the EBITDA margin gap with its peers.
20
18 April 2024
Valuation Risks
Zydus Current price: We derive our fair value target price of INR890 (earlier INR750) by Downside risks: (1) lower-than-expected increase in US
Lifesciences INR935.15 discounting back our 1-year forward fair value estimate, which is sales from new launches; (2) delays in the launch of
ZYDUSLIF IN Target price: based on our target PE of 25x (Gordon growth-based PE, earlier transdermals from the Moraiya plant; (3) a slowdown in
23x) applied to our March 2026e EPS estimate of INR38.53 (rolled Indian formulation sales; and (4) higher-than-expected R&D
INR890.00
forward from earlier December 2025e EPS estimate of INR35.18). leading to weaker-than-expected margins.
Hold Downside:
Inputs to our Gordon growth model are as follows: Upside risks: (1) faster-than-expected growth in India
-4.8%
1) a sustainable ROE of 17.5% (average of our FY24e-26e formulation sales; (2) better-than-anticipated growth in base
estimates, higher than our earlier estimate of 16.3% due to a US sales on new launches; and (3) earlier-than-anticipated
7.2-12% increase in EPS estimates for FY24-26e); benefits from vaccines and biosimilars.
2) a long-term growth rate of 5.1% (unchanged);
3) a COE of 8.1% (unchanged), based on a risk-free rate of 3.5%
(unchanged), an equity risk premium of 5.0% for India
(unchanged), a beta of 0.52 (two-year average beta,
unchanged), and an inflation differential of 2.0% for India
(unchanged). Except for the beta, our inputs for the COE are
as per HSBC strategists’ assumptions.
Our valuation multiple increases to 25x from 23x due to higher input
for ROE. Our target price implies 4.8% downside from the current
share price; we maintain our Hold rating on the stock as we look for
improved growth consistency for its India and US businesses.
Current price: We value Divi’s Lab by discounting our estimate of the 1-year Upside risks: (1) a better-than-expected pick-up from
Divi’s Lab
INR3716.55 forward fair value, which is based on our target PE multiple of 31x contrast media projects and sartans opportunities in the
DIVI IN (Gordon growth-derived PE, unchanged) applied to our March Custom Synthesis segments; (2) notable volume gains from
Target price:
INR3,065.00 2026e EPS of INR 106.78 (rolled forward from earlier December new launches in the generics segment that more than
2025e EPS estimate of INR102.44) to derive our target price of offsets the impact of price erosion; and (3) better-than-
Reduce Up/downside: INR3,065 (earlier INR2,940). expected supply gains from Unit 3 post completion of the
-17.5% construction work.
Our assumptions for the Gordon growth model include:
a) a sustainable ROE of 14.9% (the average of our FY24-26e
estimates, lower than earlier estimates of 15.1% due to 1%-
1.5% cut in EPS estimates for FY24-26e);
b) a long-term growth rate of 6.1% (unchanged); and
c) a COE of 8% (unchanged). Our 8% cost of equity is based
on a risk-free rate of 3.5% (unchanged), an equity risk
premium of 5.0% for India (unchanged), a beta of 0.50
(unchanged) and an inflation differential of 2.0% for India
(unchanged) – except for the beta, our inputs for the COE
Our valuation multiple remains unchanged at 31x. Our revised
target price implies 17.5% downside from the current price; we
retain our Reduce rating as we believe the current price is baking
in perfect execution of future growth drivers and discounting
business risks (e.g., increasing competitive intensity in the market).
Priced at 15 April 2024

21
18 April 2024
16: Biocon Limited (BL): sum-of the-part (SoTP) valuation summary

INRm unless stated BL stake March-2026e EV/EBITDA (x) Valuation Holdco discount Adj valuation Remarks
Generics 100.0% 4,143 9 37,283 0% 37,283 Target multiple of 9x (unchanged) on-par
with peer comps
Biosimilars 70.0% 31,398 11 241,767 10% 217,591 Target multiple of 11x (unchanged) on-par
with peer comps.
Research services 54.9% 15,129 24 199,334 10% 179,401 Target multiple of 24x (unchanged) on-par
with peer comps.
EV 478,385 434,275
Net debt 91,487
Equity value 342,788
Per share value (INR) 289
Fair value TP (INR) 265 Our fair value is derived by discounting
forward equity value by cost of equity
(COE) of 8.4% (unchanged). Our COE is
based on a risk-free rate of 3.5%, ERP of
5% for India, beta of 0.57 (unchanged) and
inflation differential of 2% for India –
except for the beta, our inputs for the COE
Upside to CMP -0.1% Based on closing price of 15 April 2024
22
18 April 2024
Financials & valuation: Apollo Hospitals Buy
Financial statements Valuation data

Year to 03/2023a 03/2024e 03/2025e 03/2026e Year to 03/2023a 03/2024e 03/2025e 03/2026e
Profit & loss summary (INRm) EV/sales 5.7 4.9 4.0 3.3
Revenue 166,125 192,126 235,401 283,500 EV/EBITDA 45.8 39.1 28.0 21.4
EBITDA 20,496 24,002 33,398 43,367 EV/IC 9.6 9.0 8.3 7.5
Depreciation & amortisation -6,152 -6,628 -7,768 -9,214 PE* 130.9 99.0 58.6 42.2
Operating profit/EBIT 14,344 17,373 25,630 34,153 PB 14.6 13.1 11.1 9.2
Net interest -3,808 -4,414 -3,415 -3,138 FCF yield (%) -0.1 0.3 0.8 1.2
PBT 12,713 14,011 23,360 32,276 Dividend yield (%) 0.1 0.2 0.3 0.4
HSBC PBT 12,713 14,011 23,360 32,276 * Based on HSBC EPS (diluted)
Taxation -3,836 -4,407 -7,358 -10,167
Net profit 8,191 9,168 15,451 21,459
HSBC net profit 6,917 9,149 15,451 21,459 ESG metrics
Cash flow summary (INRm) Environmental Indicators 03/2023a Governance Indicators 03/2024a
Cash flow from operations 10,530 15,079 23,518 28,624 GHG emission intensity* 76.6 No. of board members 11
Capex -11,285 -12,600 -16,250 -17,500 Energy intensity* 137.6 Average board tenure (years) 15.6
Cash flow from investment -8,562 -12,600 -16,250 -17,500 CO2 reduction policy Yes Female board members (%) 54.5
Dividends -2,579 -1,866 -3,152 -4,378
Social Indicators 03/2023a Board members independence (%) 54.5
Change in net debt 5,243 -612 -4,115 -6,746
FCF equity -755 2,479 7,268 11,124 Employee costs as % of revenues 12.9
Balance sheet summary (INRm) Employee turnover (%) n/a
Diversity policy Yes
Intangible fixed assets 10,917 10,917 10,917 10,917
Tangible fixed assets 80,337 86,309 94,791 103,077 Source: Company data, HSBC
Current assets 43,372 42,315 46,473 53,920 * GHG intensity and energy intensity are measured in kg and kWh respectively against revenue in USD ‘000s
Cash & others 7,758 5,171 6,086 9,832
Total assets 144,277 149,193 161,833 177,565
Operating liabilities 44,499 44,878 47,868 48,870 Issuer information
Gross debt 43,324 40,124 36,924 33,924 Share price (INR) 6303.15 Free float 71%
Net debt 35,565 34,953 30,837 24,091 Target price (INR) 7475.00 Sector Health Care Providers
Shareholders' funds 61,971 69,273 81,573 98,654 RIC (Equity) APLH.BO Country/Region India
Invested capital 97,352 104,476 113,210 124,195
Bloomberg (Equity) APHS IN Analyst Damayanti Kerai
Market cap (USDm) 10,852 Contact +91 22 6164 0692
Ratio, growth and per share analysis

