Stock Update 21 Mar 2016

RETAIL RESEARCH
Dishman Pharmaceuticals & Chemicals Ltd

Industry HDFCSec Scrip Code CMP Recommendation Sequential Targets Time Horizon
Pharmaceuticals DISPHAEQNR Rs. 343.45 Buy at CMP and add on dips between Rs. 315-321 band Rs. 378 & Rs. 423 2-3 quarters

Company Profile
Dishman is a global outsourcing partner for the pharmaceutical industry offering a portfolio of development, scale-up and manufacturing services. Incorporated in
1983, Dishman is an integrated CRAMS player. The company has 23 multi-purpose facilities across Bavla, Naroda, Manchester, Switzerland, Netherlands and Shanghai
and a dedicated production facility for APIs and intermediates in Bavla. Almost all the facilities are approved by health authorities (USFDA, MEB, SWISS MEDIC, ANSM,
TGA, WHO, KFDA). Dishman operates mainly under two segments CRAMS and Marketable Molecules. Its cost-effective, high quality research, development and
manufacturing services includes the production and supply of tailor-made, high-quality Intermediates and innovative and generic Active Pharmaceutical Ingredients
(APIs) straddling the entire pharmaceutical value chain. This diversity in capabilities allows a pharma client to stick with Dishman across all stages of a products lifespan
right from pilot proof of concept to proven and commercial mass production. This has enabled the company to forge a strong relationship with the customers, from
biotech to multinational pharma companies in the key advanced markets of the United States, Europe and Asia.
Carbogen Amcis (a business unit) represents the relationship with customers from early to mid-stages of a product lifecycle. Dishman India represents relationship with
customers from mid to mature stages of the same products lifecycle. The two brands deliver complex solutions to suit the varied needs of its global customers large
and small more appropriately. Among the 100% owned companies, Carbogen Amcis AG and Dishman Netherlands B.V. were the major revenue contributors at 50% in
FY15 (FY14: 47%) and 17% (17%), respectively.

Dishman offers products like Active Pharmaceutical Ingredients, High Potent APIs, Intermediates, Phase transfer catalysts, Vitamin D, Vitamin D analogues, Cholesterol,
Lanolin-related products, Antiseptic and disinfectant formulations.

Recent Updates
For Q3FY16, Total Revenues of Dishman Pharma fell marginally by 0.9% YoY to Rs 388.7 crore, primarily due to change in product mix. In Carbogen Amcis,
revenues declined as a result of minimum inventory build-up as required by the customers before actual sales. This revenue will be recognized in Q4. The
overall performance is on track backed by optimum capacity utilisation of 95% and strong order book of ~ CHF 100 mn. For the CRAMS India business, revenue
growth was driven by strong traction in in high quality commercial manufacturing and developmental orders. The Hypo division also shows healthy pickup in
revenues. For CRAMS UK, revenues declined due to lower Non-GMP work during Q3FY16; however the activity is expected to increase in Q4FY16. In Vitamin D
business, revenues declined as the company continued to consolidate its focus on high margin Vitamin D analogues. As far as the Chinese facility is concerned,
revenues of Rs. 7.5 crore revenue in Q3FY16 with 45% EBITDA Margin were driven by increased capacity utilization at the facility.
Due to a significant drop in raw material cost and cost efficiencies, the operating profit came in at Rs. 110 crore, up by 48.8% YoY thus boosting OPM to 28.8%
from 19.2% in Q3FY15. However, there was a rise in employee cost of about 15% YoY to Rs. 130.12 crore and as a percentage to sales also it increased to 34% as
against 29.4% in Q3FY15. This was on account of increments, bonuses to employees, and recruitment of more employees in Carbogen Amcis due to increase in
the proportion of developmental work, which requires more people. The rise in EBITDA margin was also backed by healthy capacity utilisation, execution of high
margin commercial and development orders, process improvement and bulk purchase of raw materials at lower prices. Due to lower interest cost, down by 28%

