9 November 2015
2QFY16Results Update | Sector: Healthcare
BSE SENSEX
26,265
Bloomberg
Equity Shares (m)
M.Cap. (INRb)/(USDb)
52-Wk Range (INR)
1, 6, 12 Rel.Per (%)
AvgVal,INRm
Free float (%)
S&P CNX
7,954
SUNP IN
2,406
1994/29.2
1201/799
-9/11/-2
4226
45.3
Sun Pharma
CMP: INR804
TP: INR950 (18%)
Buy
In line result; margin tailwinds ahead
Financials & Valuation (INR b)
Y/E Mar
Net Sales
EBITDA
Adj PAT
EPS (INR)
EPS Gr (%)
BV/Sh(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (X)
2015 2016E 2017E
273.7
78.1
47.4
19.7
50.8
106.5
21.5
25.7
40.8
7.5
280.7
79.7
48.2
20.1
1.7
118.0
17.9
20.3
40.1
6.8
324.0
103.7
73.0
30.4
51.4
141.3
23.4
27.7
26.5
5.7
Estimate change
TP change
Rating change
SUNP’s 2Q PAT at INR11b was in line estimates helped by higher gross margins,
which offset higher other expenses and taxes during this quarter. 2Q revenues
declined 15% YoY to INR68b, in line with our estimates, primarily affected by
continued supply constrains at Halol facility and muted India/ROW performance.
EBITDA margin at 28% (v/s est 26%) registered 310bp sequential improvement,
with minimal Ranbaxy related cost during this quarter.
Capacity constrains at Halol continue to hurt top line growth:
2Q revenues at
INR68b (up 4% QoQ) were in line with our estimates. However, (a) supply
constraints at Halol (b) weak domestic sales (up 1%YoY), (c) currency impact in
RoW business (down 16%YoY) and (d) higher base of last year (with Diovan sales)
resulted into 14%YoY decline. US business also included USD40m one off sales
that was non-recurring in nature. We expect growth to rebound from 4QFY16, on
the back of key drug launches like gGleevec (USD 80-100m) and normalization of
Halol supplies.
With minimal Ranbaxy cost, margins stabilized at 28%:2Q
EBITDA margins at 28%
(est. 26%) were driven by 343bp QoQ jump in gross margin and saving in staff cost
(dropped 1.5% QoQ).R&D spend at 7% of sales was also down 70bp QoQ.
However, going ahead, it is expected to remain high on the back of increased
filings of complex generics and clinical trials of MK-3222. We believe, excluding the
impact of lower utilization levels at Halol plant, base margins are likely to be at 30-
31% for Sun pharma post Ranbaxy merger. Uptick from synergies (USD 300m in
FY18E) and niche US launches would lift EBITDA margin to 34-35% in FY18E
implying 19% EBITDA CAGR.
Earnings call takeaways:
(a) SUNP has already site-transferred Gleevec from
Halol, (b) To realize Ranbaxy related merger synergy much ahead of time, (c) Halol
remediation is on track and expects re-inspection in near term, (d)MK-3222 is
likely to be filed in CY17.
Valuation and view:
We have largely maintained our EPS estimates in FY16/17E.
Halol resolution remains a big overhang for the stock. However, at CMP, risk
reward is favorable as SUNP trades at 26x on FY17E and 19x on FY18E EPS
(discount to 3 yr average). We reiterate
Buy
with target price of INR950 (27x
Sep’17E P/E, in line with 3 year avg P/E).
Amey Chalke
(Amey.Chalke@MotilalOswal.com);+91 22 3982 5423
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Sun Pharma
Key takeaways from earnings call
India (26% of sales)
India business remained flat at INR18b, due to cautions efforts to control trade
inventory.
Sales in acute business were affected by withdrawal of bonus sales and also the
soft season.
These efforts were taken to improve profitability. However, there is no long
term impact.