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 13.3 15.7 22.5 20.4 7100.00 7100.00
EBITDA -6.2 17.1 39.1 29.8 6600.00 6600.00
Operating profit -9.5 21.1 47.5 33.3 6100.00 6100.00
PBT -14.7 10.2 66.7 38.2 5600.00 5600.00
HSBC EPS -18.6 32.3 68.9 38.9 5100.00 5100.00
Ratios (%) 4600.00 4600.00
Revenue/IC (x) 1.8 1.9 2.2 2.4 4100.00 4100.00
ROIC 12.2 13.3 17.2 20.6 3600.00 3600.00
ROE 11.7 13.9 20.5 23.8 3100.00 3100.00
ROA 8.3 8.6 11.8 14.3 2022 2023 2024
EBITDA margin 12.3 12.5 14.2 15.3 Apollo Hospitals Rel to BOMBAY SE SENSITIVE INDEX
Operating profit margin 8.6 9.0 10.9 12.0
EBITDA/net interest (x) 5.4 5.4 9.8 13.8 Source: HSBC
Net debt/equity 54.5 47.8 35.9 23.2 Note: Priced at close of 15 Apr 2024
Net debt/EBITDA (x) 1.7 1.5 0.9 0.6
CF from operations/net debt 29.6 43.1 76.3 118.8
Per share data (INR)
EPS Rep (diluted) 57.00 63.80 107.53 149.34
HSBC EPS (diluted) 48.14 63.67 107.53 149.34
DPS 8.18 10.82 18.28 25.39
Book value 431.27 482.08 567.68 686.55
23
18 April 2024
Financials & valuation: Rainbow Children’s Medicare Buy

EBITDA 3,964 4,241 5,389 6,548 EV/IC 10.8 8.9 8.0 7.0
Depreciation & amortisation -903 -1,064 -1,345 -1,503 PE* 63.6 62.1 46.4 37.1
Net interest -243 -251 -162 -200 FCF yield (%) 0.8 0.0 1.0 1.0
Taxation -694 -754 -977 -1,220
Net profit 2,108 2,158 2,890 3,611
Cash flow from operations 3,049 3,126 3,897 4,920 GHG emission intensity* n/a No. of board members 6
Capex -1,411 -2,410 -1,664 -2,472 Energy intensity* n/a Average board tenure (years) n/a
Dividends -203 -302 -433 -614
Change in net debt 1,291 836 -709 -563
FCF equity 1,044 14 1,322 1,343 Employee costs as % of revenues n/a
Intangible fixed assets 53 51 50 49
Cash & others 455 899 2,625 4,352
Total assets 17,763 20,705 24,291 28,693
Net debt 5,248 6,085 5,376 4,813 Target price (INR) 1570.00 Sector Health Care Providers
Shareholders' funds 10,599 12,455 14,911 17,908 RIC (Equity) RAIB.NS Country/Region India
Bloomberg (Equity) RAINBOW IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 20.5 10.3 29.7 21.2
EBITDA 30.0 7.0 27.1 21.5
1410.00 1410.00
Operating profit 38.1 3.8 27.3 24.8
PBT 50.4 3.9 32.6 24.8 1210.00 1210.00
HSBC EPS 52.5 2.3 33.9 25.0
Ratios (%) 1010.00 1010.00
Revenue/IC (x) 1.1 0.9 1.0 1.1
810.00 810.00
ROIC 23.0 17.9 19.5 21.5
ROE 25.4 18.7 21.1 22.0 610.00 610.00
ROA 16.5 13.5 14.9 15.6 2022 2023 2024
EBITDA margin 33.8 32.8 32.1 32.2 Rainbow Children’s Rel to BOMBAY SE SENSITIVE INDEX
EPS Rep (diluted) 20.77 21.26 28.47 35.57
HSBC EPS (diluted) 20.77 21.26 28.47 35.57
DPS 3.00 2.98 4.27 6.05
Book value 104.42 122.71 146.90 176.43
24
18 April 2024
Financials & valuation1: Max Healthcare Hold

EBITDA 12,371 15,852 20,743 25,216 EV/IC 12.7 10.9 9.1 7.9
Net interest 285 875 900 900 FCF yield (%) 1.3 0.1 -0.1 0.3
Taxation -2,044 -3,483 -4,432 -5,266
Net profit 11,035 11,030 13,296 15,798
Dividends -970 0 0 0
Change in net debt -11,929 -182 1,381 -2,890
FCF equity 10,530 1,148 -1,177 2,786 Employee costs as % of revenues 17.8
Balance sheet summary (INRm) Employee turnover (%) 37.8
Cash & others 14,681 14,063 11,832 13,822
Total assets 101,019 110,098 123,756 139,664
Net debt -7,954 -8,136 -6,755 -9,645 Target price (INR) 790.00 Sector Health Care Providers
Shareholders' funds 74,096 85,126 98,422 114,221 RIC (Equity) MAXE.NS Country/Region India
Bloomberg (Equity) MAXHEALT IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 16.0 22.7 31.4 22.7 950.00 950.00
EBITDA 31.2 28.1 30.9 21.6 850.00 850.00
750.00 750.00
PBT 77.0 11.0 22.1 18.8
HSBC EPS 39.9 28.4 20.5 18.8 650.00 650.00
Ratios (%) 550.00 550.00
Revenue/IC (x) 0.7 0.8 0.9 1.0 450.00 450.00
ROIC 13.8 15.1 15.5 15.9 350.00 350.00
ROE 12.6 13.9 14.5 14.9 250.00 250.00
ROA 12.2 10.8 11.8 12.4 2022 2023 2024
EBITDA margin 27.1 28.3 28.2 27.9 Max Healthcare Rel to BOMBAY SE SENSITIVE INDEX
EBITDA/net interest (x) Source: HSBC
Net debt/equity -10.7 -9.6 -6.9 -8.4 Note: Priced at close of 15 Apr 2024
Net debt/EBITDA (x) -0.6 -0.5 -0.3 -0.4
CF from operations/net debt
EPS Rep (diluted) 11.38 11.38 13.71 16.29
HSBC EPS (diluted) 8.86 11.38 13.71 16.29
DPS 1.00 0.00 0.00 0.00
Book value 76.42 87.80 101.51 117.80
______________________________________
1 F&V is based on consolidated financials which exclude partnered healthcare
facilities (PHFs); our valuation and related analysis are based on pro forma
financials including PHFs
25
18 April 2024
Financials & valuation: Aurobindo Pharma Buy