RETAIL RESEARCH Page |1

 RETAIL RESEARCH
RETAIL RESEARCH
YoY to Rs. 18.5 crore in Q3FY16 (due to reduction in total debt by 8% to Rs 855 crore as on Dec-15, conversion of certain rupee loans into foreign currency loans
and repayment of high cost debt), PBT doubled to Rs. 66.1 crore from Rs. 30.6 crore in Q3FY15. Tax rate for Q3FY16 was higher as compared to Q3FY15 (28.9%
from 21.4%), PAT came in at Rs. 47 crore, up by 95.3% YoY. PAT margin improved from 6.2% in Q3FY15 to 12.3% in Q3FY16.
Topline growth is currently slow but would accelerate after 2-3 quarters on the back of the below mentioned triggers - The management has guided for
topline growth of 10-12% in FY17.
o Q3 sales were down about 1% YoY and up 2.4% sequentially. Q4 sales could however come in at 4-5% up YoY. The main reason for the sluggish sales
growth is that Dishman is easing out low margin products and is using its capacities to instead focus on high margin products.
o Management indicated that they have ~15 projects which are close to commercialization across Carbogen and the Indian facilities. This makes it one of
the largest disclosed pipeline of Phase 3 assets for any CRAMS player in India. They expect to commercialize 3 of these projects in Switzerland over the
next 12-18 months. Additionally, they hope to commercialize some more projects from the Indian facilities too over this period. This should provide a
significant boost to revenues / earnings over the next few quarters.
o The China facility post becoming profitable during FY16 (vs operating loss of about Rs. 26 crore in FY15) is also witnessing increasing business from
supplying intermediates and API. The company is hopeful of getting a GMP certification in Q4FY16/Q1FY17 which will enable Dishman China to accept
orders from clients other than the Dishman Group who have already audited the facilities.
o An improvement is seen in the business activity backed by a strong pipeline of oncology drugs where the company has proven expertise. It foresees a
good number of drugs entering commercial sale in the near-term which will lead to healthy commercial production from India.
o The company has been successful in transitioning a number of projects out of clinic Phase II into clinical Phase III and has already commercialized two
drugs this year for Carbogen Amcis clients. The product pipeline for Europe is robust and the services offered by Carbogen Amcis to the US clients are
being very well received. The order book of about CHF 80-90 mn at Carbogen will suffice next 9 months of revenue plan. Capex in Carbogen will be
minimum going forward.
o In Netherlands, the companys strategy of directly selling to customers rather than to distributors is bearing fruits as seen by the robust growth in the
bottomline. The company now sells high margin products directly to select customers. This has resulted in the EBITDA margins from this unit to rise
from 19% in FY15 to ~25% in 9MFY16 even when the topline has been largely flat.
o The Hipo division also shows healthy pickup in revenues and recorded revenue of $2.5 million in Q3FY16 and $8.5 million for 9MFY16, thus for FY16
revenue would be around $10-11 million. The hipo unit is completely booked for 12 months with a good revenue visibility and with more than 50%
EBITDA margins. The company is helping new chemical entities to develop the molecule as well as manufacturing the API for clinical trial purposes.
There are only 2 cells working (out of 4) of the Hipo facility with 4-5 customers. The company expects two products (out of 3-4 products in total) to be
launched in next 12-18 months (subject to approval of the authorities), thus management is targeting revenue of $12-15 million in FY17.
o This expectation is also based on an agreement from the companys longstanding customer Janssen Pharmaceutica NV (one of the Janssen
Pharmaceutical Companies of Johnson & Johnson) to produce an active pharmaceutical ingredient (API) of Sirturo, a medicine used in the treatment of
Multi-Drug Resistant Tuberculosis (MDR-TB)

