IEA Report 28th December

IEA Report
28th Dec 2016

VOLTAS
"NEUTRAL"
28th Dec 2016
The company is cautious in taking new orders in the EMPS segment and its focus is primarily on Govt. projects i.e. smart cities, rural electrification
and water treatment wherein execution cycle is steady and payments are secured. Management expects profitability to improve after closing most
of its low-margin and loss-making legacy projects by end-FY17. Going forward we expect near-term earnings to be under pressure due to lower
sales and margin in the UCP segment and continued subdued performance in EMPS segment. Right now we are not seeing any major uptick in
demand so we revised our estimates with flat revenue growth from 5% to 0.7% in FY17E and presently we are NEUTRAL on this stock at a revised
target of Rs 330 (from Rs 345). ..................................... ( Page : 2-5)
ASHOKLEY
"BUY"
27th Dec 2016
Going forward, We assume that the upcoming emission norms BS-IV to BS-VI, focus towards the export markets, improvement in demand from
infrastructure segment, diminution of investments in subsidiaries will help the company to focus on its commercial vehicle business and
government's initiative to develop defence products in the country can be volume boosters for the company in FY17. The current demonetization
issue has impacted the transport sector most because a lot of transactions happen through cash. The sales may be down by 10-12% for next couple
of months but we are hopeful that the situation might improve in 4QFY17 due to pre-buying during the quarter. We expect that the company will
maintain a healthy ROE of over 20% going ahead. We maintain 'BUY' looking at the huge growth potential going ahead but considering the
uncertain demand scenario we reduce our target to Rs.110. .................... ( Page : 6-8)
DABUR
"NEUTRAL"
26th Dec 2016
DABURs 2QFY17 result was below than our expectations. Sales for second quarter grew by 1% YoY to Rs 1981 cr on the back of sluggish growth
from international business. International business has contributed approx. 34% of companys sales in 2QFY17. International business declined by
2.3% YoY in this quarter due to geo political disturbances in the MENA region and adverse currency impact. According to Management, headwind in
international business will continue for at least 2-3 quarters going forward. Secondly, recent demonetization may negatively affect companys
domestic sales in 3QFY17E which is a cause of concern for the company in the short term. Rural demand is still stressed witnessing slight
improvement. Lastly, the company is getting tough competition from Patanjali. Patanjali is strong in north and west India from where Dabur gets
Substantial part (approx. 60% of its footprint) of its domestic business which is another concern for DABUR. Hence considering tepid international
business growth outlook, tough competition from Patanjali and stress in rural demand we maintain `Neutral rating on Dabur with no target price.
............................... ( Page : 9 -11)
SUNPHARMA
"NEUTRAL"
23th Dec 2016
Synergies from the Ranbaxy acquisition are gaining momentum and the Company is on track to achieve the targeted benefits. Post 2QFY17,
Sunpharma has further strengthened the branded ophthalmic pipeline through the acquisition of Ocular Technologies. But recent developments
are not very conducive for the company. US business is under pricing pressure due to customer consolidation. Ongoing issue in Halol plant and
inflated pricing issue on dermatology products in US will pose near term uncertainty. Though the company has maintained its guidance of 8-10%
sales growth for FY17E, we are little skeptical about it considering on-going issues. Thus, we recommend "NEUTRAL" view on this
stock......................................... ( Page : 12-14)
ASIANPAINT
"NEUTRAL"
22th Dec 2016
Management remained silent on volume growth improvement (which indicates lower double digit volume growth going ahead) but did hint at
margin pressures. We do not see significant improvement in volume growth, margin risks (due to high input cost) and peak valuations (trades at
FY18 P/E of 45x) make the risk-reward unfavourable. We see downside risks to our estimates due to an unfavourable H2FY17 base with topline and
gross margins peaking out.It also expects paint companies to register flat growth in sales during Q3FY17 compared Q3FY16, following the
government's move to scrap old Rs 500 and 1,000 notes. While the month of October saw significant jump in sales during festive season, November
has seen a significant fall on account of the demonetization announcement. While the paint industry is 80-85 per cent cash-driven with the paint
retailers accepting only cash payments for the sales, is now shifting over to digitized payments to keep the business going. We maintain Neutral
rating with a target price of Rs.1015. .......................................... ( Page : 15-16)
GLENMARK
"BUY"
21th Dec 2016
Management expects domestic business to grow by 15% in FY17 and US business to grow by 25% on the back of new launches like Zetia, Mycolog II,
Crestor, etc. in FY17.Going forward we believe that US business will remain key driver for growth. Management has guided for 20 new ANDAs
filings in FY17. Considering the long-term opportunities, we recommend buy rating on this stock with a target price of Rs. 1096
.......................................... ( Page : 17-20)
Narnolia Securities Ltd
IEA Edition No.-
914
NEUTRAL
Voltas Ltd.
28-Dec-16
Result Update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
Impact of Demonetisation
313
330
345
6%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
500575
VOLTAS
406/211
10,372
1694
7947
Stock Performance
Absolute
Rel.to Nifty
1Month
1Year
YTD
7.9
5.2
14.5
9.5
1.4
3.6
Share Holding Pattern-%

2QFY17 1QFY17
4QFY16
Promoter
30.3
30.3
30.3
Public
69.7
69.7
69.7
Others
Total
--
--
--
100
100
100
Company Vs NIFTY
150
VOLTAS
NIFTY
140
130
120
110
100
90
80
70
Bibha Kashyap
Initial impact of demonetisation in the month of November was bit low

because people are still using the old currency notes. However,December
has seen a bigger impact especially in the Tier III and tier IV towns where it
has been impacted to the tune of more than 50 %. And in the bigger cities,
the impact of this is about 25-30% on consumer durable business.
Management believes that demonetization impact is not likely to be
substantial as it has occurred during seasonally weak quarter for UCP
segment and things are likely to stabilize in coming 2-3 months.
Key Highlights:
Voltas reoprted its 2QFY17 results which is in line with our estimates.The
Consolidated Sales/Income from Operations for the quarter ended
September 30, 2016 was Rs. 972 cr as compared to Rs. 1044 cr in the
corresponding quarter last year owing to lower revenues in International
Projects. However, Profit before tax was higher by 22%, at Rs. 125 cr as
compared to Rs.103 cr last year. Profit after tax was also higher by 15%, at
Rs. 74 cr as compared to Rs. 65 cr last year. EBITDA margin improved
84bps YoY to 7.0% on higher profitability in UC; this, coupled with higher
other incomeEMPS booked an Rs 120cr order for a water treatment plant in
Agra, taking its total order book to Rs 4250cr (+13.8% YoY). Unitary cooling
segment grew a robust 13.5% YoY, driven by inventory restocking on higher
demand during the festive season.
Outlook and Valuation

