Alembic Pharmaceuticals Limited. - SKP · PDF fileAlembic Pharmaceuticals Limited. ... NSE code APLLTD Bloomberg code ALPM:IN ... API Business: Concentration on higher margin orders

March 19, 2013

Alembic Pharmaceuticals Limited.

Strong pipeline ahead…

CMP Rs 101 Target Rs: 137 Initiating Coverage - Buy

SKP Securities Ltd www.skpmoneywise.com Page 1 of 13

z

Face Value (Rs.) 2

Equity Capital (Rs.Cr) 37.7

M. Cap (Rs. Cr.) 1,904

52‐wk High / Low (Rs.) 112.95/41.70

Avg.Volume (qtrly) 45986

BSE code 533573

NSE code APLLTD

Bloomberg code ALPM:IN

Key Share Data

Shareholding Pattern (as on Dec 31,2012)

74%

7% 1%

18%Promoters

FII

DII

Others

Source: Company data, BSE

Particulars FY11 FY12 FY13E FY14E FY15ENet Sales 1184 1438 1502 1727 2150

growth (%) 21% 4% 15% 24%

EBIDTA 160 220 242 299 377

PAT 85 130 153 185 245

growth (%) 52% 18% 20% 33%

EPS (Rs.) 5 7 8 10 13

BVPS (Rs.) 16 21 25 33 44

Key Ratios FY11 FY12 FY13E FY14E FY15E

P/E (x) 22.3 14.6 12.4 10.3 7.8

P/BVPS (x) 6.4 4.9 4.0 3.1 2.3

M.Cap/Sales (x) 1.6 1.3 1.3 1.1 0.9

EV/EBIDTA (x) 13.6 9.5 8.7 6.6 5.0

ROCE (%) 19% 26% 24% 28% 31%

ROE(%) 58% 38% 35% 34% 34%

EBIDTA Mar. (%) 14% 15% 16% 17% 18%

PAT Mar. (%) 7% 9% 10% 11% 11%

Financials (Rs In Cr.)

Price Performance APL vs CNXpharma

‐100%

0%

100%

200%

Alembic CNXPHARMA Analyst: Rupali Goregaonkar

Tel No.:+91 22 2281 9012; Mob: +919820501348

Email: [email protected]

Company Profile Alembic Group was established in 1907. Alembic Pharmaceutical Ltd. is a vertically integrated research & development pharmaceutical company. It has presence in regulated & semi regulated markets with wide varieties of products in API & formulation. It has established well equipped Research & Development centre at Vododara with highly talented pool of 300 Research Scientists. Investment Rationale International Business to Grow: strong pipeline will boost revenue Since the inception of R&D centre, APL has gradually increased its focus on

the regulated markets where it has filed cumulative 55 ANDA & 58 DMF and received approval of 22 ANDA from the US markets.

Going ahead, APL will focus on Niche products (Para IV, 505 (b) (2) NDA – technically complex products) by filing in the regulated market to achieve the opportunity of ongoing patent expiration. On the basis of this, we can expect that APL will file an additional 13 (ANDA) in FY13E, 12 in FY14E and 12 in FY15E.

APL has earmarked Rs 100 cr. in the International Generic Division. With this investment the company will enhance its existing Panelav production capacity of 2.7 billion to 5 billion tablets.

With the ramp up of enhanced capacity, new launches and backlog of orders, the revenue of the International Generics division is expected to grow by 32% CAGR between FY12-15E.

Branded formulation business: Focusing more on Chronic therapy than acute therapy This shift in focus will enable the company to depend less on the acute

division which in turn will lead to expansion of margins and market share and growth of revenue by 17% CAGR between FY12-15E.

API Business: Concentration on higher margin orders We expect that APL will only concentrate on higher margin orders. This

will enable the company to expand its margins. Outlook & Recommendation: We expect APL to report healthy topline on the back of operation of

enhanced capacity, new product launches, backlog of orders in the international divisions.

On an EV/EBITDA basis, APL is trading at 8.7x, 6.6x and 5x its FY13E, FY14E and FY15E EBITDA of Rs.242, Rs. 299 and Rs. 377 respectively.

APL trade at a PE of 12.4x, 10.3x and 7.8 in FY13E, FY14E and FY15E earning of Rs.8, Rs. 10 and Rs. 13 respectively.