EBITDA 37,582 57,172 63,739 71,028 EV/IC 2.6 2.4 2.2 2.0
Taxation -6,849 -12,196 -14,919 -17,141
Net profit 19,275 31,287 36,449 41,884
Cash flow from investment -39,778 -26,496 -25,000 -25,000 CO2 reduction policy Yes Female board members (%) 20
Dividends -4,395 -6,291 -7,290 -8,377
Social Indicators 03/2023a Board members independence (%) 50
Change in net debt 5,946 -6,350 -15,589 -18,843
FCF equity -8,825 7,978 17,469 21,270 Employee costs as % of revenues 14.2
Balance sheet summary (INRm) Employee turnover (%) 19
Cash & others 60,842 60,192 69,781 82,624
Total assets 398,900 418,904 443,570 472,594
Net debt -12,227 -18,576 -34,165 -53,009 Target price (INR) 1340.00 Sector Pharmaceuticals
Shareholders' funds 268,399 293,395 322,554 356,061 RIC (Equity) ARBN.BO Country/Region India
Bloomberg (Equity) ARBP IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 6.0 15.5 6.3 5.8 1290.00 1290.00
EBITDA -14.3 52.1 11.5 11.4
PBT -22.9 66.0 18.1 14.9
890.00 890.00
HSBC EPS -29.1 59.9 15.9 14.9
Ratios (%) 690.00 690.00
Revenue/IC (x) 1.1 1.1 1.1 1.2
490.00 490.00
ROIC 8.2 12.0 12.8 13.9
ROE 7.7 11.2 11.8 12.3 290.00 290.00
ROA 5.5 8.2 8.8 9.5 2022 2023 2024
EBITDA margin 15.1 19.9 20.9 22.0 Aurobindo Pharma Rel to BOMBAY SE SENSITIVE INDEX
Net debt/EBITDA (x) -0.3 -0.3 -0.5 -0.7
EPS Rep (diluted) 33.01 53.58 62.42 71.72
HSBC EPS (diluted) 33.68 53.86 62.42 71.72
DPS 7.51 10.77 12.48 14.34
Book value 459.61 502.42 552.35 609.73
26
18 April 2024
Financials & valuation: Torrent Pharma Buy

EBITDA 28,220 33,862 40,079 46,594 EV/IC 7.9 7.9 7.8 7.4
Net interest -3,330 -3,597 -3,081 -2,619 FCF yield (%) 1.6 2.1 2.4 2.7
Taxation -6,020 -7,311 -9,225 -11,413
Net profit 12,450 16,617 20,533 26,008
Cash flow from investment -24,150 -2,800 -3,000 -3,200 CO2 reduction policy Yes Female board members (%) 20
Dividends -8,630 -6,402 -7,792 -9,870
FCF equity 13,600 18,085 20,135 22,739 Employee costs as % of revenues 17.5
Cash & others 5,710 10,392 15,735 21,604
Total assets 150,120 153,545 163,932 174,825
Net debt 47,970 36,288 23,945 11,076 Target price (INR) 2960.00 Sector Pharmaceuticals
Shareholders' funds 61,980 72,194 84,935 101,073 RIC (Equity) TORP.BO Country/Region India
Bloomberg (Equity) TRP IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 12.5 13.3 15.6 14.0
EBITDA 16.1 20.0 18.4 16.3
Operating profit 19.6 22.7 24.4 22.0 2500.00 2500.00
PBT 50.7 29.5 24.4 25.7
HSBC EPS -2.9 29.8 29.1 26.7 2000.00 2000.00
Ratios (%)
Revenue/IC (x) 0.9 1.0 1.1 1.3 1500.00 1500.00
ROIC 14.5 17.0 20.7 24.7
ROE 20.2 23.7 26.1 28.0 1000.00 1000.00
ROA 10.5 12.6 14.3 16.4 2022 2023 2024
EBITDA margin 29.5 31.2 31.9 32.6 Torrent Pharma Rel to BOMBAY SE SENSITIVE INDEX
EPS Rep (diluted) 36.79 49.10 60.67 76.84
HSBC EPS (diluted) 36.19 47.00 60.67 76.84
DPS 13.75 16.45 20.02 25.36
Book value 183.13 213.31 250.96 298.64
27
18 April 2024
Financials & valuation: Cipla Buy

EBITDA 51,235 62,930 66,111 77,754 EV/IC 5.0 4.4 4.0 3.6
Net interest -1,095 -1,025 -900 -800 FCF yield (%) 2.0 2.3 2.5 3.2
Taxation -11,279 -16,054 -16,771 -19,590
Net profit 28,019 39,858 42,562 49,765
Dividends -4,035 -7,972 -10,215 -12,441
Change in net debt 601 -8,199 -8,118 -12,793
Cash & others 15,646 23,845 31,963 44,756
Total assets 294,633 327,239 360,596 401,084
Shareholders' funds 234,078 265,964 298,311 335,634 RIC (Equity) CIPL.BO Country/Region India
Bloomberg (Equity) CIPLA IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 4.5 14.0 7.6 13.2 1570.00 1570.00
EBITDA 7.8 22.8 5.1 17.6 1470.00 1470.00
PBT 13.5 42.4 6.1 16.8 1270.00 1270.00
HSBC EPS 8.0 33.4 1.9 16.9
1170.00 1170.00
Ratios (%)
1070.00 1070.00
Revenue/IC (x) 1.1 1.1 1.1 1.1 970.00 970.00
ROIC 13.7 16.5 15.3 16.4 870.00 870.00
ROE 14.2 16.7 15.1 15.7 770.00 770.00
ROA 10.3 13.2 12.7 13.4 2022 2023 2024
EBITDA margin 22.5 24.3 23.7 24.6 Cipla Rel to BOMBAY SE SENSITIVE INDEX
Net debt/EBITDA (x) -0.2 -0.3 -0.4 -0.5
EPS Rep (diluted) 34.74 49.42 52.78 61.71
HSBC EPS (diluted) 38.83 51.82 52.78 61.71
DPS 5.77 8.20 10.51 12.80
Book value 290.25 329.79 369.90 416.18
28
18 April 2024
Financials & valuation: Sun Pharma Buy