The company is cautious in taking new orders in the EMPS segment and its
focus is primarily on Govt. projects i.e. smart cities, rural electrification and
water treatment wherein execution cycle is steady and payments are
secured. Management expects profitability to improve after closing most of its
low-margin and loss-making legacy projects by end-FY17. Going forward we
expect near-term earnings to be under pressure due to lower sales and
margin in the UCP segment and continued subdued performance in EMPS
segment. Right now we are not seeing any major uptick in demand so we
revised our estimates with flat revenue growth from 5% to 0.7% in FY17E
and presently we are NEUTRAL on this stock at a revised target of Rs 330
(from Rs 345).
Rs in Cr
Financials
FY13
FY14
FY15
FY16
FY17E
Sales
5531
5266
5183
5857
5896
EBITDA
245
266
410
437
419
Net Profit
207
245
384
386
337
EBIDTA%
4.4%
5.0%
7.9%
7.5%
7.1%
P/E
0.0
0.0
0.1
0.1
0.1
bibha.kashyap@narnolia.com
Please refer to the Disclaimers at the end of this Report
Segment wise performance:

Electro-Mechanical Projects and Services: Segment Revenue for the quarter was lower at Rs. 543 cr as compared to
Rs. 635 cr in the corresponding quarter last year partly owing to slower than expected progress on certain projects.
Segment Result was Rs. 5 cr as compared to Rs. 17 cr, last year. Order Book of the Segment stood higher at Rs. 4252
cr as compared to Rs. 3736 cr in the same quarter last year. Orders booked during the quarter include Rs. 121 cr for
water treatment plant for Agra smart city.
Engineering Products and Services: Segment Revenue and Result for the quarter were Rs. 75 cr and Rs 30 cr as
compared to Rs. 96 cr and Rs 34 cr, respectively in the corresponding quarter last year. The industrial environment in
India for both, Textile and Mining businesses remains challenging for capital equipment sales, due to the weak
investment cycle.
Unitary Cooling Products for Comfort and Commercial use: Voltas continues to be the market leader for the Room Air
Conditioners in India. Segment Revenue was higher at Rs. 354 cr as compared to Rs. 312 cr in the corresponding
quarter last year, on account of improved volumes and greater festive season demand. Segment Result was also higher
at Rs. 41 cr as compared to Rs. 34 cr in the corresponding quarter last year.
Trend of Gross margin & EBITDA margin(%):
EMP order book position (Rs in Cr)
Order Intake
Gross Margin %
2187
2065
2032
2385
2035
1879
35%
35%
30%
25%
29%
24%
31%
26% 27%
31%
32%
29% 28% 29%
28%
20%
10%
731
959
EBIDTA %
37%
33%
15%
382
2141
1369
500
1871
1728
201
2021
2018
594
1,908
1,985
544
1,856
2,093
40%
680
2,207
1,472
395
1,629
2,160
International Order Book
694
2,023
1,589
275
2,131
240
500
785
1,000
1,524
1,500
1,815
2,088
2,000
2,261
2,500
1209
3,000
2,286
Domestic Order Book
5%
4% 4%
8% 8% 6%
6% 7%
10% 8%
6%
10% 11% 8%
4%
0%

Investment arguments:
Company sustained its leadership in the UCP segment(i.e. 22%) which will help to register better sales growth in the
current quarter.
Company sold 50000 units coolers last quarter and mabagement expects their marketing efforts to benefit volumes
going ahead and as per the management Air cooler will grow ahead of market.
The company has been selective in taking new orders with minimum margins of 4-5% in the international market. Its
aspirational EBIT margin target remains at 4-5% for the international market in FY17.
The company has cut prices selectively on few products with selective sale promotions due to the higher competitive
pressures.
Despite the aggressive competition, the company retained its market leadership position with 22% market share.
New efficiency norms for ACs from January
Seeking to reduce carbon emissions, the government said that a new efficiency rating system for air-conditioners, based
on Indian climatic conditions, will be made compulsory for all models starting January 2018.All air-conditioners will need
energy-saving and intelligent regulation of compressors in place of the conventional thermostat-triggered cut-offs, said
the Bureau of Energy Efficiency (BEE), the standard setter for appliances. Today, ACs with this technology is costlier by
about Rs.7000-8000 a unit. But as more units adopt it, cost will come down. As per the management, Company is ready
to comply with the new guidelines set by BEE for 2018. They will continue to provide energy-efficient products to their
customers.
The Governments initiatives on creating new Smart Cities and upgradation of the infrastructure of existing cities
represents an area of significant potential. The Companys expertise at installation, testing, commissioning and
operation of sensor networks across some of the worlds largest building complexes and its existing infrastructure of
support technicians and service partners, positions it effectively to handle the complex task of managing the
maintenance of Smart City information networks.
In International front, Despite the declining oil prices, spend on infrastructure will get a boost especially in Dubai and
Qatar owing to the EXPO 2020 and FIFA world cup 2022. Voltas remains one of the few large MEP contractors with
required project qualifications and domain expertise. Voltas continues to be a preferred contractor in the Middle East,
holds the Company in good stead against competition for these mega events.
About the Company:

Voltas Limited is an India-based air-conditioning and engineering company. Its segments include Electro-mechanical
Projects and Services, Engineering Products and Services, and Unitary Cooling Products for Comfort and Commercial
use. The electro-mechanical projects and services include electrical, mechanical and refrigeration solutions and
electrical and mechanical solutions international. , Engineering products and services includes textile machinery and
mining and construction equipment. The unitary cooling products are sub-divided into: air conditioners, commercial
refrigeration and water cooler and dispensers. The Companys operating subsidiaries include Universal Comfort
Products Limited, Auto Aircon (India) Limited, Saudi Ensas Company for Engineering Services WLL, Weathermaker
Limited and Lalbuksh Voltas Engineering Services & Trading LLC.

Financials Snap Shot
FY14
7.4
55.0
1.9
25%
RATIOS
FY15
FY16
11.6
11.7
63.5
72.4
2.2
2.6
19%
23%
FY17E
10.2
79.5
3.0
30%
21.7
2.9
1.16%
24.1
4.4
0.77%
23.6
3.8
0.96%
32.6
4.2
0.92%
13%
13%
18%
18%
16%
17%
13%
15%
1.1
92.5
85.3
112.8
0.00
1.1
94.3
88.0
108.6
0.00
1.0
81.4
79.0
108.7
0.00
1.0
89.4
84.1
108.7
0.00
INCOME STATEMENT
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY14
5266
100
5366
3854
1
551
266
5%
25
241
23
318
94
30%
245
62
33
FY15
5183
109
5292
3597
1
586
410
8%
28
382
23
467
128
27%
384
72
33
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Total Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Cash & Bank Balances
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
33
1786
1819
5
258
2
1825
210
2
1335
282
1627
279
1487
4746
FY15
33
2069
2102
5
117
2
2107
193
4
1339
252
1541
354
1218
4888
FY16
5857
118
5975
4126
1
625
437
7%
28
409
15
511
160
31%
386
87
33
FY17E
5896
130
6025
4180
1
619
419
7%
32
387
26
490
153
31%
337
101
33
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
BALANCE SHEET
FY16
33
2362
2395
0
260
2
2395
222
0
1307
197
1745
408
1356
5599
FY17E
33
2598
2631
0
262
2
2631
227
0
1444
193
1757
424
1532
5874
OP/(Loss) before Tax