As per AIOCD, secondary sales growth stands at 10%YoY. SUNP continued to
rank no 1 in Indian pharma market with 8.9% market share and ranks no 1 in 13
classes of doctors.
Integration with Ranbaxy for domestic formulation business is on track.
US business (48% of sales)
Revenues stood at USD510m that also include non recurring sales of USD40m
during this quarter.
Pricing pressure and capacity constrains at Halol continue to impact US sales.
Overall, 154 ANDAs are awaiting approvals. In 1HFY16, 6 ANDAs were filed and 8
approvals were received.
Emerging markets & RoW business
Registered negative growth mainly on account of steep currency depreciation in
some of the emerging markets and discontinuance of low margin businesses
in
2Q.
High receivables in 2Q
There
is no risk to outstanding receivables and are likely to moderate going
ahead.
Tax rates
Tax rates could go up if profitability of subsidiaries in high tax brackets increases
in the future.
Contingent liabilities related to tax disputes has increased due to merger of
Ranbaxy. Going ahead,
SUNP will try to reduce these litigations.
Ranbaxy integration
SUNP has been able to finish most of the Ranbaxy related integration activities
ahead of time. It is on track to fully realize Ranbaxy related synergy by FY18.
Halol Update
Since 483 observations were of OAI status, facility will only come under
compliance only after re-inspection.
Till date, regular updates have been sent to US FDA as per the improvement
done in the facility. However, both the parties have finalized the inspection
date.
During 2Q, Halol supplies have seen marginal improvement and SUNP can reach
full utilization levels before US inspection. Gleevec has already been site
transferred (No risk to Feb’16 launch).
2
9 November 2015

Sun Pharma
MK-3222
Phase 3 data is expected by FY16 end and product to be filed in CY17.
SUNP is evaluating the options of expanding to new indications. Time required
for getting new label for new indication would depend on trials.
APIs of MK-3222 will be made at Merck facility and initial trials will also be done
at Merck. Merck will also be actively involved in selecting CMO.
2Q Result snapshot
Exhibit 1: Quarterly Snapshot (Revenue mix)
Revenue split
2Q FY15
18,013
42,630
16,782
2,790
334
80,549
1Q FY16
17,837
30,906
14,197
2,714
214
65,868
2Q FY16
18,187
33,158
14,057
3,146
142
68,689
%YoY
1.0
-22.2
-16.2
12.7
-57.6
-14.7
%QoQ
2.0
7.3
-1.0
15.9
-34.0
4.3
FY15
67,166
137,196
60,646
9,910
792
275,709
FY16
%YoY
72,949
8.6
136,414
-0.6
57,547
-5.1
11,488
15.9
796
0.5
279,194
1.3
Source: Company, MOSL
India
USA
RoW
API
Other
Total sales
Exhibit 2: Consolidated Profit and Loss statement
(INR m)
Total revenues
Cost of revenues
Gross profit
Gross margin (%)
Staff cost
% of Total Revenues
R&D expense
% of Total Revenues
Other expense
% of Total Revenues
EBITDA
EBITDA margin (%)
Depreciation
EBIT
Interest cost
Other income (net)
PBT
Income tax
Effective tax rate (%)
Net Profit - reported
Minority interest
Exceptional items
Adjusted Net Profit
2Q FY15
79,793
18,172
61,621
77.2
11,143
14
4,169
5.2
16,248
20
30,061
37.7
2,691
27,371
1,617
291
26,045
2,794
11
23,252
2,749
-
20,502
1Q FY16
65,222
17,174
48,048
73.7
12,270
19
4,999
7.7
14,635
22
16,143
24.8
2,401
13,742