RETAIL RESEARCH Page |2

 RETAIL RESEARCH
RETAIL RESEARCH
The management expects the EBITDA margin to normalize at 25-27% in FY16 & FY17.
o EBITDA margin is expanding and is likely to sustain going forward on the back of R&D efforts which has reduced the amount of raw material used is
processes. By following the strategy of concentrating on high margin value added products rather than low margin (which are being phased out and
hence the small topline growth) at Carbogen Amcis, the company will be able to maintain its margins at the current rate. Also, Dishman is consolidating
its presence in the high margin business of Vitamin D in Netherlands which will boost the margins going ahead. Developmental work on certain new
products in CRAMS business of India would also help the margins move forward. The company is expecting to get GMP licence for the China facility in
Q4FY16/Q1FY17 which would allow them to sell very complex, high margin intermediates to clients other than the Dishman group from that facility.
Research & Development Activities in FY15 include
o India:
150 projects under different stages of development
100 CRAMS projects
25 NCE Molecules currently under laboratory pilot scale and commercial production
o Switzerland:
R&D staff increased from total 55 (end 2012) to 60 (end 2013) to 68 (end 2014)
Additional site for small scale production of highly potent compounds rent and brought to operation. Site located in Vionnaz (close to Lake
Geneva, CH). Site is currently ramping up. Target maximum personal is about 14 FTEs in PR&D and small scale production and QA/QC.
Installation of additional multi-purpose room (Compartment D, BU) completed in June 2014 to enable small scale production up to 20 L (up to
0.5 kg) and prep. HPLC and Biotage purification of highly active compounds
Installation of 2 small scale lyophilization units (one for HiPo chemistry and one for normal chemistry) allowing to isolate highly instable
compounds at scale up to 200 g per batch
Upgrade of Neuland production and solid handling to enable pilot production of category III compounds in the range of 5 to about 20 kg
o Shanghai:
PR&D has been reorganised. A new leader has been transferred from Europe to China to strengthen the team
Development activities between Shanghai, India and Europe have been intensified
Reorganisation of the factory (Headcount reduction from 72 to 62)
Installation of a new reactor (500L glassline)
Initiated the requalification of the site to produce GMP materials
o Bubendorf:
New Clean-Room has been installed to activate the ADC-(Anti-Body-Drug-Conjugates)-Business
New Containment lab has been installed to access HiPo-lab scale-up and HiPochromatography capabilities
o Neuland:
Containment production facilities for category 3 have been expanded
Received approval for manufacture of a drug substance for South Korean market by relevant SK authorities

RETAIL RESEARCH Page |3

 RETAIL RESEARCH
RETAIL RESEARCH
o Manchester:
2014-15 capacity utilisation was an all-time high in both labs and production
12 people employed in R&D (including 9 PhD)
Laboratories refurbished, new fume cupboards installed to replace old ones now 21 in total
Other highlights
o Capex for FY16 would be minimal as the company would be concentrating on the capacities to be utilised optimally. For FY17, as of now, there is a
capex of Rs. 50 crore planned but it would be reviewed by the management post March 2016. Tax rate for FY17 could be 24-25%. As far as debt
reduction is concerned around Rs. 80-100 crore would be repaid in FY17 and debt/equity ratio could come down at 0.4-0.5 in FY17 (currently at 0.6).
o Dishman receives repeated orders from its customers - for both existing and new products. This is because it offers end-to-end, low-cost CRAMS from
process research and development to late-stage clinical and commercial manufacturing along with a well-established manufacturing base in major
markets such as Europe, India and China.
o Dishman had acquired on a long term lease basis Land located at the Pharma and Finechem SEZ being developed by Dishman Infrastructure Limited
(DIL), a company promoted by the promoters of Dishman. However, owing to withdrawal of the benefits granted earlier to SEZ developers/units located
therein by the Government, the said company DIL has suspended the work on the SEZ development since last around three years and is looking at
various options including de-bonding the SEZ and selling off the entire SEZ land. If this happens, Dishman's lease will also be cancelled and Dishman will
get back the money invested (~Rs.104 cr) in the Land leased to it in the said SEZ.
o During FY16 till date, the company has obtained regulatory approvals from USFDA for two plants at Carbogen Amcis (Switzerland). It also plans to obtain
Good Manufacturing Practice (GMP) certification for the China plant by Q4FY16/Q1FY17. The approvals would provide the flexibility to manufacture
from all the facilities. This would lead to de-risking the production from a single plant and provide strong growth opportunities to Carbogen Amcis.
o On 25th February 2016, Dishman made an announcement on exchanges that its Board of Directors has approved for a Bonus issue of 1:1 to the existing
equity shareholders of the company. For this purpose, the record date has not been decided yet by the company but the process would be completed
by April end/early May.
o Also during the same meeting, the Board announced amalgamation amongst Dishman Pharmaceuticals & Chemicals Ltd (the Company), Dishman Care
Ltd (DCL) and Carbogen Amcis India Ltd (CAIL). Dishman Care is engaged in market research, business development and marketing of disinfectant
products to be manufactured by the company and CAIL is engaged in research and development, including regulatory filings of certain pharmaceutical
molecules for some of the overseas subsidiaries of the Company.
o The amalgamation process will commence once the approval of transfer of effluent treatment plants (ETP) from the company to CAIL (a wholly owned
subsidiary) on slump sale basis is done. The company said total consideration for transfer of ETP Undertaking will be Rs 15 crore. This would be the first
phase of restructuring and in order to avail continuity of certain tax benefits (additional depreciation) on the transfer of ETP, this transaction has been
done separately.
o The second phase of restructuring would be the amalgamation of DCL with the Company wherein no shares shall be required to be issued in respect of
the equity shares held by the Company in DCL (as DCL is a wholly owned subsidiary). Upon amalgamation, equity shares of DCL held by DPCL shall be
deemed to be cancelled and shall stand extinguished without consideration