Depreciation
Direct Taxes Paid
OP before WC changes
CF from Op. Activity
CAPEX
CF from Inv. Activity
Repayment of LTB
Interest Paid
Divd Paid (incl Tax)
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance

FY14
340
25
89
351
230
0
25
(285)
0
23
57
(79)
(134)
407
273
CASH FLOW STATEMENT

FY15
FY16
FY17E
514
552
490
28
28
32
104
153
153
341
505
548
311
275
284
0
0
86
34
52
37
(104)
(367)
(189)
0
0
0
23
14
0
71
88
101
(236)
36
(99)
(29)
(56)
(4)
273
243
197
243
188
193
"BUY"
ASHOK LEYLAND LTD.
27-Dec-16
Result Update
CMP
77
Target Price
110
120
Upside
44%
Market Data
BSE Code
500477
NSE Symbol
ASHOKLEY
52wk Range H/L
113/74
Mkt Capital (Rs Cr)
21,799
Av. Volume
567130
Nifty
7,908
Ashok Leyland reported 6.4% decline in revenues during 2QFY17. CV

volumes contracted by 10% YoY but realization increased by 4% YoY during
the quarter. Domestic M&HCV market share increased by 220 bps QoQ to
33% in 2QFY17, due to intense competition from competitors in the form of
discounting. The country would be moving to BS-IV norms in April, 2017 and a
significant amount of pre-buying expected, especially in the fourth quarter of
FY17. Ashok Leyland is already manufacturing commercial vehicles with
EURO-IV engines in India and EURO-VI engines for export market, which is
similar to BS-IV and BS-VI norms. Management's focused approach towards
curtailing debt and concentrating in its core CV business will help the
company to gain further market share and revenue growth in domestic and
exports businesses.
2QFY17 Result Highlights

Revenue declined by 6.4% YoY to Rs.4622 crore in 2QFY17 due to 15%YoY
decline in M&HCV segment. Realisation grew by 4%YoY due to higher sales
in the exports market combined with higher revenues from spare parts.
Stock Performance
1Month
1Year
YTD
Absolute
-0.6
-12.9
-13.0
Rel.to Nifty
2.0
-13.5
-12.5
EBITDA margin contracted by 40 bps due to higher other expenses during the
quarter.
PAT margin grew by 260 bps to 6.4% due to lower interset cost and tax
expenses.

2QFY17 1QFY17
Promoter
Public
Others
Total
4QFY16
50.4
50.4
50.4
49.6
-100.0
49.6
-100.0
49.6
-100.0
Company Vs NIFTY
130
ASHOKLEY
NIFTY
125
120
115
110
105
Outlook
Going forward, We assume that the upcoming emission norms BS-IV to BSVI, focus towards the export markets, improvement in demand from
infrastructure segment, diminution of investments in subsidiaries will help the
company to focus on its commercial vehicle business and government's
initiative to develop defence products in the country can be volume boosters
for the company in FY17. The current demonetization issue has impacted the
transport sector most because a lot of transactions happen through cash. The
sales may be down by 10-12% for next couple of months but we are hopeful
that the situation might improve in 4QFY17 due to pre-buying during the
quarter. We expect that the company will maintain a healthy ROE of over
20% going ahead. We maintain 'BUY' looking at the huge growth potential
going ahead but considering the uncertain demand scenario we reduce our
target to Rs.110.
Rs. In crore
100
95
90
85
Dec-16
Nov-16
Oct-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Naveen Kumar Dubey

naveen.dubey@narnolia.com
Financials
2QFY17
1QFY17
2QFY16
QoQ
YoY
Sales
EBITDA
Net Profit
EBIDTA%
PAT %
4622
536
294
11.6%
6.4%
4259
476
282
11.2%
6.6%
4940
594
287
12.0%
5.8%
9%
13%
5%
-6%
-10%
3%

ASHOKLEY
Investment Arguments
The country would be moving to BS-IV norms in April, 2017 and a significant amount of pre-buying expected, especially in the
fourth quarter of FY17. Ashok Leyland's subsidiary, Albonair, holds a significant potential moving forward because Albonair does
exhaust emission systems, selective catalytic reduction emission systems which are necessary for being BS-IV compliant.
Export is only 12% of total volumes, therefore the company is targeting the African and Middle East countries to expand its export
contribution by setting up own assembly plants in these countries under the company's global expansion project. The exports is an
important part of Ashok Leyland's strategic intent to globalise its product portfolio and derisk itself from supplying only into India.
The management expects its defence business to log four-fold jump in revenues at over Rs 2,000 crore in next five years as it
gears up to provide an entire range of mobility solutions, including missile carrying vehicles to the armed forces. Ashok Leyland is
the largest supplier of logistics vehicles to the Indian Army.
The management has focused approach towards its core commercial vehicle business. We expect that the company will be
benefitting from recovery in the M&HCV demand and its EBITDA margin will expand on account of operating leverage. The
company is also working on to reduce its debt and generate more cash to fulfill its future expansion requirements.
Management Highlights
Management expects Q4 to be promising due to the implementation of BS-IV norms.
If there is economic growth in the country CV industry will move ahead. Going ahead we see CV industry to grow about 12-15%
annually.
30% market share in M&HCV space and in south region overall market share is 51%.
Domestic truck business contributes 50-55 percent of total revenue.
Marginal impact of commodity prices but it will be passed on to the customers.
Net debt stood at Rs.1870 crore.
Price increase on November 1, 2016 of 1%.
Ashok Leyland have acquired 100% ownership of the JVs, we will continue to be associated with Nissan for the technology of the
existing Dost, Partner, and Mitr models.
The management is focusing on to improve profitability and ROCE of the company going ahead.
Defence Revenue to be close to around Rs 1,500 crore by FY18.
M&HCV volume and growth trend

M&HCV
40000
71%
60%
26262
25000
10000
70%
29840
30000
15000
80%
35246
35000
20000
Growth YoY
44%
21489
14908
18207
14%
18279
64%
40%
23232
27%
34%
24025
25346
50%
40%
30%
12%
20%
10%
0%
0%
-15%
5000
0
-10%
-20%
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16

1QFY17
2QFY17
ASHOKLEY
Net Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY14
11,487
92
11,579
8,138
71%
1,581
422
4%
530
(108)
805
(821)
(68)
8%
(164)
266
INCOME STATEMENT
FY15
FY16
15,341
20,659
189
152
15,530
20,811
10,443
13,558
68%
66%
1,845
2,396
1,517
2,932
10%
14%
580
524
937
2,408
872
968
254
1,592
172
528
68%
33%
134
1,071
150
316
285
285
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
266
3,723
3,989
5,491
1,264
411
9,480
7,087
270
1,381
113
2,592
256
400
17,534
BALANCE SHEET
FY15
FY16
285
285
4,227
4,708
4,511
4,992
6,219
7,597
827
1,093
510
536
10,731
12,589
6,060
5,894
166
162
1,354
1,515
905
1,758
3,082
2,966
599
1,081
522
1,016
19,525
22,963
FY17E
23,458
171
23,630
15,365
66%
2,698
3,383
14%
519
2,865
1,194
1,842
611
33%
1,232
364
285
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
FY14
FY17E
285
5,575
5,860
7,217
938
536
13,077
5,871
162
1,721
2,094
3,213
1,147
1,222
23,951
FY14
(300)
Depreciation
530
Direct Taxes Paid
(97)
OP before WC changes
195
(104)
Capex
(408)
(377)
Repayment of Long Term Borrowings
(1,586)
Interest Paid
(499)
(187)
461
Inc/(Dec) in Cash
(20)
127
Closing Balance
106