1,230
3,408
15,920
2,268
14
13,652
2,007
6,852
4,793
2Q FY16
68,033
15,583
52,450
77.1
12,088
18
4,769
7.0
16,600
24
18,994
27.9
2,711
16,282
1,484
2,256
17,055
3,355
20
13,700
2,633
-
11,067
%YoY
-14.7
-14.2
-14.9
(13)bp
8.5
380 bp
14.4
178 bp
2.2
404 bp
-36.8
(976)bp
0.8
-40.5
-8.2
674.5
-34.5
20.1
-41.1
-4.2
-46.0
%QoQ
4.3
-9.3
9.2
343 bp
-1.5
(104)bp
-4.6
(66)bp
13.4
196 bp
17.7
317 bp
12.9
18.5
20.7
-33.8
7.1
47.9
0.4
31.2
130.9
FY15
274,334
67,392
206,943
75.4
44,299
16
18,373
7
65,604
24
78,667
28.7
11,947
66,720
5,790
5,477
66,407
9,147
13.8
57,260
9,488
2,378
45,394
FY16
280,688
67,497
213,192
76.0
48,433
17
21,401
8
63,616
23
79,742
28.4
10,698
69,044
5,167
11,312
75,189
%YoY
2.3
0.2
3.0
52 bp
9.3
111 bp
16.5
93 bp
-3.0
(125)bp
1.4
(27)bp
-10.5
3.5
-10.8
106.5
13.2
11,697
27.9
15.6
178 bp
63,492
10.9
9,925
6,852
46,715
2.9
Source: Company, MOSL
Sun pharma’s US subsidiary Taro reported 2Q numbers on 5
th
Nov 2015. Key
highlights of 2Q results:
Taro’s 2QFY16results met expectations
9 November 2015
3

Sun Pharma
Net sales at USD 212m, (15% YoYdecline, est USD 226m) declined 1.5%
sequentially, affected by price protection charges undertaken in 2Q. Adjusted
for the price protection provisions, the net sales declined7.7%YoY. (in line with
our sales estimates at USD 226m).
Gross margins stood at 79.6% (in line) with gross profits declining15%YoY in
2QFY16.
Operating profits (margins at 59%) declined faster at 22%YoY, led by higher R&D
(8.8% of sales) and other expenses (11.8% of sales).
Reported PAT at USD 134m, beat estimate by 18% (includes a forex loss of USD
35m). Adjusted for forex loss, PAT was in line with estimates. Tax rate was lower
in 2Q at 18.5% vsest of 20%.
During the quarter, Taro received approvals for Keveyis with Orphan drug status
and 7 years of data exclusivity. While pending ANDA approvals stand at 34
ANDAs.
Cash and cash equivalent: USD 1.1b (up USD 143m).
We expect Taro to retain leadership in US generic dermatology market:
We do not
expect disruption in recent price hikes taken in relatively less crowded dermatology
generic market (USD2.5bn, 5-6 large players) Product development and approval
timeline would restrict new players’ entry over medium term and pricing is likely to
be benign. Taro has intensified product development over last 4 yrs (32 pending
ANDAs) which would aid its revenue growth over medium term.
Exhibit 3:
Taro
financials
USD M
Sales
Growth (%)
Cost of sales (inclDepn)
Gross profit
GP Margin (%)
Operating expenses:
R&D
R&D as a % of sales
SG&A
SG&A as a % of sales
Operating Profit
Operating Profit Margin (%)
Financial expenses
Extraordinary items inclforex
Other income
PBT
Taxes
Effective tax rate (%)
Net income before MI
Minority interest
Net income
2QFY16A
212.1
43.3
168.8
79.6
18.7
8.8
25.0
11.8
125.1
59.0
-3.4
-34.7
0.8
164.0
30.4
18.5
133.6
0.0
133.6
2QFY15A
250.8
52.7
198.1
79.0
13.8
5.5
24.0
9.6
160.3
63.9
-2.1
-5.9
1.6
169.8
26.1
15.4
143.7
0.3
143.4
% YoY
-15.4
-17.9
-14.8
0.6
35.2
4.2
-21.9
-4.9
1QFY16A
215.3
43.5
171.8
79.8
14.5
6.8
22.9
10.6
134.4
62.4
-3.3
4.2
0.4
133.8
30.1
22.5
103.7
0.0
103.6
% QoQ
-1.5
-0.4
-1.7
-79.2
28.6
9.2
-6.9
2QFY16E
225.8
45.2
180.6
80.0
15.8
7.0
22.6
10.0
142.2
63.0
0.0
0.0
0.5
142.7
29.2
20.5
113.5
0.0
113.5
% Var.