We recommend Buy rating on the stock with the 15 month target price of Rs. 137 per share, implying an upside of ~36% from current levels. We have arrived at the target by assigning to EV/EBITDA methodology of 7x.


SKP Securities Ltd. www.skpmoneywise.com Page 2 of 13

The company: Snapshot

Alembic Group was established in 1907, It is a vertically integrated research and development pharmaceutical company that has an ability to develop, manufacture and market pharmaceutical products, pharmaceutical substances and intermediates. It is a market leader in Macrolides segment of anti – infective drugs in India and manufactures a range of APIs, which include Penicillin G (Pen G), Erythromycin, Roxithromycin & Azithromycin.

Alembic Ltd. has 4 Business verticals : Pharma Vododara (API division) Power asset Real Estate assets

Generic Business: largely driven by the regulated markets and R&D activites.

Engaged in manufacturing & marketing of fermentation and chemistry based API

Engaged in power generation through Co‐generation power plants, Wind mills

Holds land assets at Vododara & real estate activity

Domestic formulation Also engaged in R&D activityInternational API

Source: Company’s presentation & SKP Research

Alembic Ltd. de-merged its pharmaceutical business in 2010 and established a new entity called Alembic Pharma Limited, to become a pure pharma player. Post de- merger, Alembic Limited was left with (Pen G business) Vadodara undertaking, power assets and Real estate assets business.

The Shareholders of Alembic Limited received additional shares in Alembic Pharma Limited in the ratio of 1:1. The company is listed on the stock exchange “Alembic Pharmaceuticals Limited”.

Alembic Pharmaceuticals limited (APL) is a vertically integrated research and development pharmaceutical company. It manufactures and markets generic pharmaceutical products, domestic formulation and international API all over the world.

The company has export over 75 countries and has a presence in both regulated and semi regulated markets, 33% of its turnover (export) is contributed from these markets. It has a strong foothold on anti- infective, cough & cold and pain management. APL is ranked 22nd in the Indian formulation market with a market share of 1.76%.

The company has an API manufacturing infrastructure located at Panelav (2 units) and at Karkhadi (1 unit), which is approved by USFDA, TGA, EDQM, WHO. The branded formulation facility is located at Baddi, Himachal Pradesh and the international formulation- generics (regulatory market) facility is located at Panelav with current annual production capacity of 2.7 billion capsules/ tablets, Both of these plants are approved by USFDA and major regulatory authorities.

The company has a state of the art research center in Vadodara with highly talented pool of 300 Research Scientists focusing on R&D, F&D and Bio – equivalence centre.

APL has Effective marketing strategies such as therapy focus marketing through over 3,600 field force (MRs) covering over 1 Lac doctors and 12 marketing arms on PAN India basis, with strong partnership and alliance in Generic space and has a long term relationship with API customers.

APL has 3 business verticals: Branded Formulations Business (65%), International Generics Business (16%) and Active Pharmaceutical Ingredient (18%).



Business Verticals: (3QFY13)

11% 7%

16%

4%1%

61%

API Export

API Domestic

International Generics

International Branded FormulationsExport Incentive

Domestic Branded Formulations


Branded formulations Business:

The Branded formulation is APL’s core business. It is a market leader in the macrolides segment in India with 4 brands in the list of 300 top brands, with focus mainly in Acute therapeutic. In 2007, the company acquired Dabur pharma assets (non oncology business). The acquired businesses are mainly concentrated on Cardiology, Diabetics, Gynecology and Gastrointestinal and had gross sales of Rs 95 Cr. during FY2008. With this acquisition, APL has further enhanced its presence in the lifestyle segment (Chronic Therapeutic). The total Branded formulation segment has contributed 65% of total sales, out of which 93% sales is contributed by the company’s domestic formulation segment. With this realignment of business, today APL is ranked 22nd in the Indian formulation market with a market share of 1.76%. The major product portfolio introduced in this vertical are as follows:

Top products

Therapeutic areas Ranking

Azithral Anti infective 25Althrocin Anti infective 47Roxid Anti infective 137Wikoryl Cough & cold 147

Other products Therapeutic areaUlgel Antacid & Anti FlatulantZeet/ Bro Zeet Cough & coldTellzy CardiologyGestofit GynecologySharkoferrol TonicTetan CardiologyLivfit HepaprotectivesZolix Anti infectivesRevas CardiologyGilsen Anti DiabeticGlycodin Cough & cold


Domestic Branded Formulations : therapy based sales breakup:

41%

17%

12%

9%

9%

5%4%2% 1% Anti infectives

GastrologyCough & ColdGynecologyCardiologyOrthopedicsAnti DiabeticNephrology/UrologyOphthalmology



International Generics Business: Since the inception of Research and Development Centre, the company has started

developing complex molecules, products formulations, process validation, bioequivalence testing and other data needed to develop the drugs that are equivalent to branded products for sale in the emerging markets or whose ongoing patents and regulatory exclusivity periods have expired or nearing expiry in the regulated markets.