(1)
15
0%
RATIOS
FY15
FY16
0
4
16
18
0.5
1.1
112%
30%
FY17E
4
21
1.3
30%
-38.4
1.6
0.00%
73.2
2.2
1.53%
9.2
2.0
3.23%
8.0
1.7
3.71%
-4%
-1%
3%
9%
21%
19%
21%
22%
0.7
43.9
69.2
82.4
1.4
0.8
32.2
54.8
73.3
1.4
0.9
26.8
55.5
52.4
1.5
1.0
26.8
55.5
50.0
1.2
CASH FLOW STATEMENT

FY15
FY16
FY17E
(42)
1,627
1,842
580
524
519
(112)
(545)
(611)
1,725
2,431
3,554
496
(952)
3,080
(251)
(212)
(126)
552
(652)
(1,996)
(2,362)
(380)
(803)
(316)
(1,194)
(154)
(364)
381
1,246
(2,092)
751
846
336
106
858
1,758
858
1,718
2,094
Neutral
DABUR INDIA LTD
26-Dec-16
Company Update
CMP
263
Target Price
NA
NA
Upside
NA
NA
Market Data
BSE Code
500096
NSE Symbol
DABUR
320/231
46,240
1040
7,986
52wk Range H/L

Mkt Capital (Rs Cr)
Av. Volume(,000)
Nifty
DABURs 2QFY17 result was below than our expectations. Sales for second quarter
grew by 1% YoY to Rs 1981 cr on the back of sluggish growth from international
business. International business has contributed approx. 34% of companys sales in
2QFY17. International business declined by 2.3% YoY in this quarter due to geo
political disturbances in the MENA region and adverse currency impact. According to
Management, headwind in international business will continue for at least 2-3
quarters going forward. Secondly, recent demonetization may negatively affect
companys domestic sales in 3QFY17E which is a cause of concern for the company
in the short term. Rural demand is still stressed witnessing slight improvement.
Lastly, the company is getting tough competition from Patanjali. Patanjali is strong in
north and west India from where Dabur gets Substantial part (approx. 60% of its
footprint) of its domestic business which is another concern for DABUR. Hence
considering tepid international business growth outlook, tough competition
from Patanjali and stress in rural demand we maintain `Neutral rating on Dabur
with no target price.
Q2FY17_Result Update
Stock Performance
1M
3M
12M
Absolute
-4.8
-8.2
-5.5
Rel.to Nifty
-4.6
1.7
-7.4

2QFY17
1QFY17 4QFY16
Promoters
68.0
68.0
68.1
Public
32.0
32.0
31.9
Others
0.0
0.0
0.0
100.0
100.0
100.0
Total
Company Vs NIFTY
120
DABUR
NIFTY
115
110
105
100
Sales for this quarter grew by 1% YoY to Rs 1981 cr led by sluggish growth from
international business. EBITDA margin declined by 4 bps YoY to 20.6% due to higher
employee and COGS.Ad expenses for Q2FY17 declined by 92Bps. International
business operating margin declined by 250Bps YoY. PAT margin improved by 64Bps
YoY led by higher other income (Rs 89Cr in Q2FY17 Vs Rs 56Cr in Q2FY16). PAT
grew by 5% YoY to Rs 357Cr in Q2FY17. Oral Care, Hair Care, Home Care and Skin
Care reported volume growth of 6% while growth in value terms was 1.6%. Oral care
category including toothpowder was flattish in value terms. Home care category
reported good growth of 20% in value terms led by strong double digit growth in
Odomos and Odonil. Honey was flattish in volume terms on a high base of 32.5%
growth during Q2FY16.
Concall Highlights:
Rural demand is severely stressed. Good monsoon and seventh pay commission
pay out would not be sufficient.
The company will continue with promotion for next 2 quarters. After that company
will try to reduce promotion and think of increase in price.
It gained market share in Almond hair oil segment. Presently it is below than 10%.
Indian business witnessed some deflation in this quarter.
95
90
85
80
Financials
2013
2014
2015
2016
Rs,Cr
2017E
Sales
6169
988
763
4
36.4%
7075
1160
914
5
34.4%
7827
1316
1066
6
31.8%
8454
1520
1253
7
30.1%
7903
1598
1349
8
27.3%
EBITDA
Net Profit
Rajeev Anand
rajeev.anand@narnolia.com
EPS
ROE

DABUR
Gross Margin and EBITDA Margin

65%
55%
51%
54%
51%
52%
51%
53%
52%
57%
55%
54%
54%
55%
51%
51%
45%
35%
25%
15%
19%
16%
17%
14%
18%
17%
18%
19%
16%
19%
18%
18%
21%
We expect 51.2% Gross

, 20.2% EBITDA and 17.1%
PAT margin for DABUR in
FY17E.
15%
Gross Margin %
5%
EBITDA margin %
-5%
Net Sales and PAT (in cr.)

2500
400
Net Sales(in cr)
PAT(in cr)
341
2000
287 283 285
250 243
235
1500
300
250
200
150
1975
1924
2157
2122
2092
2064
1945
2074
1924
1864
1769
1904
1749
100
1651
500
293
261
211
186
1000
358
350
332
319
We expect Sales of Rs 7903

cr and PAT of Rs1349 cr for
Dabur in FY17E. This
estimate can be negatively
affected if demonetization
will persist for longer
duration than expected.
50
Employee ,Other and Ad Expenses(% of Sales)

20%
Employee Expence
18%
16%
15%
14%
12%
13%
10%
8%
6%
8%
9%
12%
8%
13%
14%
9%
14%
13%
13%
8%
12%
9%
13%
13%
13%
13%
13%
13%
13%
9%
9%
10%
10%
9%
12%
9%
Ad Expenses
16%
16%
15%
15%
15%
13%
13%
Other expenses
12%10% 12%
11%
11%
8%
4%
2%
0%
1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17

10
DABUR
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares

INCOME STATEMENT
FY14
FY15
FY16
FY17E
7075
7827
8454
7903
EPS
128
158
219
292
Book Value
7203
7985
8673
8195
DPS
3400
3720
3797
3858
51.9%
52.5%
55.1%
51.2%
Valuation(x)
1908
2101
2342
1584
P/E
1160
1316
1520
1598
Price / Book Value
16%
17%
18%
20%
Dividend Yield (%)
97
115
134
143
1062
1201
1386
1455
RoE
54
40
48
63
RoCE
1136
1319
1557
1684
Turnover Ratios
219
251
302
332
Asset Turnover (x)
19%
19%
19%
20%
914
1066
1253
1349
326
462
422
566
174
176
176
176
Net Debt/Equity (x)
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
174
2482
2656
260
448
45
2916
1789
22
675
519
1097
311
1142
5312
BALANCE SHEET
FY15
FY16
176
176
3178
3984
3354
4160
211
341
523
450
59
77
3565
4502
1927
1995
50
0
711
810
276
220
1096
1330
302
384
835
1271
6106
7120
FY17E
176
4766
4942
341
450
77
5284
2098
50
736
263
1148
426
1604
7734