-6.0
-4.1
-6.5
18.3
10.7
-12.0
-3.4
22.6
14.9
-7.0
-6.8
28.9
28.9
17.7
17.7
E: MOSL Estimates
9 November 2015
4

Sun Pharma
Operating metrics
Exhibit 4: Key operating metrics
3QFY13 4QFY13
Revenue Mix (%)
India
USA
RoW
API
Revenue Gr. (%)
India
USA
RoW
API
As % of sales
Raw material
Staff cost
R&D cost
Other expenses
Tax Rate
Margins (%)
Gross Margins
EBITDA Margins
EBIT Margins
PAT margins
1QFY14
2QFY14 3QFY14
4QFY14
1QFY15 2QFY15
3QFY15
4QFY15 1QFY16 2QFY16
27.3
51.7
13.6
7.4
33.2
13.3
43.7
40.3
36.0
25.0
57.3
12.6
5.0
31.9
(11.1)
76.9
22.1
11.0
24.1
57.6
12.8
5.6
30.8
44.4
31.8
23.0
(3.7)
22.4
61.0
11.6
4.9
57.0
17.2
94.6
32.2
20.4
21.9
61.8
12.0
4.3
49.8
20.1
79.2
32.1
(16.7)
23.1
60.6
10.8
5.5
31.5
21.4
39.1
12.9
30.5
25.2
47.4
24.0
3.2
81.1
16.9
48.8
239.3
87.6
22.4
53.1
20.7
3.8
89.3
21.3
64.9
237.6
83.0
25.1
48.7
22.5
3.6
61.0
84.3
26.4
200.3
66.2
25.3
49.1
20.9
4.6
51.4
65.8
22.6
191.2
30.5
27.1
46.9
21.6
4.1
3.2
11.1
2.2
(7.2)
57.4
26.5
48.3
20.5
4.6
(12.4)
1.3
(18.8)
(15.4)
39.5
19.6
13.6
5.7
16.9
18.6
80.4
44.2
44.1
36.2
17.2
14.3
7.1
20.3
13.8
82.8
41.0
42.0
35.9
15.1
14.5
5.5
21.0
10.0
84.9
44.0
43.9
(33.4)
19.1
12.6
5.0
19.6
15.0
80.9
43.6
44.1
37.2
18.3
12.0
7.1
16.5
12.0
81.7
46.1
47.4
41.5
16.6
13.0
7.6
18.7
6.4
83.4
44.2
46.7
43.6
26.1
17.4
5.5
20.9
11.9
73.9
30.3
29.9
20.5
22.8
14.0
5.2
20.4
10.6
77.2
37.6
34.2
29.5
24.9
15.9
6.8
21.7
26.0
18.4
8.9
32.4
26.3
18.8
7.7
22.4
14.2
73.7
24.8
26.3
10.4
22.9
17.8
7.0
24.4
19.7
77.1
27.9
27.2
20.1
60.2 (101.8)
75.1
30.8
27.1
9.9
74.0
14.3
11.6
19.4
Source: Company; MOSL
9 November 2015
5

Sun Pharma
Valuation and view
SUNP has historically commanded 20-25% premium to Indian pharma peers,
typically at 25-27x one-year forward P/E multiples. The stock is currently trading at
40x FY16E and 26.5x FY17E which does not fully value its rich US pipeline and stable,
cash-generating domestic business. Consistent outperformance in the domestic
market with market share gains and high profitability reflect management’s
execution capability (and product selection skills). Identification of value-accretive
assets and integrating them successfully has been one of the cornerstones of SUNP’s
success.