APL is spreading its arm in the regulated markets to develop and file the drugs (ANDAs) through partnership with leading generic players in the USA, Canada, Europe, Australia, Brazil and South Africa. It has International Generics formulation facilities located at Panelav with current annual production capacity of 2.7 billion capsules/ tablets, which is approved by major regulatory authorities. So far, APL has filed 55 cumulative ANDA and 58 DMF (Drug master file), out of which it has received 22 ANDA (Abbreviated New Drug Application) approvals.

International Generics- Global sales Break up:

30%

70%

Europe

USA/ Canada

Source: Company & SKP Research

Pramipexole Dihydrochloride Tablets Metronidazole ER TabletsFamotidine Tablets USP Fluoxetine Capsules USPVenlafaxine Hydrochloride Tablets Ropinirole Hydrochloride TabletsLithium Carbonate Capsules USP Theophylline Extended ‐ Release TabletsMetronidazole Tablets USP Lamotrigine TabletsMetronidazole Capsules Losartan Potassium Tablets (Para IV)Meprobamate Tablets USP Irbesartan Tablets USP (Para IV)Irbesartan and Hydrochlorothiazide Tablets USP

Losartan Potassium‐Hydrochlorothiazide Tablets

Clonidine Hydrochloride Tablets USP Modafinil Tablets USP

Leflunomide Tablets USP Hydrochlorothiazide CapsulesRivastigmine Tartrate Capsules Desvenlafaxine Base

ANDA approved


Active Pharmaceutical Ingredient (API) Business:

The company has presence in API business, through which its supplies APIs for various therapeutic segments including anti- infective, cardiovascular, central nervous system, musculoskeletal, erectile dysfunction and Gastro-Instestinal to both domestic as well as international regulated and semi regulated players. In API space, it contributes 18% of turnover, of which 67% business is derived from API exports. The company has received USFDA approval for both Panelav and Karkhadi facilities.



Investment Rationale:

International Business to Grow: Strong pipeline will boost revenue APL has a presence in both regulatory markets like US and Europe and Semi- regulated markets

like Russia, Africa and other Asian countries. APL has established well equipped research & development center at Vadodara with highly talented pool of 300 Research Scientists focusing on R&D. It includes (~115 in formulations R&D, ~125 in Organics Synthesis & ~ 65 in Bio Equivalence centre (BE). With the BE centre, the company has carried out in-house Bio pilot studies mainly to develop ANDA filing in US markets.

Since the inception of R&D centre, the company has gradually increased its focus on the regulated markets where it has filed 55 cumulative ANDA & 58 DMFs (3QFY13) in the US market. Along with the US market, APL is also expanding its footprints in Europe and other emerging markets. Recently, it has filed 3 Brazilian dossiers with ANVISA and 2 Dossiers filed in Europe market.

Going ahead, APL will focus on Niche products like (Para IV, 505 (b) (2) NDA – technically complex products) filing in the regulated market to achieve the opportunity of ongoing patents expiration. On the basis of this, we can expect that APL will file an additional 13 (ANDA) in FY13E, 12 in FY14E and 12 in FY15E. ANDA (Abbreviated New Drug Application ) Filings:

311

1825

3744

5769

38

77

127

1312

12

0 20 40 60 80 100

FY 07FY 08FY 09FY 10FY 11FY 12

FY 13EFY14EFY15E

ANDA Filed ‐ Beginning of the year addition during the year

Source: Company & SKP Research DMF (Drug master file) Filings:

6

18

26

32

45

54

6

12

8

6

13

9

7

0 20 40 60 80

2006‐07

2007‐08

2008‐09

2009‐10

2010‐11

2011‐12

2012‐13E

DMFs filed ‐ Beginning of the year addition during the year




So far, APL has received approval for 22 ANDA from the US markets and has commercialized 16 products in US markets including 2 launches (Telmisartan & Hydrochlorothiazide) in the recent quarter. Going ahead, we expect that APL will launch 9 (ANDA) in FY13E, 10 in FY 14E and 12 in FY15E.