Depreciation
Direct Taxes Paid
O.profit befo. WC changes
Capital expenditure
Repayment of LT Borrow.
Interest Paid
Inc/(Dec) in Cash
Closing Balance

FY14
5.2
15.2
1.9
36%
RATIOS
FY15
FY16
6.1
7.1
19.1
23.6
2.6
2.4
43%
34%
FY17E
7.7
28.1
3.2
42%
34
11.8
1.0%
32
10.2
1.4%
39
11.7
0.9%
34
9.4
1.2%
34%
36%
32%
34%
30%
31%
27%
28%
1.3
35
104
57
0.1
1.3
33
95
51
0.1
1.2
35
105
57
0.1
1.0
34
103
53
0.1
FY14
1136
97
-186
1202
1098
-215
-107
-280
-34
-326
-804
187
123
313
CASH FLOW STATEMENT

FY15
FY16
FY17E
1319
1557
1681
115
134
143
-230
-278
-332
1395
1602
1888
1047
1083
1419
-267
-217
-189
-876
-618
-746
-50
131
0
-26
-47
-63
-462
-422
-566
-417
-395
-630
-246
69
42
313
68
220
68
137
263
11
Neutral
SUN PHARMACEUTICAL INDUSTRIES LTD

Company Update
CMP
611
Target Price
NA
870
Upside
NA
NA
Market Data
BSE Code
524715
NSE Symbol
SUNPHARMA
898/571
146723
421.82
8607.5
52wk Range H/L

Mkt Capital (Rs Cr)
Av. Volume(,000)
Nifty
Stock Performance
1M
3M
12M
Absolute
-10.1
-23.4
-23.3
Rel.to Nifty
-11.3
-26.2
-29.3
Q2FY17_Result Update
EBITDA margin of the company has improved by 1110 bps to 38.3% in

2QFY17 from 27.2% in 2QFY16.
PAT has increased by 90% to Rs. 2471 Cr in the last quarter from Rs.
1299 Cr. in 2QFY16.
Sales from the US formulations business has increased by 9% to ~ Rs.

3774 Cr. in 2QFY17 which accounts for 48% of total revenue. Sales for
1HFY17 were boosted due to the benefit of 180-day exclusivity for Imatinib
which commenced from 01-Feb- 2016.
R&D expense for Q2FY17 was Rs. 570 crores
1QFY17 4QFY16
Promoters
55.0
55.0
55.0
Public
45.0
45.0
45.0
Others
0.01
Company Vs NIFTY
120
Sunpharma has posted robust growth in revenue of 20% to Rs. 8265

Cr in 2QFY17 vs Rs. 6873 Cr. in the same period of FY16. In 2QFY17,
company has filed 3 ANDAs received approval for 6 ANDAs.
Additionally, the pipeline includes 37 approved NDAs while 4 NDAs
await US FDA approval, of which 2 ANDAs were filed in H1FY17.
Ranbaxy integration is gaining momentum and company is on track to
achieve revenue guidance of Rs. 2000 Cr in FY18.Company has
undergone an inspection by USFDA on Dec 7,2016 and post that the
health regulator issued a Form-483 observation letter for Halol Plant.
Management has guided to commercialize Tildrakizumab in near term,
company is waiting for USFDA approval.
Revenue from branded formulations in India increased by 11% on YoY to

Rs. 2009 Cr in 2QFY17 which accounts for 26% of total revenue.

2QFY17
23rd December2016
SUNPHARMA
NIFTY
115
110
105
100
Outlook
Synergies from the Ranbaxy acquisition are gaining momentum and the
Company is on track to achieve the targeted benefits. Post 2QFY17,
Sunpharma has further strengthened the branded ophthalmic pipeline
through the acquisition of Ocular Technologies. But recent developments
are not very conducive for the company. US business is under pricing
pressure due to customer consolidation. Ongoing issue in Halol plant and
inflated pricing issue on dermatology products in US will pose near term
uncertainty. Though the company has maintained its guidance of 8-10%
sales growth for FY17E, we are little skeptical about it considering on-going
issues. Thus, we recommend "NEUTRAL" view on this stock.
90
Financials
2012
2013
2014
2015
Rs,Cr
2016
85
Sales
EBITDA
Net Profit
EPS
ROE
8019
3204
2657
26
22%
11300
4896
2983
29
20%
16080
7002
3141
15
17%
27433
8064
4541
22
17%
27219
7431
3665
18
12%
95
Dec-16
Nov-16
Oct-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Aditya Gupta
aditya.gupta@narnolia.com

12
Segmental Revenue
Latest Events
16 Dec 2016- The necessary formalities for closure of acquisition transaction have been concluded and we have successfully
completed the acquisition of Ocular Technologies.
12 dec 2016- Sun Pharma, Moebius Medical ink pact to develop pain management product.Moebius Medical will conduct requisite
pre-clinical studies and will assume responsibility for product development and manufacturing through the end of Phase-II studies,
as per the pact
7 Dec 2016- Company has undergone an inspection by USFDA recently and post that the health regulator issued a Form-483
observation letter For Halol Plant. The company is in the process of responding to the letter.
Financial Performance
EBITDA
50%
46%
44%
44%
45%
41%
44%
44%
46%
EBITDA Margins
44%
44%
46%
3000
2500
40%
31%
35%
27%
30%
28%
31%
33%
26%
27%
25%
1500
20%
14%
1000
1873
1768
2520
2169
1934
1850
892
2165
2180
1733
1801
2001
1843
1551
1275
1275
1175
5%
1242
15%
10%
2000
0%
500
0
1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
About the Company

Sun Pharmaceuticals (SUNP) is one of the fastest growing companies in India as well as globally. It has a highly impressive track
record of organic and inorganic growth. Various US acquisitions augment SUNPs pipeline with differentiated products, and SUNP
has turned around business in a highly profitable manner Taro/ TDPL/ Natcos brands/ etc. It has one of the highest margins/
return ratios amongst global peers. In Apr 14, SUNP announced its biggest M&A deal ever Ranbaxy (RBXY). SUNP currently is
the second largest player in the domestic market, while the merged entity will become the largest player. Its API business footprint
is strengthened through 11 world class API manufacturing facilities across the globe. Sun Pharma fosters excellence through
innovation supported by strong R&D capabilities comprising about 1800 scientists and R&D investments of over 7% of annual
revenues.