We believe that the valuation premium is likely to be maintained on the back of:
High earnings visibility on a favorable base (forecast EPS CAGR of 26% over
FY15-18E).
Sustained improvement in ROE, implying high capital efficiency. We expect ROE
to expand from 21% in FY15E to 25% by FY18E.
Strong cash generation and Healthy Balance Sheet. We expect SUNP to generate
INR 219b free cash flows over FY16-18E and its cash surplus to reach INR 200b+
(~50% of capital employed)
Our Target price implies 18% upside
We assign a target P/E of 27x to SUNP’s base business EPS for Sep’17E and arrive at
target price of INR 950, implying 18% upside from current levels. Our target multiple
is:
At higher end of its historic average P/E band (1 yr forward)
At 25% average to sector average P/E of 22x, in line with the past average
Lower than current trading multiple (FY16E P/E)
Key catalysts going forward are:
We have not factored any potential acquisition that SUNP can execute (net cash
surplus) as well as positive development of its novel molecule (tildrakizumab, in-
licensed from Merck).
Execution of RBXY integration would be a key catalyst to watch out in future.
Higher than expected upsides from niche molecules in US (gGleevec).
Risks to our thesis are:
Currency volatility:
SUNP derives more than 75% of its revenues (and profits)
from overseas business (largely the US) and hence is affected by currency
fluctuations on an operational level. As a prudent measure though, the company
has hedged ~50% of its net exposure to the USD through forward covers
(<12mths duration) in the past. A reversal in current trend (i.e., rupee
appreciation) thus poses downside risk to forecasts.
Increased competition in US derma market:
Taro accounts for 17% of SUNP’s
business and is currently benefitting from lack of enough competition in the US
derma market (and price hikes). We do not expect new player’s entry for 4-5
years at least due to developmental timeline, etc. However, if some of the
9 November 2015
6

Sun Pharma
approved players (2-3) re-enter the market, there could be risk to pricing in the
US derma market, hurting SUNP (Taro) adversely.
Exhibit 5: PE Band (x)
62
52
42
32
22
12
15.7
25.8
22.6
33.3
PE (x)
Median(x)
Peak(x)
Min(x)
Avg(x)
52.1
Exhibit 6: PE relative to Sensex
210
140
70
0
-70
59.9
Sun Pharma PE Relative to Sensex PE (%)
LPA (%)
106.2
Source: Company, MOSL
Source: Company, MOSL
9 November 2015
7

Sun Pharma
Story in charts
Exhibit 7: Sequential improvement in 2Q
Sales (INR b)
81
40
58
33
29
32
31
31
35
42
50
32
3
27
43
40
63
80
69
61
Growth YoY (%)
90
61
52
-15
40
35
Exhibit 8: Supply issues continue to hit US business
US sales (USD m)
64
69
56
61
Growth YoY (%)
119
31
22
26
22
-19 -42
65 68
245 276 330 373 414 432 402 601 906 546 492 487 522
Source: Company, MOSL
Source: Company, MOSL
Exhibit 9: Domestic growth was muted in 2Q
Domestic formulations (INR b)