Metronidazole ER Tablets Irbesartan Tablets USP (Para IV)Venlafaxine Hydrochloride Tablets Irbesartan and Hydrochlorothiazide Tablets USPLithium Carbonate Capsules USP Losartan Potassium‐Hydrochlorothiazide TabletsTheophylline Extended ‐ Release Tablets Famotidine Tablets USPPramipexole Dihydrochloride Tablets Ropinirole Hydrochloride TabletsFluoxetine Capsules USP Losartan Potassium Tablets (Para IV)Hydrochlorothiazide Capsules TelmisartanMeprobamate Tablets USP Hydrochlorothiazide

Product Launch:


Spreading its arm in the regulated market through different partnerships: APL has entered development and marketing agreement with Breckenridge Pharmaceutical Inc.

USA to file Para IV ANDA (Rivastigmine tartrate capsules, a generic version of Exelon by Novartis) and share exclusivity. Rivastigmine Tartrate capsules is a prescription medicine that is indicated for the treatment of mild to moderate dementia of the Alzheimer’s type and also associated with Parkinson’s disease. The current generic market is approximately US$46 million based on industry sales data. APL and its partner will launch this product in 4 strengths (1.5 mg, 3mg, 4.5 mg and 6 mg).

The company has received approval from the USFDA and its NDA for Desvenlafaxine Base, (a bioequivalent version of innovator drug Pristiq by Pfizer). It has also entered into an out licensing agreement with Ranbaxy Pharmaceuticals Inc. to market the product in USA. The current market size for Pristiq is approximately US$ 538 million. Desvenlafaxine base Extended release tablets is a prescription medicine for the treatment of major depressive disorder. APL & its partner will soon launch this product and will make it available in 50 mg and 100 mg dosage.

It is also spreading its wings in the other regulated markets. In Europe market along with the partners, APL has won almost 80% AOK tenders which indicate delivery of fixed volume for the next 2 years (approximately for Rs. 50-60 cr. for FY14 & FY15). In the Brazilian regulated market, APL has filed the Dossier with ANVISA.

APL has entered into a product development and license agreement with Accu- Break pharmaceuticals Inc. USA to develop new brand products that will use ABP’s innovative Accu- Break tablet technologies. ABP’s patented ‘Accu- Break tablets” can be spilt easily by hand into exact smaller doses. This product will develop on the popular anticoagulant medication warfarin. It will seek USFDA 505 (b2) approval which will be filed and launched in the next 24 months.

Easing of capacity constraints: Over 9MFY13, APL has reported de-growth of 17% in the International Generics division mainly

due to capacity constraints. To overcome this problem. APL has earmarked Rs. 100 cr. in the International Generics division. With this investment APL will enhance its existing Panelav production capacity of 2.7 billion tablets to 5 billion tablets. This facility is partially approved by USFDA and fully by Europe and Brazilian regulatories.



The total capex is largely funded through internal accruals and this facility is expected to be operational by Q4FY13. Thereby we expect that with ramp up of enhanced capacity, new launches and backlog of orders, the revenue of the International Generics division is expected to grow by 32% CAGR between FY12-15E.

Branded formulation business: Focusing more on Chronic therapies than acute therapies: APL had emerged as an acute player and became a market leader in the macrolides segment in

India. In the acute therapeutic portfolio, the company has 4 brands (Azithral, Althrocin, Roxid, Wikoryl) in the list of 300 top brands which is growing by 5% as per November MAT 2012. Thereby the company decided to shift its focus from acute therapy to chronic therapy division.

The acquisition of Dabur’s non oncology portfolio in 2007. It helped APL to mark its tad presence in chronic therapy. With this acquisition APL is spreading its product portfolio mix between chronic and acute (47:53) therapy. In the chronic product portfolio, APL has existence in Gastrology, Cardiology, Anti diabetic, Gynaecology, Opthalmology and Nephro segments where it is growing more than Industry therapy growth.

Recently APL marked its presence in new (Dermatology) division by launching 7 new products and in the existing portfolio it has launched 18 new more products in 3QFY13.