13
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares

INCOME STATEMENT
FY13
FY14
FY15
FY16
11300
16080 27433
27219 EPS
388
552
452
459 Book Value
11688
16633 27885
27678 DPS
2,073
2,779
6,739
6,483 Payout (incl. Div. Tax.)
18%
17%
25%
24% Valuation(x)
2,796
4,225
8,201
8,508 P/E
4896
7002
8064
7431 Price / Book Value
43%
44%
29%
27% Dividend Yield (%)
336
409
1295
1014 Profitability Ratios
4,560
6,592
6,769
6,417 RoE
43
44
579
477 RoCE
4,905
7,101
6,642
6,399 Turnover Ratios
846
702
915
935 Asset Turnover (x)
17%
10%
14%
15% Debtors (No. of Days)
2983
3141
4541
3665 Inventory (No. of Days)
512
606
363
363 Creditors (No. of Days)
104
207
207
207 Net Debt/Equity (x)
Share Capital
Reserves and surplus
Shareholders' funds
Long term Debt
Total Borrowings
Non Current liabilities
Long term provisions
Short term Provisions
Current liabilities
Total liabilities
Net Fixed Assets
Non Current Investments
Other non Current assets
Current assets
Total Assets
FY13
104
14,886
14,990
115
198
1,001
787
1,482
2,758
20,583
5,077
1,106
8
11,503
20,583
BALANCE SHEET
FY14
FY15
207
207
18,318 26,252
18,525 26,459
49
1,368
2,489
7,596
2,886
2,817
2,602
2,532
1,961
3,336
3,549
9,256
29,371 49,028
5,824 11,020
788
599
0
55
18,686 29,122
29,371 49,028
FY16
241
31,164
31,404
3,117
8,338
2,365
2,080
3,417
8,026
54,220
13,361
593
96
30,865
54,220
FY13
29
145
5
17%
RATIOS
FY14
FY15
15
22
89
128
3
2
19%
8%
FY16
18
152
2
10%
14
3
1%
38
6
1%
47
8
0%
58
7
0%
20%
30%
17%
35%
17%
24%
12%
19%
1
78
83
34
0.0
1
50
71
30
0.0
1
71
75
42
0.1
1
91
86
47
0.1
CASH FLOW STATEMENT

FY13
FY14
FY15
FY16
4,315
4,581
6,403
6,765
Depreciation
336
409
1,195
1,014
Direct Taxes Paid
1,073
789
1,740
1,988
Operating profit before working
4,475
capital changes
4,541
7,101
8,492
3,357
3,959
5,322
6,769
Purchase of Non Current investments
(15,672) (28,265) (28,802) (40,089)
Capital expenditure on fixed assets
(845) including
(906)capital
(2,366)
advances(3,382)
and capital
(2,635)
(2,367)
(2,671)
(4,455)
(111)
(89)
(6,662)
(9,076)
Interest Paid
38
23
251
300
512
606
363
869
(665)
507
(1,087)
(1,924)
Inc/(Dec) in Cash
57
2,099
1,563
390
2,013
2,260
4,479
7,729
Closing Balance
2,069
4,359
7,286
8,120

14
Neutral
Asian Paints Ltd.
22-Dec-16
View & Valuations :
Company Update
CMP
866
Target Price
1015
1100
Upside
NA
NA
Market Data
BSE Code
500820
NSE Symbol
ASIANPAINT
1230/825
52wk Range H/L

Mkt Capital (Rs Cr)
83,095
Av. Volume(,000)
128.0
Nifty
8061
Management remained silent on volume growth improvement (which indicates

lower double digit volume growth going ahead) but did hint at margin
pressures. We do not see significant improvement in volume growth, margin
risks (due to high input cost) and peak valuations (trades at FY18 P/E of 45x)
make the risk-reward unfavourable. We see downside risks to our estimates
due to an unfavourable H2FY17 base with topline and gross margins peaking
out.It also expects paint companies to register flat growth in sales during
Q3FY17 compared Q3FY16, following the government's move to scrap old Rs
500 and 1,000 notes. While the month of October saw significant jump in sales
during festive season, November has seen a significant fall on account of the
demonetization announcement.
While the paint industry is 80-85 per cent cash-driven with the paint retailers
accepting only cash payments for the sales, is now shifting over to digitized
payments to keep the business going. We maintain Neutral rating with a target
price of Rs.1015.
Stock Performance
1Month
1Year
YTD
Absolute
-7.6
-1.0
1.2
Rel.to Nifty
-8.8
-3.8
-4.8
Q2FY17 Result Update :

Q2FY17 Q1FY17 4QFY16
Promoter
52.8
52.8
52.8
Public
Others
Total
47.2
47.2
47.2
100.0
100.0
100.0
Company Vs NIFTY
140
ASIANPAINT
NIFTY
130
120
110
100
90
Dec-16
Oct-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Bhabani Prasad Dehury
Consolidated net profit grew 18.1% to Rs494.76 Cr YoY in Q2FY17, while

consolidated income from operations rose 10.2% to Rs4,232 Cr YoY.
Consolidated EBIDTA margins improved by more than 100bps to 16.85% YoY,
but on a sequential basis, gross margins declined. 271bps QoQ dip in gross
margin was purely owing to increase in raw material cost not due to a change
in the product mix. We see further drop in margins as crude price is bottoming
out.
Investment Rationals :
Double digit volume growth in decorative business in Q2FY17, but, a

prolonged monsoon did affect demand in West and Central India.
No price revision for this quarter. Asian Paints will closely monitor movement
of input prices and GST rate before deciding on price revision, if any.
In the standalone business, the company will incur capex of INR6bn in FY17
for its Mysore and Vizag facilities. Of this, capitalisation will be INR2bn in FY17.
Full Vizag and Mysore plants will be capitalised in FY18.
Financials
Q2FY17
Q1FY17
Q2FY16
QoQ
YoY
Sales
4232
4082
3779
3.7%
12.0%
EBITDA
713
820
621
-13.1%
14.8%
Net Profit
507
622
399
-18.5%
27.0%
Gross %
51%
53%
46%
(231Bps)
444.87
EBIDTA %
17%
20%
16%
-324.84
41.95
PAT %
12%
15%
11%
-325.86
141.80
bhabani.dehury@narnolia.com
15
Brief Highlights Q4FY16 Results :

Net Sales from Operations
Other Income
Total Income
COGS
Employee Benefit Expenses
Excise Duty
Other Expenses
Expenditure
EBITDA
Depreciation
EBIT
Interest
PROFIT BEFORE TAX
Tax
PROFIT AFTER TAX
Margin %
EBIDTA %
EBIT %
PAT %
Cost Calculation % to Sales
COGS Cost % to Sales
Employee Cost % to Sales
Excise Duty % to Sales
Other expenses % to Sales
Q2FY16
Q3FY16
Q4FY16
3779
58
3837
2032
247
4160
36
4196
2200
247
3971
34
4005
2027
277
880
3159
621
71
550
9
598
184
415
912
3359
801
73
728
8
756
229
527
964
3268
704
75
628
15
648
225
422
Q2FY16
16.4%
14.6%
11.0%
Q2FY16
53.8%
6.5%
0.0%
23.3%
1QFY15
Q3FY16
19.2%
17.5%
12.7%
Q3FY16
52.9%
5.9%
0.0%
21.9%
2QFY15
Q4FY16
17.7%
15.8%
10.6%
Q4FY16
51.0%
7.0%
0.0%
24.3%
3QFY15
Q1FY17
4082
72
4154
1919
277
445
621
3262
820
85
735
6
800
260
540
Q1FY17
20.1%
18.0%
13.2%
Q1FY17
47.0%
6.8%
10.9%
15.2%
4QFY15
Q2FY17
4232
79
4312
2088
279
469
683
3519
713
84
629
6
702
221
481
Q2FY17
QoQ
YoY
3.7%
10.0%
3.8%
8.8%
0.7%
5.5%
10.1%
7.9%
-13.1%
-1.3%
-14.4%
-5.0%
-12.3%
-15.2%
-10.9%
12.0%
37.6%
12.4%
2.7%
13.3%
14183
170
14353
7971
907
-22.3%
11.4%
14.8%
19.0%
14.3%
-34.5%
17.3%
20.2%
16.0%
3069
11947
2235
266
1969
35
2104
650
1395
QoQ
YoY
16.8% (325 Bps)