89
44
15
13
17
20
21
18
17
16
11
18
-11
8.1 7.9 7.8 8.5 9.5 9.5 9.5 16
1
18
Growth YoY (%)
89
84
66
Exhibit 10: R&D spend at 7% of sales in 2Q
R&D cost (INR b)
7.1
7.1 7.6
5.5 5.2
% of sales
8.9
6.8
7.7
5.3 5.7
5.5 5.0
7.0
1.4 1.6 2.2 1.9 2.1 3.1 3.1 3.5 4.2 4.7 5.5
5.0 4.8
Source: Company, MOSL
Source: Company, MOSL
Exhibit 11: Revenues to grow by 10% CAGR
Formulations (INR b)
API (INR b)
15
Exhibit 12: US generic sales to be driven by new launches
US Sales (USD m)
110.8
14
47.5
-30.5
494
55.0
42.9
39.3
-6.7
729
1130
1615
2249
2099
2460
Growth YoY (%)
11
8
154
265
12
17.2
2777
6
34
5
53
6
75
8
106
267
311
356
FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Source: Company, MOSL
Source: Company, MOSL
9 November 2015
8

Sun Pharma
Exhibit 13: Domestic formulations sales to sustain
momentum
India sales (INR b)
82%
Growth YoY (%)
34.0
34.2
Exhibit 14: Margins likely to improve
EBITDA (INR m)
39.9
43.7
43.3
EBITDA Margin (%)
28.5
28.4
32.0
35.2
30%
24
22%
29
2%
30
24%
37
67
9%
73
17%
85
16%
99
14
FY10
20
FY11
32
FY12
49
FY13
69
FY14
78
80
104
130
FY15 FY16E FY17E FY18E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 15: Earnings to grow at 27% CAGR (on fav. base)
Exhibit 16: Healthy return ratios to sustain
RoE (%)
30.4
23.6
21.0
23.9
22.0
31.5
25.6
21.5
25.7
20.3
17.9
23.4
RoCE (%)
27.7
31.1
25.1
18.8
6
8
11
12
13
20
20
30
40
FY11
FY12
FY13
FY14
FY15
FY16E FY17E FY18E
Source: Company, MOSL
FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Source: Company, MOSL
9 November 2015
9

Sun Pharma
Financials and valuations
Key assumption
Segment growth
2011
30.1
102.7
34.1
-5.1
42.5
24.0
12.1
5.0
34.3
2012
22.5
54.0
72.6
17.9
39.8
19.2
12.6
4.9
40.0
2013
1.7
77.3
37.3
22.8
40.5
18.4
13.6
5.5
44.0
2014
24.5
59.0
25.0
6.1
42.0
17.3
12.9
6.5
43.5
2015
81.9
40.2
217.8
23.7
70.2
24.6
16.1
6.7
28.7
2016E
8.6
-0.6
-5.1
15.9
1.3
24.0
17.2
7.6
28.6
2017E
17.0
17.2
14.8
9.2
16.4
23.3
15.5
8.2
32.2
2018E
16.4
12.9
14.6
8.1
14.1
22.1
14.8
8.2
35.4
India
USA
RoW
API
Total sales
Expenses
Raw material
Staff cost
R&D cost
EBITDA Margins
Income Statement
Y/E March
Net Sales
Change (%)
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income - Rec.
Extra-ordinary Exp
PBT
Tax
Tax Rate (%)
Profit after Tax
Change (%)
Margin (%)
Less: Mionrity Interest
Net Profit
Reported PAT (excl. Ex. Items)
2011
57,214
42.8
19,566
34.2
2,049
17,518
739
3,611
32
20,357
1,286
6.3
19,072
41.6
33
913
18,158
18,158
2012
80,098
40.0
31,947
39.9
2,912
29,035
282
4,856
11
33,598
3,826
11.4
29,772
56.1
37
3855
25,917
25,917
2013
112,388
40.3
49,063
43.7
3,362
45,701
443
3,727
5,836
43,148
8,456
19.6
34,693
16.5
31
4863
29,830
29,830
2014
160,044
42.4
69,257
43.3
4,092
65,165
442
6,282
25,174
45,831
7,022
15.3
38,809
11.9
24
7375
31,434
31,434
2015
273,742
71.0
78,075
28.5
11,947
66,128
5,790
6,069
2,378
64,029
9,147
14.3
54,882
41.4
20
9488
45,394
47,415
2016E
280,688