India’s formulation business is growing by 15% backed by strong growth (23-24%) in speciality (chronic) division. Going ahead, we expect this growth to continue with the launch of new products in chronic division.

This shift in focus will enable the company to depend less on the acute division which in turn will lead to expansion of margins, market share and growth of revenue by 17% CAGR between FY12-15E.

TherapyTherapy Growth

Market share

Alembic Growth

Therapy Growth

Market share

Alembic Growth

Gastrology 13 2.42 28 15 2.15 21Cardiology 14 1.22 28 17 1.08 22Anti Diabetic 23 1.27 35 25 1.16 23Gynaecology 9 1.93 11 15 1.89 25Opthalmology 14 1.25 25 12 1.14 34Orthopaedic 9 1.13 9 13 1.13 ‐6Cold & Cough 6 5.07 3 11 5.24 9Anti Infective 11 4.17 5 7 4.41 4Nephro/ Uro 14 1.7 32 15 1.47 25Overall 12 1.76 12 13 1.77 9

November MAT 2012 November MAT 2012Domestic Formulation Business - Therapy wise performance


API Business: Concentration on high margins orders Currently, all API manufacturing facilities are working at a full capacity, of which around 40% of

the capacity is used for captive purpose and remaining production is sold in domestic as well as in international markets.

In API space, it contributes 18% of turnover, of which 67% business is derived from API exports. Despite its strong order book, the company has no expansion plans, mainly because it is commodity and lower margin business.

Going ahead, we expect APL will only concentrate on high margins orders. This will enable the company to expand its margins.



Financial Outlook:

Change in segment contribution- topline to grow at CAGR of 14% between FY12-15E: We expect that with ramp up of enhanced capacity, new launches and backlog of orders will

increase the contribution of international generics segment in overall sales from 15% in FY13E to 26% in FY15E. In the API segment contribution to overall sales will reduce from 22% in FY13E to 13% in FY15E, mainly on account of accepting high margins orders. In the Branded formulation segment contribution to overall sales will sustain around 63-66% between FY13E-FY15E, mainly on account of shifting its focus from acute therapy to chronic therapy with the launch of new products in existing division or in the new division. Segment wise contribution: Segment wise Revenue breakup:

0%

20%

40%

60%

80%

100%

FY11 FY12 FY13E FY14E FY15E

62% 57% 62% 66% 61%

15% 16% 15%20% 26%

21% 25% 22% 14% 13%

Formulations International Generics API Others

0

500

1000

1500

2000

2500

FY11 FY12 FY13E FY14E FY15E

592 839 943 1,154 1,334147241 225

341554

198

374 336248

282

Formulations International Generics API Others

Re

ven

ue

Rs.

in c

r.


In FY13E, APL is facing capacity constraint problem in the International Generics division and the slowdown in the acute therapy segment. With this in FY13E, APL revenue will grow by 3%. Going ahead, we expect in FY14E and FY15E revenue will grow by 15% and 25% respectively.

The Formulations division will grow at CAGR of 17% between FY12-15E on the back of shifting its focus on chronic (speciality) therapy.

The International division will grow at CAGR of 31% between FY12-15E on account of strong pipeline, backlog of orders and operations of enhanced capacity in Panelav plant. With this APL will register the revenue growth of 14% CAGR between FY12-15E. Revenue & Revenue Growth (%)

950 1,

468

1,51

2

1,74

3 2,16

954.4%

3.0%15.3%

24.5%

0%

20%

40%

60%

0

500

1000

1500

2000

2500

FY11 FY12 FY13E FY14E FY15ERevenue Revenue Growth (%)

Reve

nue

(Rs

in c

r.)




Focus on Research & Development activities and market strategies will drive the innovation and growth: Since the inception of a well equipped R&D Centre at Vododara in 2004, APL has carried out in-

house Bio pilot studies mainly to develop ANDA filing in US markets, Europe and other emerging markets. Going forward, we expect R&D expenses to remain between 5-6% of total revenue and will drive the innovation and growth in the long term.

The highly talented pool of 300 Research Scientists and 3600 field force (MRs) covering over 1 Lac Doctors and 12 marketing arms on PAN India basis will drive the growth in future. Going forward, we expect an employee costs to remain stable around 13% between FY12-15E.