EBITDA 117,729 131,449 150,639 172,092 EV/IC 6.7 6.3 6.0 5.7
Net interest -1,720 -1,892 -1,135 -795 FCF yield (%) 0.9 1.8 2.7 3.1
Taxation -8,476 -17,155 -18,881 -20,270
Net profit 84,736 93,273 114,674 134,311
Dividends -25,189 -28,915 -36,696 -42,979
Cash & others 57,703 74,528 119,233 174,829
Total assets 807,436 845,039 910,373 992,512
Net debt 9,875 -29,500 -92,205 -162,801 Target price (INR) 1790.00 Sector Pharmaceuticals
Shareholders' funds 559,954 624,312 702,291 793,622 RIC (Equity) SUN.BO Country/Region India
Bloomberg (Equity) SUNP IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 13.5 11.7 10.8 10.6
EBITDA 14.9 11.7 14.6 14.2 1680.00 1680.00
PBT 102.2 18.4 21.1 15.6
HSBC EPS 19.4 9.8 19.1 17.1 1280.00 1280.00
Ratios (%)
1080.00 1080.00
Revenue/IC (x) 0.9 0.9 0.9 1.0
ROIC 16.9 16.2 18.5 20.8 880.00 880.00
ROE 16.9 16.3 17.3 18.0 680.00 680.00
ROA 11.5 11.5 13.2 14.2 2022 2023 2024
EBITDA margin 26.8 26.8 27.7 28.6 Sun Pharma Rel to BOMBAY SE SENSITIVE INDEX
Net debt/equity 1.7 -4.5 -12.5 -19.6 Note: Priced at close of 15 Apr 2024
Net debt/EBITDA (x) 0.1 -0.2 -0.6 -0.9
CF from operations/net debt 549.7
EPS Rep (diluted) 35.32 38.88 47.79 55.98
HSBC EPS (diluted) 36.56 40.13 47.79 55.98
DPS 11.50 12.05 15.29 17.91
Book value 233.38 260.21 292.71 330.77
29
18 April 2024
Financials & valuation: Glenmark Pharmaceuticals Buy

EBITDA 22,784 14,875 26,326 34,396 EV/IC 2.9 3.0 2.7 2.4
Taxation -4,911 -1,617 -5,748 -8,294
Net profit 2,972 396 13,998 20,501
Dividends -1,366 -558 -2,158 -2,975
Cash & others 14,430 19,633 20,965 24,441
Total assets 193,717 188,338 201,183 218,012
Shareholders' funds 94,739 94,577 106,417 123,943 RIC (Equity) GLEN.BO Country/Region India
Bloomberg (Equity) GNP IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 7.1 -5.0 16.5 12.8
EBITDA 3.6 -34.7 77.0 30.7 1060.00 1060.00
Operating profit -2.7 -47.1 123.9 36.1
PBT -39.7 -67.1 625.4 44.4 860.00 860.00
HSBC EPS -31.3 -32.4 222.2 37.9
Ratios (%) 660.00 660.00
Revenue/IC (x) 1.2 1.1 1.3 1.4
460.00 460.00
ROIC 7.8 5.0 14.6 17.7
ROE 7.4 4.9 14.8 17.8 260.00 260.00
ROA 2.9 1.7 9.3 11.8 2022 2023 2024
EBITDA margin 17.5 12.1 18.3 21.2 Glenmark Pharmaceuticals Rel to BOMBAY SE SENSITIVE INDEX
EPS Rep (diluted) 10.53 1.40 49.61 72.66
HSBC EPS (diluted) 24.21 16.36 52.70 72.66
DPS 2.34 1.98 7.65 10.54
Book value 335.76 335.19 377.15 439.27
30
18 April 2024
Financials & valuation: Ipca Laboratories Buy

EBITDA 9,268 12,829 17,089 22,876 EV/IC 6.5 4.8 4.3 3.9
Net interest -455 -1,450 -1,100 -900 FCF yield (%) 0.9 -7.8 1.0 2.3
Taxation -2,534 -3,073 -3,250 -4,623
Net profit 4,713 6,681 10,335 14,687
Cash flow from operations 8,025 -6,338 8,281 12,936 GHG emission intensity* 391.0 No. of board members 8
Dividends -1,015 -1,296 -2,232 -3,172
Change in net debt -5,385 16,164 -1,049 -4,513
FCF equity 3,080 -26,268 3,281 7,686 Employee costs as % of revenues 20.6
Cash & others 18,532 7,069 7,617 11,630
Total assets 86,264 110,640 120,051 133,253
Net debt -3,720 12,444 11,396 6,882 Target price (INR) 1505.00 Sector Pharmaceuticals
Shareholders' funds 58,420 63,805 71,908 83,422 RIC (Equity) IPCA.BO Country/Region India
Bloomberg (Equity) IPCA IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 7.1 22.4 15.9 15.8
EBITDA -29.2 38.4 33.2 33.9 1360.00 1360.00
Operating profit -38.2 38.9 43.8 40.7
PBT -34.4 30.4 39.4 42.2 1160.00 1160.00
HSBC EPS -46.7 27.3 72.2 42.1
Ratios (%) 960.00 960.00
Revenue/IC (x) 1.3 1.3 1.2 1.2
760.00 760.00
ROIC 9.4 11.3 14.1 17.8
ROE 8.3 9.8 15.2 18.9 560.00 560.00
ROA 6.4 7.8 9.6 12.1 2022 2023 2024
EBITDA margin 14.8 16.8 19.3 22.3 Ipca Laboratories Rel to BOMBAY SE SENSITIVE INDEX
Net debt/equity -6.3 16.4 13.6 7.2 Note: Priced at close of 15 Apr 2024
Net debt/EBITDA (x) -0.4 1.0 0.7 0.3
CF from operations/net debt 72.7 188.0
EPS Rep (diluted) 18.58 26.33 40.74 57.89
HSBC EPS (diluted) 18.58 23.65 40.74 57.89
DPS 4.00 4.26 7.33 10.42
Book value 230.27 251.49 283.43 328.82
31
18 April 2024
Financials & valuation: Alembic Pharmaceuticals Hold