2.5
79,742
28.4
10,698
69,044
5,167
7,015
6,852
64,040
11,697
18.3
52,343
-4.6
19
9925
42,418
48,242
2017E
323,978
15.4
103,703
32.0
12,179
91,524
3,075
10,230
0
98,679
15,789
16.0
82,890
58.4
26
9868
73,022
73,022
(INR Million)
2018E
369,769
14.1
130,285
35.2
12,959
117,326
2,088
13,317
0
128,555
20,569
16.0
107,986
30.3
29
12855
95,131
95,131
Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Net Fixed Assets
Capital WIP
Goodwill
Investments
Curr. Assets
Inventory
Account Receivables
Cash and Bank Balance
L & A and Others
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
E: MOSL Estimates
9 November 2015
2011
1,036
93,798
94,833
8,472
-3652
3,717
103,370
22,334
2,355
10,599
22,297
61,146
14,895
11,049
22,046
13,156
15,361
10,078
5,283
45,785
103,371
2012
1,036
120,628
121,663
11,616
-5199
2,739
130,820
26,136
3,447
13,378
22,129
90,681
20,870
19,261
33,672
16,878
24,950
14,410
10,541
65,730
130,820
2013
1,036
148,862
149,897
16,351
-7122
2,072
161,197
31,604
5,626
24,870
24,116
113,420
25,778
27,108
40,587
19,948
38,439
15,752
22,687
74,981
161,198
2014
2,071
183,178
185,249
19,212
-9110
24,982
220,333
34,982
8,415
33,191
27,860
177,393
31,230
22,004
75,902
48,257
61,509
15,887
45,622
115,884
220,333
2015
2,406
253,826
256,232
28,661
-17516
77,827
345,203
69,752
20,386
57,073
27,163
297,403
56,680
53,123
109,980
77,619
126,574
59,198
67,376
170,828
345,203
2016E
2,406
281,419
283,825
38,586
-17516
64,585
369,479
104,055
22,425
57,073
27,163
295,536
55,232
51,689
108,976
79,640
136,773
59,290
77,483
158,763
369,479
2017E
2,406
337,552
339,958
48,454
-17516
47,308
418,203
103,876
24,667
57,073
27,163
361,032
61,951
55,193
155,328
88,560
155,608
66,503
89,105
205,424
418,203
(INR Million)
2018E
2,406
415,792
418,198
61,309
-17516
34,795
496,786
102,917
27,134
57,073
27,163
456,937
67,042
62,971
227,314
99,610
174,438
71,968
102,471
282,499
496,786
10

Sun Pharma
Ratios
Y/E March
EPS
Fully Diluted EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Fixed Asset Turnover (x)
Debtor (Days)
Inventory (Days)
Working Capital T/O (Days)
Leverage Ratio
Interest Cover Ratio
Debt/Equity (x)
2011
7.5
7.5
8.4
39.4
1.5
22.1
2012
10.8
10.8
12.0
50.6
1.8
17.2
74.6
15.9
23.5
58.9
0.2
21.0
23.6
3.2
70
95
151
23.9
30.4
3.3
88
95
146
2013
12.4
12.4
13.8
62.3
2.2
17.5
64.8
12.9
16.6
38.1
0.3
22.0
31.5
3.9
88
84
112
2014
13.1
13.1
14.8
77.0
2.6
18.7
61.5
10.4
11.6
26.8
0.3
18.8
25.6
4.8
50
71
91
2015
19.7
19.7
23.8
106.5
4.3
21.8
40.8
7.5
6.8
24.0
0.5
21.5
25.7
5.2
71
76
81
2016E
20.1
20.1
22.1
118.0
5.0
26.9
40.1
6.8
6.6
23.4
0.6
17.9
20.3
3.2
67
72
65
2017E
30.4
30.4
35.4
141.3
6.0
20.4
26.5
5.7
5.6
17.3
0.7
23.4
27.7
3.1
62
70
56
2018E
39.5
39.5
44.9
173.8
6.0
15.6
20.3
4.6
4.6
13.2
0.7
25.1
31.1
3.6
62
66
54
23.7
0.0
103.0
0.0
103.1
0.0
147.5
0.2
11.4
0.3
13.4
0.3
29.8
0.2
56.2
0.1
Cash Flow Statement
Y/E March
OP/(Loss) bef. Tax
Int./Dividends Recd.