1,18

4

1,43

8

1,50

2

1,72

7

2,15

0

4% 4%5% 5% 5%

13%12%

13% 13% 13%

0%

2%

4%

6%

8%

10%

12%

14%

‐

500

1,000

1,500

2,000

2,500

FY11 FY12 FY13E FY14E FY15ENet sales R&D cost % to NS Employee cost % to NS

Rev

enue

(Rs.

in c

r.)


Margins to improve: We expect that margins to improve on the back of shifting focus on specialty therapy,

concentrate on higher margin orders in API division and new launches in the international division. This will lead improvement of 100 bps in FY14E and FY15E. EBITDA & EBITDA Margins (%) Adjusted PAT & PAT Margins(%)

160 22

0

242 29

9 377

14%15% 16%

17% 18%

0%

5%

10%

15%

20%

‐

100

200

300

400

FY11 FY12 FY13E FY14E FY15EEBITDA EBITDA Margins

EBIT

DA

(Rs

in c

r.)

85 130

153 18

5 245

7%

9%10% 11% 11%

0%

2%

4%

6%

8%

10%

12%

‐

50

100

150

200

250

300

FY11 FY12 FY13E FY14E FY15ENet profit Net profit margins

Net

pro

fit(

Rs.

in c

r.)




Debt : Equity Ratio & Interest coverage Ratio to improve: We expect that the company will make repayment of its debt in the next 2 years. This will lead

to improve Debt Equity & interest coverage ratio and also it will expand margins.

5 5

11 11

150.97

0.63

0.47

0.20

0.03 ‐

0.20

0.40

0.60

0.80

1.00

1.20

0

5

10

15

20

FY11 FY12 FY13E FY14E FY15EInterest coverage ratio Debt : Equity ratio


Healthy Return ratio: On the account of strong pipeline, backlog of orders, operation of Panelav capacity and

focusing more on chronic product portfolio. This will lead the company to sustain its healthy return ratio.

0%

20%

40%

60%

80%

FY11 FY12 FY13E FY14E FY15EROCE ROE


Key concerns: Delay in getting ANDA approval: Any delay in approval of ANDA from USFDA and any other

major regulatory authorities will further delay in launch of the product. Delay in Panelav expansion activities: Any delay in expansion activities of panelav facility.

This would impact our estimation. Any political instability at exporting countries can hamper APL’s operations. Implementation of New pharmaceutical pricing policy : the implementation of NPPP will

impact the domestic business. The company has 61% of its turnover contributes from the domestic market. The impact will be around Rs 20-25 cr. on topline & bottomline.



Valuations: We expect APL to report healthy topline on the back of operation of enhanced capacity, new

product launches, backlog of orders in the international divisions. On an EV/EBITDA basis, APL is trading at 8.7x, 6.6x and 5x its FY13E, FY14E and FY15E

EBITDA of Rs.242, Rs. 299 and Rs. 377 respectively. APL trade at a PE of 12.4x, 10.3x and 7.8 in FY13E, FY14E and FY15E earning of Rs.8, Rs.10

and Rs. 13 respectively. One year forward EV/EBITDA Band

‐500

1,000 1,500 2,000 2,500 3,000

5x 6x 7x 8x 9x 10x EV

EV (R

s. in

cr.)


One year forward PE Band

0.00

50.00

100.00

150.00

Apr‐1

2

May‐1

2

Jun‐

12

Jul‐1

2

Aug‐

12

Sep‐

12

Oct‐1

2

Nov‐

12

Dec‐

12

Jan‐

13

Feb‐

13

Mar‐1

3

Close ‐Unit Curr 12.0 X 10.0 X9.0 X 8.0 X 7.0 X


We recommend Buy rating on the stock with the 15 month target price of Rs. 137 per share, implying an upside of ~36% from current levels. We have arrived at the target by assigning to EV/EBITDA methodology of 7x.