EBITDA 8,635 9,315 11,445 14,419 EV/IC 4.0 4.0 3.8 3.5
Taxation -126 -572 -988 -1,520
Net profit 3,420 5,826 7,364 9,489
Dividends -1,966 -1,748 -2,357 -3,036
Change in net debt -70 -4,532 -4,059 -2,187
Cash & others 823 4,755 7,814 8,801
Total assets 60,598 65,905 72,135 77,351
Net debt 5,536 1,004 -3,055 -5,242 Target price (INR) 890.00 Sector Pharmaceuticals
Shareholders' funds 43,705 47,783 52,791 59,243 RIC (Equity) ALEM.NS Country/Region India
Bloomberg (Equity) ALPM IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 6.5 12.3 11.7 11.3 1190.00 1190.00
EBITDA -13.4 7.9 22.9 26.0 1090.00 1090.00
PBT -37.8 64.9 29.5 31.9 890.00 890.00
HSBC EPS -30.5 21.5 26.4 28.8 790.00 790.00
Ratios (%) 690.00 690.00
Revenue/IC (x) 1.1 1.3 1.5 1.6 590.00 590.00
ROIC 10.8 12.5 15.3 18.6 490.00 490.00
ROE 10.0 12.7 14.6 16.9 390.00 390.00
ROA 6.4 10.0 11.2 13.1 2022 2023 2024
EBITDA margin 15.3 14.7 16.1 18.3 Alembic Pharmaceuticals Rel to BOMBAY SE SENSITIVE INDEX
Net debt/equity 12.7 2.1 -5.8 -8.9 Note: Priced at close of 15 Apr 2024
Net debt/EBITDA (x) 0.6 0.1 -0.3 -0.4
CF from operations/net debt 134.2 839.1
EPS Rep (diluted) 17.40 29.64 37.47 48.27
HSBC EPS (diluted) 24.40 29.64 37.47 48.27
DPS 5.22 8.89 11.99 15.45
Book value 222.34 243.09 268.57 301.39
32
18 April 2024
Financials & valuation: Alkem Laboratories Hold

EBITDA 16,095 22,458 25,769 29,388 EV/IC 8.4 7.3 6.5 5.8
Net interest -1,074 -1,100 -800 -725 FCF yield (%) 2.3 1.2 1.8 2.3
Taxation -2,980 -2,245 -3,478 -3,989
Net profit 9,842 17,927 21,255 24,404
Cash flow from investment 1,128 -3,500 -4,200 -5,000 CO2 reduction policy Yes Female board members (%) 25
Dividends -5,295 -5,737 -6,802 -7,809
Change in net debt -13,113 -2,726 -6,450 -8,669
Cash & others 26,169 28,895 33,545 40,414
Total assets 137,567 151,314 165,298 181,482
Shareholders' funds 90,453 102,643 117,097 133,692 RIC (Equity) ALKE.NS Country/Region India
Bloomberg (Equity) ALKEM IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 9.1 11.3 10.3 9.9
5500.00 5500.00
EBITDA -21.6 39.5 14.7 14.0
PBT -29.3 55.5 22.4 14.7 4500.00 4500.00
HSBC EPS -34.5 74.9 11.8 14.8
4000.00 4000.00
Ratios (%)
Revenue/IC (x) 1.7 1.8 1.8 1.8 3500.00 3500.00
ROIC 15.4 25.3 24.8 25.7 3000.00 3000.00
ROE 12.3 19.7 19.3 19.5 2500.00 2500.00
ROA 7.8 13.2 13.9 14.5 2022 2023 2024
EBITDA margin 13.9 17.4 18.1 18.8 Alkem Laboratories Rel to BOMBAY SE SENSITIVE INDEX
Net debt/EBITDA (x) -0.8 -0.7 -0.9 -1.1
EPS Rep (diluted) 82.31 149.93 177.77 204.11
HSBC EPS (diluted) 90.93 159.05 177.77 204.11
DPS 24.69 47.98 56.89 65.31
Book value 756.52 858.47 979.36 1118.15
33
18 April 2024
Financials & valuation: Biocon Hold

EBITDA 23,367 27,673 36,390 50,190 EV/IC 1.3 1.3 1.2 1.2
Taxation -1,339 -1,346 -3,414 -6,700
Net profit 4,627 12,329 10,422 20,845
Dividends -718 -394 -2,293 -4,586
Cash & others 24,001 30,989 34,497 41,511
Total assets 520,428 527,949 538,208 556,085
Shareholders' funds 178,669 190,604 198,733 214,992 RIC (Equity) BION.BO Country/Region India
Bloomberg (Equity) BIOS IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 34.4 30.3 22.9 25.1
EBITDA 18.6 18.4 31.5 37.9 420.00 420.00
PBT -16.9 83.0 -1.1 78.4
HSBC EPS -38.4 -62.9 482.3 100.0 320.00 320.00
Ratios (%)
270.00 270.00
Revenue/IC (x) 0.5 0.4 0.5 0.6
ROIC 4.5 3.2 4.6 7.2 220.00 220.00
ROE 3.7 1.0 5.4 10.1 170.00 170.00
ROA 3.2 4.7 3.8 5.5 2022 2023 2024
EBITDA margin 21.2 19.3 20.7 22.8 Biocon Rel to BOMBAY SE SENSITIVE INDEX
EPS Rep (diluted) 3.90 10.38 8.77 17.55
HSBC EPS (diluted) 4.06 1.51 8.77 17.55
DPS 0.61 0.30 1.75 3.51
Book value 150.43 160.48 167.32 181.01
34
18 April 2024
Financials & valuation: Divi's Laboratories Reduce