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Invest.
CF from investments
Change in networth
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
2011
19,534
3,611
-4,048
-286
18,811
-16,500
2,311
9,367
-7,134
8,225
2,006
-739
-4,213
5,280
16,957
5,089
22,046
2012
31,935
4,856
-5,373
-8,319
23,099
-10,585
12,515
169
-10,416
5,318
-978
-282
-5,115
-1,058
11,626
22,046
33,672
2013
43,227
3,727
-10,379
-2,336
34,239
-22,501
11,737
-1,987
-24,488
4,334
-668
-443
-6,058
-2,835
6,915
33,672
40,587
2014
44,083
6,282
-9,010
-5,589
35,767
-18,580
17,187
-3,745
-22,324
6,674
22,910
-442
-7,270
21,872
35,315
40,587
75,902
2015
75,697
6,069
-17,553
-20,865
43,348
-82,570
-39,223
698
-81,872
37,513
52,845
-5,790
-11,964
72,605
34,080
75,902
109,982
2016E
72,890
7,015
-11,697
11,060
79,268
-47,039
32,229
0
-47,039
-750
-13,242
-5,167
-14,075
-33,234
-1,005
109,980
108,976
(INR Million)
2017E
103,703
10,230
-15,789
-308
97,836
-14,242
83,594
0
-14,242
0
-17,276
-3,075
-16,890
-37,241
46,352
108,976
155,328
2018E
130,285
13,317
-20,569
-5,089
117,944
-14,467
103,477
0
-14,467
0
-12,513
-2,088
-16,890
-31,491
71,986
155,328
227,314
9 November 2015
11

Sun Pharma
Corporate profile: Sun Pharma
Company description
Sun Pharma is among the largest players in the
domestic formulations market and the most
profitable one. It makes and markets specialty
medicines and APIs for chronic therapy areas such
as cardiology, psychiatry, neurology, etc. Sun has
forayed into regulated markets by acquiring
majority stake in CaracoPharma and has
strengthened its presence in US by recent
acquisition of Taro.
Exhibit 16: Sensex rebased
Exhibit 17: Shareholding pattern (%)
Sep-15
Promoter
DII
FII
Others
54.7
8.1
27.6
9.7
Jun-15
54.7
7.8
23.8
13.8
Sep-14
63.7
4.6
22.8
9.0
Exhibit 18: Top holders
Holder Name
LIC of India
Government of Singapore
Company Ltd General Sub Fund
Lakshdeep Investments & Finance Pvt Ltd
Abu Dhabi Investment Authority-Gulab
% Holding
3.0
1.6
1.5
1.5
1.2
Note: FII Includes depository receipts
Exhibit 19: Top management
Name
Israel Makov
Dilip S Shanghvi
Designation
Chairman
Managing Director
Exhibit 20: Directors
Name
Israel Makov
Dilip S Shanghvi
AshwinDani*
Keki M Mistry*
Hasmukh S Shah*
*Independent
Name
S MohanchandDadha*
Sudhir V Valia
Sailesh T Desai
RekhaSethi*
Exhibit 21: Auditors
Name
Deloitte Haskins & Sells LLP
KailashSankhlecha& Associates
Type
Statutory
Cost Auditor
Exhibit 22: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
FY18
MOSL
forecast
20.1
30.4
39.5
Consensus
forecast
23.3
35.6
42.4
Variation
(%)
-13.6
-14.5
-6.9
9 November 2015
12

Sun Pharma
NOTES
9 November 2015
13

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