14.9% (315 Bps)
11.4% (186 Bps)
Q2FY17
49.3%
6.6%
11.1%
16.1%
1QFY16
QoQ
42 Bps
30 Bps
39 Bps
YoY
231 Bps (445 Bps)

(20 Bps)
7 Bps
19 Bps 1108 Bps
94 Bps (713 Bps)
Q2FY16
Q3FY16
FY15
FY15
15.8%
13.9%
9.8%
FY15
56.2%
6.4%
0.0%
21.6%
Q4FY16
FY16
15843
213
16056
8049
990
1571
2463
13074
2769
276
2494
41
2666
844
1779
FY16
17.5%
15.7%
11.2%
FY16
YoY
11.7%
25.7%
11.9%
1.0%
9.1%
-19.7%
9.4%
23.9%
3.6%
26.6%
17.0%
26.7%
30.0%
27.5%
YoY
172 Bps
185 Bps
139 Bps
YoY
50.8% (540 Bps)

6.2% (15 Bps)
9.9% 992 Bps
15.5% (609 Bps)
Q1FY17
Q2FY17
Volume Growth ( % )
11%
10%
3%
4%
12%
5%
15%
13%
11%
12%
Realization Growth (%)
7%
6%
3%
3%
-4%
-1%
-1%
-1%
1%
0%
Sales Growth (%)
18%
17%
6%
7%
8%
4%
14%
12%
13%
12%
Crude Price in USD
109.8
102.1
76.0
54.0
62.1
50.0
43.4
34.4
45.5
45.8
Key Conference call Highlights :
Double digit volume growth in decorative business in Q2FY17, but, a prolonged monsoon did affect demand in West and Central
India.
Rural India still continues to grow faster than urban India. South India, post floods, has picked up. Hence, North and South have been
growing at similar pace. Overall retail demand has improved after monsoon eased out.
No price revision this quarter. Asian Paints will closely monitor movement of input prices and GST rate before deciding on price
revision, if any.
271bps QoQ dip in gross margin was purely owing to increase in raw material cost.
Good demand in auto OEM and general industrial business segment led to improved performance of automotive coatings JV. In the
industrial coatings JV, the industrial liquid paints segment continued to grow well.
Home improvement delivered good top line due to network expansion and new product launches. Good improvement in Ess Ess and
Sleek business. New products launches under Ess Ess have resulted in better traction.
International business performed well aided by good growth in markets like Nepal, UAE and Fiji. Moderate improvement in Ethiopia
too, but it was affected by adverse forex fluctuations.
In the standalone business, the company will incur capex of INR6bn in FY17 for its Mysore and Vizag facilities. Of this, capitalisation
will be INR2bn in FY17. Full Vizag and Mysore plants will be capitalised in FY18.
16
Buy
GLENMARK PHARMACEUTICALS LTD.
Company Update
CMP
932
Target Price
1096

Upside
18%
Market Data
BSE Code
532296
NSE Symbol
GLENMARK
994/671
52wk Range H/L

Mkt Capital (Rs Cr)
26324
100.95
8124
Av. Volume(,000)
Nifty
21th Dec 2016

Glenmark has posted flat revenue of Rs. 2224 Cr in 2QFY17 vs Rs.
2281 Cr in the corresponding period of FY16. This is led by the
growth in the revenue of US formulations business by 28.9% to Rs.
771 Cr. The company has filed 2 new ANDAs and received
approval for 6 ANDAs in 2QFY17.The company has cumulatively
filed 6 new ANDAs in 1HFY17 and received approval for 11 in the
first half of FY17. Glenmark has launched cholesterol drug Zetia
with 6 months exclusivity in the US on December 12.The company
has partnered with Par pharmaceuticals in this product. Total
revenue estimated to be generated is around Rs. 2700-3400 Cr and
post profit sharing with Par pharmaceuticals, Glenmark should
make around Rs. 1300-1700 Cr. The management plans to reduce
debt by Rs. 600-800 Cr. by 1QFY18 on the back of growth in US
business.
Result Highlights of 2QFY17
Absolute
5.2
8.6
17.0
EBITDA margin has improved by 690 bps to 20.2% in 2QFY17.

PAT has inccreased by 50% to Rs. 224 Cr in 2QFY17 as compared to
Rs.149 Cr in the same quarter of FY16.
Rel.to Nifty
2.6
2.2
11.8
India business grew by 10.91% to Rs. 674 Cr in 2QFY17.
Stock Performance
1M
3M
12M
US business grew by 28.87% to Rs. 771 Cr in 2QFY17.

Rest of the World(ROW) grew by 20.38% to Rs. 253 Cr in 2QFY17.

2QFY17
1QFY17 4QFY16
Promoters
46.5
46.5
46.5
Public
Others
Total
53.5
53.5
53.5
100
100
100
Europe Formulations Business decreased by 16.00% at Rs. 134Cr.

Latin America Business decreased by 19.24% at Rs. 133 Cr.
Outlook and Valuation
Management expects domestic business to grow by 15% in FY17 and US

business to grow by 25% on the back of new launches like Zetia, Mycolog II,
Crestor, etc. in FY17.Going forward we believe that US business will remain
key driver for growth. Management has guided for 20 new ANDAs filings in
FY17. Considering the long-term opportunities, we recommend buy rating
on this stock with a target price of Rs. 1096
Company Vs NIFTY
120
GLENMARK
NIFTY
115
110
105
100
95
90
85
Dec-16
Oct-16
Nov-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Aditya Gupta
Financials
2012
2013
2014
2015
Rs,Cr
2016
Sales
EBITDA
Net Profit
EPS
P/E
4021
714
464
17
18.0
5012
1015
628
23
20.0
6005
1091
546
20
28.1
6630
1210
474
17
45.0
7650
1433
702
26
30.7
aditya.gupta@narnolia.com
17
Concall Highlights
Glenmark has launched cholesterol drug Zetia in US on Dec 12,2016