EBITDA 23,678 21,044 29,373 36,861 EV/IC 10.6 9.6 8.5 7.6
Taxation -5,453 -5,413 -6,772 -8,467
Net profit 18,234 15,407 22,671 28,347
Capex -4,730 -12,000 -11,000 -10,000 Energy intensity* 1,493.4 Average board tenure (years) 15.7
Dividends -7,964 -5,393 -7,935 -9,921
Cash & others 42,131 43,696 45,641 51,276
Total assets 144,388 154,589 169,129 188,049
Gross debt 33 33 33 33 Share price (INR) 3716.55 Free float 48%
Shareholders' funds 127,671 137,686 152,422 170,847 RIC (Equity) DIVI.BO Country/Region India
Bloomberg (Equity) DIVI IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue -13.3 -0.3 16.3 17.2
4900.00 4900.00
EBITDA -38.8 -11.1 39.6 25.5
Operating profit -43.1 -14.8 48.1 27.6 4400.00 4400.00
PBT -35.7 -12.1 41.4 25.0
HSBC EPS -38.4 -15.5 47.1 25.0 3900.00 3900.00
Ratios (%) 3400.00 3400.00
Revenue/IC (x) 0.9 0.8 0.9 0.9
ROIC 17.2 13.6 18.9 21.5 2900.00 2900.00
ROE 14.9 11.6 15.6 17.5 2400.00 2400.00
ROA 13.1 10.3 14.0 15.9 2022 2023 2024
EBITDA margin 30.5 27.2 32.6 34.9 Divi's Laboratories Rel to BOMBAY SE SENSITIVE INDEX
Net debt/EBITDA (x) -1.8 -2.1 -1.6 -1.4
EPS Rep (diluted) 68.69 58.04 85.40 106.78
HSBC EPS (diluted) 68.69 58.04 85.40 106.78
DPS 30.00 20.31 29.89 37.37
Book value 480.93 518.65 574.16 643.57
35
18 April 2024
Financials & valuation: Dr Reddy's Laboratories Hold

Revenue 240,938 279,800 296,966 315,901 EV/EBITA 18.0 12.9 11.9 11.1
EBITA 52,694 71,147 73,489 75,498 EV/IC 5.6 5.0 4.6 4.2
Net interest 2,853 3,400 3,300 3,200 FCF yield (%) 3.0 3.1 3.6 3.3
Taxation -15,300 -17,877 -19,281 -20,172
Net profit 45,067 55,268 54,876 55,947
Dividends -4,979 -6,500 -7,500 -8,500
Cash & others 66,499 94,462 133,873 171,935
Total assets 321,854 367,927 415,384 464,486
Shareholders' funds 230,991 279,759 327,135 374,582 RIC (Equity) REDY.BO Country/Region India
Bloomberg (Equity) DRRD IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 14.1 16.1 6.1 6.4 6800.00 6800.00
EBITA 47.3 35.0 3.3 2.7 6300.00 6300.00
PBT 86.9 21.2 1.4 2.6
HSBC EPS 50.8 35.7 1.0 2.0 5300.00 5300.00
Ratios (%) 4800.00 4800.00
Revenue/IC (x) 1.5 1.6 1.6 1.6 4300.00 4300.00
ROIC 22.2 28.2 26.8 26.3 3800.00 3800.00
ROE 19.0 21.3 18.1 15.9 3300.00 3300.00
ROA 13.9 15.3 13.4 12.2 2022 2023 2024
EBITA margin 21.9 25.4 24.7 23.9 Dr Reddy's Laboratories Rel to BOMBAY SE SENSITIVE INDEX
EBITA/net interest (x) Source: HSBC
Net debt/EBITA (x) -1.0 -1.2 -1.7 -2.2
EPS Rep (diluted) 272.31 333.94 331.58 338.05
HSBC EPS (diluted) 241.80 328.24 331.58 338.05
DPS 28.64 31.03 35.80 40.57
Book value 1395.72 1690.38 1976.65 2263.34
36
18 April 2024
Financials & valuation: Lupin Hold

EBITDA 17,206 35,885 40,594 50,236 EV/IC 4.9 4.5 4.3 4.1
Net interest -2,743 -3,175 -2,500 -2,000 FCF yield (%) 0.2 1.2 2.3 3.2
Taxation -2,688 -5,057 -7,190 -9,709
Net profit 4,301 21,005 21,420 27,494
Dividends -1,825 -3,393 -5,355 -6,874
Cash & others 12,931 17,046 23,656 34,950
Total assets 229,559 243,244 257,791 278,300
Net debt 29,509 24,395 12,784 -3,510 Target price (INR) 1630.00 Sector Pharmaceuticals
Shareholders' funds 124,645 142,257 158,322 178,943 RIC (Equity) LUPN.BO Country/Region India
Bloomberg (Equity) LPC IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 3.8 19.3 11.3 14.0 1850.00 1850.00
EBITDA -11.7 108.6 13.1 23.8 1650.00 1650.00
Operating profit -25.4 209.0 15.1 26.8
1450.00 1450.00
PBT 266.2 9.6 29.8
HSBC EPS -63.6 434.6 13.6 28.4 1250.00 1250.00
Ratios (%) 1050.00 1050.00
Revenue/IC (x) 1.1 1.2 1.3 1.4 850.00 850.00
ROIC 4.0 13.5 13.6 16.3 650.00 650.00
ROE 2.9 14.1 14.3 16.3 450.00 450.00
ROA 2.8 10.1 9.4 10.9 2022 2023 2024
EBITDA margin 10.3 18.1 18.4 19.9 Lupin Rel to BOMBAY SE SENSITIVE INDEX
Net debt/equity 23.5 17.0 8.0 -1.9 Note: Priced at close of 15 Apr 2024
Net debt/EBITDA (x) 1.7 0.7 0.3 -0.1
CF from operations/net debt 56.1 63.6 195.3
EPS Rep (diluted) 9.49 46.36 47.28 60.69
HSBC EPS (diluted) 7.78 41.60 47.28 60.69
DPS 3.42 6.36 10.05 12.90
Book value 275.12 313.99 349.45 394.96
37
18 April 2024
Financials & valuation: Zydus Lifesciences Hold

EBITDA 35,755 52,089 56,491 60,969 EV/IC 5.3 5.1 4.7 4.4
Net interest -333 80 -184 -83 FCF yield (%) 1.5 3.5 3.0 3.4
Taxation -5,878 -9,026 -10,514 -11,279
Net profit 19,603 36,590 36,774 39,445
Cash flow from investment 11,712 -11,000 -12,000 -14,000 CO2 reduction policy Yes Female board members (%) 20
Dividends -2,671 -9,662 -10,113 -12,326
FCF equity 14,533 33,094 27,899 32,296 Employee costs as % of revenues 16
Cash & others 5,731 24,163 41,949 61,919
Total assets 257,564 277,681 311,433 340,759
Net debt 5,901 -17,531 -35,317 -55,287 Target price (INR) 890.00 Sector Pharmaceuticals
Shareholders' funds 175,158 202,086 228,747 255,865 RIC (Equity) ZYDU.NS Country/Region India
Bloomberg (Equity) ZYDUSLIF IN Analyst Damayanti Kerai