Financial Performance: (consolidated)

Income Statement (March ending) Figures: Rs in crores Cash Flow Statement Figures: Rs in croresParticulars FY11 FY12 FY13E FY14E FY15E Particulars FY11 FY12 FY13E FY14E FY15E

Net Sales 1,184 1,438 1,502 1,727 2,150 Net profit Before Tax (NPBT) 107 161 191 231 306 growth % 21.5% 4.4% 15.0% 24.5% Depreciation 30 34 37 46 49 Total Income 1,202 1,466 1,504 1,727 2,150 Interest Expenses 28 38 18 22 22 growth % 22.0% 2.6% 14.8% 24.5% Other (income/ loss) (1) 4 5 5 5 Expenditure 1,042 1,246 1,262 1,428 1,772 Operating PB change in w. cap 163 236 251 304 382 RM & Mfg. expenses 668 804 671 745 912 Change in working capital (50) (63) (38) (23) (124) Personnel expenses 149 168 192 223 280 Taxes paid (18) (33) (38) (46) (61) Admin & Other expenses 178 215 326 372 463 Net CF from operating activites 95 141 175 234 197 R&D Expenses 47 59 73 89 117 Capital Expenditure (62) (61) (86) (40) (40) EBITDA 160 220 242 299 377 Other income 6 5 - - - Depreciation 30 34 37 46 49 Net CF from Investing activites (57) (57) (86) (40) (40) EBIT 131 187 205 253 328 Inc./(Dec.) in Debt (31) (25) (72) (100) (100) Other Income 4 12 4 - - Dividend paid incl tax - 22 31 33 40 Interest Expenses 28 38 18 22 22 Interest paid 27 38 18 22 22 Profit Before Tax 107 161 191 231 306 Other adjustment 11 (3) - - - Tax 21 31 37 46 61 Net CF from Financing activites (47) (44) (121) (155) (162) Profit After Tax 85 130 153 185 245 Net change in cash or cash equ. (9) 40 (32) 39 (5) growth % 52.4% 17.7% 20.4% 32.7% Opening cash balance 15 6 47 15 55 EPS 5 7 8 10 13 Closing cash balance 6 47 15 55 50 DPS 1 1 2 2 2

Balance Sheet (March ending) Figures: Rs in crores Ratio AnalysisParticulars FY11 FY12 FY13E FY14E FY15E Particulars FY11 FY12 FY13E FY14E FY15E

Earning Ratio (%)Equity Capital 38 38 38 38 38 EBITDA Margin 13.5% 15.3% 16.1% 17.3% 17.5%Reserves & Surplus 258 352 441 585 786 Net profit Margin 7.2% 9.1% 10.2% 10.7% 11.4%Shareholder's Fund 295 390 478 623 824 ROCE 19.4% 26.4% 24.4% 27.6% 31.4%Forex reserve 1 5 5 5 5 RONW 28.9% 33.4% 32.0% 29.6% 29.7%Total Debt 287 247 225 125 25 Valuation RatioDeffered Tax Liabiity 5 10 11 11 11 P/E (x) 22.3 14.6 12.4 10.3 7.8

P/BV (x) 6.4 4.9 4.0 3.1 2.3Sources of funds 589 651 719 764 865 EV/EBIDTA (x) 13.6 9.5 8.7 6.6 5.0

EV/ Sales (x) 1.8 1.5 1.4 1.1 0.9Gross Block 434 463 563 613 653 Market cap/ sales (x) 1.6 1.3 1.3 1.1 0.9Less: Depreciation 162 195 237 283 332 Dividend Payout 22.1% 20.3% 18.5% 18.4% 15.4%Net Fixed Assets 272 268 326 330 321 Interest coverage 4.74 4.97 11.24 11.48 14.92Capital WIP 27 58 50 40 40 Balancesheet RatioTotal Fixed Assets 298 326 376 370 361 D/E Ratio 0.97 0.63 0.47 0.20 0.03 Investments 3 3 3 3 3 Inventory Days 67 65 64 62 60Total Current Assets 542 722 724 783 936 Debtors Days 62 51 50 46 42-Inventory 219 259 265 296 357 Creditors Days 85 99 98 93 90-Debtors 202 199 206 218 247 Dupont Analysis (ROE) 58% 38% 35% 34% 34%-Cash & Bank Balances 6 47 15 55 50 NPAT/ EBT (tax burden) 0.80 0.81 0.80 0.80 0.80-Loans & Advances 114 217 238 215 282 EBT/ EBIT (int. burden) 0.82 0.86 0.93 0.91 0.93Total Current Liabilities 255 401 385 393 436 EBIT Margin 0.11 0.13 0.14 0.15 0.15Net Current Assets 287 321 340 391 500 Asset /TO Ratio 5.46 3.21 2.93 2.94 3.40

Asset / Equity Ratio 1.47 1.31 1.18 1.07 0.87Uses of Funds 589 651 719 764 865




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