Total revenue estimated to be generated is around USD 400-500 million and post profit sharing with Par, Glenmark should
make around USD 200-250 million.
Zetia launch would lead to further debt repayment in 1HFY18
Inhaler launch in EU to start from end-4QFY17, with Nordic countries
Tax rate to normalize at ~25% in FY17
R&D stood at ~10.5% of sales (FY17 guidance: 10-11%)
Expect growth to pick up further in 2HFY17, and full year growth is likely to normalize at 15% in FY17E
The company has no pending observations from USFDA on any of its facilities
Sales
250
191
185
200
150
PAT
214
143
198
170
165
157
131
198
191
2000
1500
115
100
1000
1701
1776
11
1655
1909
1778
2307
1655
1909
3QFY14
1681
2QFY14
1487
1602
1QFY14
1704
1463
43
1238
50
2500
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
500
0
Filings with USFDA

ANDA Filed
ANDA Pending
ANDA Approved
180
160
136
140
120
100
103
116
108
85
112
90
83
78
80
60
171
165
155
65
70
FY2014
FY2015
67
4045
5053
95
59
53
41
38
FY2011
FY2012
40
20
0
FY2009
FY2010
FY2013
FY2016
About Company
Glenmark Pharmaceuticals is one of the most successful research focused pharmaceutical companies, with a business model
spanning drug discovery research, APIs and formulations in the domestic and international markets. Glenmark's R&D efforts have
been extremely productive.GPL almost has a leadership position in the Indian drug discovery space (both NCEs and biologics).
GPL has a presence in over 85 countries across the world including India, Europe, Brazil, Latin America (excluding Argentina),
Russia/CIS, Africa and Asia through branded generic formulations. In regulated markets such as US, Europe, Argentina, etc it has
a presence via its non-branded generics. GPLs formulation business is diversified over several therapeutic segments such as
dermatology, internal medicine, respiratory, diabetes, paediatrics, gynaecology, ENT and oncology. Its manufacturing plants are
located in Baddi (India), Nashik (India), Sao Paolo (Brazil) and Vysoke Myto (Czech Republic). In India, GPL markets over 100
molecules and combinations in various therapy areas such as dermatology, respiratory, gynaecology, pain management, diabetes,
cardio-vascular, internal medicine, etc.Glenmark has reclassified it operations into 6 categories- India, US, Europe, Latin America,
ROW markets and APIs. Earlier the classification was on the basis of - 1) Specialty businesses and 2) Generics businesses.
18

INCOME STATEMENT
FY13
FY14
FY15
FY16
Revenue (Net of Excise Duty) 5012
6005
6630
7650
EPS
Other Income
6
5
20
20
Book Value
Total Revenue
5019
6010
6650
7670
DPS
COGS
1654
1873
1934
2361
GPM
33.0%
31.2%
29.2%
30.9%
Valuation(x)
Other Expenses
1561
2015
2283
2477
P/E
EBITDA
1015
1091
1210
1433
Price / Book Value
EBITDA Margin (%)
20%
18%
18%
19%
Dividend Yield (%)
Depreciation
127
217
260
269
EBIT
888
874
950
1164
RoE
Interest
160
189
190
179
RoCE
PBT
739
697
780
1005
Turnover Ratios
Tax
111
151
119
303
Asset Turnover (x)
Tax Rate (%)
15%
22%
15%
30%
Reported PAT
628
546
474
702
Dividend Paid
64
63
63
63
No. of Shares
27
27
27
27
Net Debt/Equity (x)
Souce: Eastwind/Company
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY13
27
2760
2787
1920
2288
262
57
33
1834
7171
2768
60
636
3727
7171
BALANCE SHEET
FY14
FY15
27
27
2969
3073
2997
3000
2429
2574
2782
2922
259
402
111
232
260
59
2596
3364
8634
9688
3036
3270
60
58
873
774
4763
5323
8634
9688
FY16
28
3737
4270
2487
3275
344
247
63
3214
11103
3908
57
987
5910
11103
FY13
23.2
102.9
2.4
10%
RATIOS
FY14
FY15
20.1
17.5
110.5
110.6
2.3
2.3
12%
13%
FY16
25.9
157.4
2.3
9%
20.0
4.5
1%
28.1
5.1
0%
45.0
7.1
0%
30.7
5.1
0%
23%
19%
18%
16%
16%
17%
16%
17%
0.7
119
61
76
0.7
0.7
131
57
83
0.8
0.7
138
70
113
0.9
0.7
100
75
96
0.6
Souce: Eastwind/Company
CASH FLOW STATEMENT

FY13
FY14
FY15
FY16
739
697
594
1005
Depreciation
127
217
260
269
Direct Taxes Paid
165
263
318
478
Operating profit before working
1081capital1407
changes 1067
1431
648
854
482
345
Purchase of Non Current investments
-471
-377
-544
-890
Capital expenditure on fixed-464
assets including
-368 capital
-540advances
-880and capi
-314
-56
3
452
-256
-628
-691
-1340
Interest Paid
147
194
179
180
64
63
63
68
195
-98
199
699
Inc/(Dec) in Cash
379
388
141
163
226
407
623
694
Closing Balance
605
795
764
857

19

201 | 2nd Floor | Marble Arch Building | 236B-AJC Bose Road |
Kolkata-700 020 , Ph : 033-40501500
email: narnolia@narnolia.com, website
: www.narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing East wind & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other
mentioned in this report/message.

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IEA Report 28th December

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IEA Report

28th Dec 2016

28th Dec 2016

27th Dec 2016

26th Dec 2016

23th Dec 2016

22th Dec 2016

21th Dec 2016

IEA Edition No.-

Share Holding Pattern-%

Initial impact of demonetisation in the month of November was bit low

Outlook and Valuation

Segment wise performance:

Trend of Gross margin & EBITDA margin(%):

EMP order book position (Rs in Cr)

International Order Book

Domestic Order Book

Narnolia Securities Ltd

About the Company:

Narnolia Securities Ltd

Financials Snap Shot

OP/(Loss) before Tax

Narnolia Securities Ltd

CASH FLOW STATEMENT

Previous Target Price

Change from Previous

52wk Range H/L

Mkt Capital (Rs Cr)

Ashok Leyland reported 6.4% decline in revenues during 2QFY17. CV

2QFY17 Result Highlights

Share Holding Pattern-%

Naveen Kumar Dubey

Narnolia Securities Ltd

M&HCV volume and growth trend

Narnolia Securities Ltd

Narnolia Securities Ltd

CASH FLOW STATEMENT

DABUR INDIA LTD

Previous Target Price

Change from Previous

52wk Range H/L

Share Holding Pattern-%

Narnolia Securities Ltd

Gross Margin and EBITDA Margin

We expect 51.2% Gross

Net Sales and PAT (in cr.)

We expect Sales of Rs 7903

Employee ,Other and Ad Expenses(% of Sales)

Narnolia Securities Ltd

Financials Snap Shot

OP/(Loss) before Tax

Narnolia Securities Ltd

CASH FLOW STATEMENT

SUN PHARMACEUTICAL INDUSTRIES LTD

Previous Target Price

Change from Previous

52wk Range H/L

EBITDA margin of the company has improved by 1110 bps to 38.3% in

Sales from the US formulations business has increased by 9% to ~ Rs.

Sunpharma has posted robust growth in revenue of 20% to Rs. 8265

Revenue from branded formulations in India increased by 11% on YoY to

Share Holding Pattern-%

Narnolia Securities Ltd

About the Company