Year to 03/2023a 03/2024e 03/2025e 03/2026e
Price relative
Y-o-y % change
Revenue 14.1 12.9 10.1 9.1
EBITDA 6.4 45.7 8.5 7.9 1040.00 1040.00
PBT -49.2 78.1 3.8 7.3 840.00 840.00
HSBC EPS 10.7 41.5 2.2 7.3
Ratios (%) 640.00 640.00
Revenue/IC (x) 1.0 1.1 1.2 1.2
440.00 440.00
ROIC 12.7 20.3 20.2 20.7
ROE 14.7 19.1 17.1 16.3 240.00 240.00
ROA 7.8 14.0 12.9 12.5 2022 2023 2024
EBITDA margin 20.7 26.8 26.3 26.0 Zydus Lifesciences Rel to BOMBAY SE SENSITIVE INDEX
EBITDA/net interest (x) 107.4 307.0 738.8 Source: HSBC
Net debt/equity 3.0 -7.8 -14.0 -19.8 Note: Priced at close of 15 Apr 2024
Net debt/EBITDA (x) 0.2 -0.3 -0.6 -0.9
CF from operations/net debt 421.0
EPS Rep (diluted) 19.15 35.74 35.92 38.53
HSBC EPS (diluted) 24.85 35.17 35.92 38.53
DPS 4.72 7.74 7.90 9.63
Book value 171.10 197.40 223.44 249.93
38
18 April 2024
Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s)
whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering
analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or
issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other
views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect
their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific
recommendation(s) or views contained in this research report: Damayanti Kerai, Gaurang Sakare and Shubhangi Gupta, Ph.D.
Important disclosures
Equities: Stock ratings and basis for financial analysis
HSBC and its affiliates, including the issuer of this report (“HSBC”) believes an investor's decision to buy or sell a stock should
depend on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations and that
investors utilise various disciplines and investment horizons when making investment decisions. Ratings should not be used or
relied on in isolation as investment advice. Different securities firms use a variety of ratings terms as well as different rating
systems to describe their recommendations and therefore investors should carefully read the definitions of the ratings used in
each research report. Further, investors should carefully read the entire research report and not infer its contents from the rating
because research reports contain more complete information concerning the analysts' views and the basis for the rating.
From 23rd March 2015 HSBC has assigned ratings on the following basis:
The target price is based on the analyst’s assessment of the stock’s actual current value, although we expect it to take six to 12
months for the market price to reflect this. When the target price is more than 20% above the current share price, the stock will
be classified as a Buy; when it is between 5% and 20% above the current share price, the stock may be classified as a Buy or a
Hold; when it is between 5% below and 5% above the current share price, the stock will be classified as a Hold; when it is between
5% and 20% below the current share price, the stock may be classified as a Hold or a Reduce; and when it is more than 20%
below the current share price, the stock will be classified as a Reduce.
Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation or resumption of coverage, change
in target price or estimates).
Upside/Downside is the percentage difference between the target price and the share price.
Prior to this date, HSBC’s rating structure was applied on the following basis:
For each stock we set a required rate of return calculated from the cost of equity for that stock’s domestic or, as appropriate,
regional market established by our strategy team. The target price for a stock represented the value the analyst expected the
stock to reach over our performance horizon. The performance horizon was 12 months. For a stock to be classified as Overweight,
the potential return, which equals the percentage difference between the current share price and the target price, including the
forecast dividend yield when indicated, had to exceed the required return by at least 5 percentage points over the succeeding 12
months (or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock was
expected to underperform its required return by at least 5 percentage points over the succeeding 12 months (or 10 percentage
points for a stock classified as Volatile*). Stocks between these bands were classified as Neutral.
*A stock was classified as volatile if its historical volatility had exceeded 40%, if the stock had been listed for less than 12 months
(unless it was in an industry or sector where volatility is low) or if the analyst expected significant volatility. However, stocks which
we did not consider volatile may in fact also have behaved in such a way. Historical volatility was defined as the past month's
average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating, however,
volatility had to move 2.5 percentage points past the 40% benchmark in either direction for a stock's status to change.
39
18 April 2024
Rating distribution for long-term investment opportunities

As of 31 March 2024, the distribution of all independent ratings published by HSBC is as follows:
Buy 55% (12% of these provided with Investment Banking Services in the past 12 months)
Hold 38% (15% of these provided with Investment Banking Services in the past 12 months)
Sell 7% (10% of these provided with Investment Banking Services in the past 12 months)
For the purposes of the distribution above the following mapping structure is used during the transition from the previous to current
rating models: under our previous model, Overweight = Buy, Neutral = Hold and Underweight = Sell; under our current model Buy
= Buy, Hold = Hold and Reduce = Sell. For rating definitions under both models, please see “Stock ratings and basis for financial
analysis” above.
For the distribution of non-independent ratings published by HSBC, please see the disclosure page available at
http://www.hsbcnet.com/gbm/financial-regulation/investment-recommendations-disclosures.
To view a list of all the independent fundamental ratings disseminated by HSBC during the preceding 12-month period, please
use the following links to access the disclosure page:
Clients of HSBC Private Banking: www.research.privatebank.hsbc.com/Disclosures
All other clients: www.research.hsbc.com/A/Disclosures
HSBC & Analyst disclosures

Disclosure checklist
Company Ticker Recent price Price date Disclosure

ALEMBIC PHARMACEUTICALS ALEM.NS 965.60 16 Apr 2024 7
ALKEM LABORATORIES ALKE.NS 4734.30 16 Apr 2024 7
APOLLO HOSPITALS APLH.BO 6334.75 16 Apr 2024 7
AUROBINDO PHARMA ARBN.BO 1111.10 16 Apr 2024 7
BIOCON BION.NS 263.75 16 Apr 2024 7
CIPLA CIPL.NS 1375.20 16 Apr 2024 6, 7
DIVIS LABORATORIES DIVI.BO 3764.20 16 Apr 2024 –
DR REDDYS LABORATORIES REDY.NS 6050.35 16 Apr 2024 7
GLENMARK PHARMACEUTICALS GLEN.BO 1060.00 16 Apr 2024 7
IPCA LABORATORIES IPCA.BO 1341.50 16 Apr 2024 7
LUPIN LUPN.NS 1611.45 16 Apr 2024 4, 7
MAX HEALTHCARE MAXE.NS 817.95 16 Apr 2024 –
RAINBOW CHILDREN’S RAIB.NS 1312.10 16 Apr 2024 –
SUN PHARMA SUN.NS 1537.55 16 Apr 2024 7
TORRENT PHARMA TORP.BO 2537.60 16 Apr 2024 6, 7
ZYDUS LIFESCIENCES ZYDU.NS 944.85 16 Apr 2024 7
Source: HSBC
1 HSBC has managed or co-managed a public offering of securities for this company within the past 12 months.
2 HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next
3 months.
3 At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this company.
4 As of 31 March 2024, HSBC beneficially owned 1% or more of a class of common equity securities of this company.
5 As of 29 February 2024, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of investment banking services.
and/or paid compensation to HSBC in respect of non-investment banking securities-related services.
and/or paid compensation to HSBC in respect of non-securities services.
8 A covering analyst/s has received compensation from this company in the past 12 months.
9 A covering analyst/s or a member of his/her household has a financial interest in the securities of this company, as
detailed below.
10 A covering analyst/s or a member of his/her household is an officer, director or supervisory board member of this
company, as detailed below.
40
18 April 2024
11 At the time of publication of this report, HSBC is a non-US Market Maker in securities issued by this company and/or in
securities in respect of this company.
12 As of 12 April 2024, HSBC beneficially held a net long position of more than 0.5% of this company’s total issued share
capital, calculated according to the SSR methodology.
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capital, calculated according to the SSR methodology.
14 HSBC Qianhai Securities Limited holds 1% or more of a class of common equity securities of this company.
HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt
(including derivatives) of companies covered in HSBC Research on a principal or agency basis or act as a market maker or
liquidity provider in the securities/instruments mentioned in this report.
Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking,
sales & trading, and principal trading revenues.
Whether, or in what time frame, an update of this analysis will be published is not determined in advance.
Non-U.S. analysts may not be associated persons of HSBC Securities (USA) Inc, and therefore may not be subject to FINRA
Rule 2241 or FINRA Rule 2242 restrictions on communications with the subject company, public appearances and trading
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Economic sanctions laws imposed by certain jurisdictions such as the US, the EU, the UK, and others, may prohibit persons
subject to those laws from making certain types of investments, including by transacting or dealing in securities of particular
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For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company
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Additional disclosures
1 This report is dated as at 18 April 2024.
2 All market data included in this report are dated as at close 15 April 2024, unless a different date and/or a specific time of
day is indicated in the report.
3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its
Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of
Research operate and have a management reporting line independent of HSBC's Investment Banking business.
Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses
to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.
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Production & distribution disclosures

1. This report was produced and signed off by the author on 18 Apr 2024 05:42 GMT.
2. In order to see when this report was first disseminated please see the disclosure page available at
https://www.research.hsbc.com/R/34/STJtqTN
41
18 April 2024
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Private Limited. MCI (P) 061/09/2023, MCI (P) 073/10/2023, MCI (P) 007/10/2023, MCI (P) 008/01/2024
[1233936]
42
Global Life Sciences & Healthcare

Research Team
Developed markets - US & Europe
Head, European Life Sciences & Healthcare
Research
Rajesh Kumar +44 20 7991 1629
rajesh4kumar@hsbcib.com
Morten Herholdt + 44 20 7992 4082

morten.herholdt@hsbc.com
Sezgi Oezener, CFA +49 211 910 3290

sezgi.oezener@hsbc.de
Yifeng Liu +44 20 7 9919355

yifeng.liu@hsbc.com
Shubhangi Gupta, PhD +91 80 6737 3629

shubhangi.gupta@hsbc.co.in
Sidharth Sahoo +91 77 3813 4135

sidharth.sahoo@hsbc.co.in
EEMEA Healthcare
Head of EEMEA Equity Research
Raj Sinha +971 4 423 6932
raj.sinha@hsbc.com
Jaina Heerabhai +27 60 5010 4253

jaina.heerabhai@za.hsbc.com
Asia
Damayanti Kerai +91 22 3396 0692
damayantikerai@hsbc.co.in
Charlene Liu +65 6658 0615

charlene.r.liu@hsbc.com.sg
Jeremy Chen +8862 6631 2866

jeremy.cm.chen@hsbc.com.tw
Jessie Lu +852 2996 6570

jessie.x.lu@hsbc.com.hk
Gaurang Sakare +91 94 2257 7832
gaurang.sakare@hsbc.co.in
Nicholas Lai +886 2 6631 2867

nicholas.yl.lai@hsbc.com.tw
Jess Hsieh +886 2 6631 2871

jess.ch.hsieh@hsbc.com.tw
Latin America
Santhosh Seshadri, CFA +91 80 4555 2758
santhosh.seshadri@hsbc.co.in

HSBC On India Pharma & Hospitals 4QFY24 Preview We Expect A Healthy

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HSBC On India Pharma & Hospitals 4QFY24 Preview We Expect A Healthy

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Downloaded from Capital IQ by Karthik Rajagopal (karthik.rajagopal@spglobal.com) at S&P Global Market Intelligence Inc.

on Saturday Apr 20 2024 03:19:14 AM,

4QFY24 preview: We expect a healthy quarter India

Key Buy rated names

Disclosures & Disclaimer Issuer of report: HSBC Securities and Capital

1: HSBC India Healthcare coverage summary

Equities ● Pharma and Healthcare

Our expectations for 4QFY24 (quarter ending 31 March 2024)

2: HSBC India healthcare coverage – 4QFY24e expectations summary

3: HSBC India pharma coverage 4QFY24e expectations (1/2)

Equities ● Pharma and Healthcare

Equities ● Pharma and Healthcare

5: HSBC India hospitals coverage 4QFY24e expectations

Equities ● Pharma and Healthcare

6: 4QFY24 earnings calendar

7: HSBC India Pharma coverage: Change in estimates (1/2)

8: HSBC India Pharma coverage: Change in estimates (2/2)

9: HSBC India Hospitals coverage: Change in estimates

Valuation and risks for hospital coverage

10: APHS: Sum-of-the-parts valuation summary

11: Rainbow: DCF valuation summary

12: Max Healthcare: Sum-of-the-parts (SOTP) valuation^^ summary

13: Max Healthcare – (pro-forma* based) financials overview

Notes on financials for Max Health

Valuation and risks for pharma coverage (Buy-rated names)

Priced at 15 April 2024

14: Torrent Pharma: valuation summary

15: Glenmark: valuation summary

Priced at 15 April 2024

16: Biocon Limited (BL): sum-of the-part (SoTP) valuation summary

Financials & valuation: Apollo Hospitals Buy

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation: Rainbow Children’s Medicare Buy

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation1: Max Healthcare Hold

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation: Aurobindo Pharma Buy

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation: Torrent Pharma Buy

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation: Cipla Buy

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation: Sun Pharma Buy

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation: Glenmark Pharmaceuticals Buy

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation: Ipca Laboratories Buy

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation: Alembic Pharmaceuticals Hold

Financial statements Valuation data

Ratio, growth and per share analysis

Financials & valuation: Alkem Laboratories Hold

Financial statements Valuation data

Ratio, growth and per share analysis