RETAIL RESEARCH Page |4

 RETAIL RESEARCH
RETAIL RESEARCH
o The third/last phase of restructuring would be to transfer all assets (tangible and intangible) of the Company to CAIL and to change name of Carbogen
Amcis India to Dishman Carbogen Amcis that will be listed on BSE and NSE. Accordingly, Dishman Pharma's shareholders will get one share of CAIL for
every one share held in the company. Pursuant to amalgamation, shareholding of CAIL will be mirror image of shareholding of the company and equity
shares of CAIL held by Dishman will be deemed to be cancelled. However, this scheme of arrangement will be subject to approval of shareholders and
Gujarat High Court & other authorities. This will also lead to an increase in the value of fixed assets recorded on the books of combined entity
accompanied by an increase in reserves. Debt equity ratio of the company could come down further.
o On 4th March 2016, India Ratings and Research (Ind-Ra) revised Dishmans outlook to positive from stable for its long-term/fund-based facilities and
non-convertible debenture issues. It has, however, reaffirmed its rating at Ind A for (term loans & NCDs) and Ind A1 for short-term facilities. The
Outlook revision reflects managements expectation of a substantial increase in Dishmans revenue and profitability in the foreseeable future. The
expectation is based on an agreement from the companys longstanding customer Janssen Pharmaceutica NV to produce an active pharmaceutical
ingredient (API), Dishmans China plant becoming profitable in the financial year 2015 (January-December 2015), and managements expectation of
commercialisation of certain new molecules. The revenue growth would also be driven by an increase in sales from the High Potent (Hi-Po) plant due to
an increase in Hi-Po orders and an increase in the number of molecules under development.
Risks/Concerns
Large proportion of exports and presence of substantial portion of foreign debt in the balance sheet results in relatively higher vulnerability to forex
fluctuations. The company does hedge its net position in the currencies they deal with, normally euros and dollars.
Dishman faces regulatory risks for all its facilities, but on a timely manner, USFDA keeps inspecting the facilities apart from regular customer audits.
CRAMS business requires constant innovation so that it caters to the ever increasing and changing demand from the Pharma players. This requires sufficient
amount of R&D spend. Increasing R&D spends can affect the companys operating margins negatively.
The company can face risk in terms of competition from US and European companies. However being an Indian manufacturer it does have a cost advantage
which helps Dishman to market its products at a competitive price. Also, the company tries to tap customers at the pre-clinical stage itself so that they stay with
them throughout the product life which can be of 10-20 years. Any new product launch takes time in the pharma industry as it has to go through phases.
Further DPCL has embarked on a risk mitigation strategy in the sense that earlier it was dependent on 8-10 large customers, but over the last few years it has
consciously developed a number of small customers in the traditional and ne areas like biotech, oncology etc.
The company can face volatility in the price and availability of raw material. However to mitigate this risk, the company completely passes on any
increase/decrease of raw materials to its customers. Also, API forms a small proportion of the total final cost of the drug. So the customer does not mind any
changes in the prices of the same.
Risk of substitution to its customers products However given the fact that the NCE goes through a long process, possibility of a new substitute emerging in the
first 5-7 years of commercialization is remote.

Quarterly Financials Consolidated

Particulars - Rs.Cr Q3FY16 Q3FY15 % Chg Q2FY16 % Chg 9MFY16 9MFY15 % Chg
Net Sales 382.47 385.84 -0.9% 373.66 2.4% 1156.18 1139.73 1.4%
Other operating income 6.27 3.84 63.3% 7.49 -16.3% 17.76 11.8 50.5%
Total Operating Income 388.7 389.7 -0.2% 381.2 2.0% 1173.9 1151.5 1.9%
Gross Profit 298.1 258.4 15.3% 283.4 5.2% 895.5 789.0 13.5%

RETAIL RESEARCH Page |5

 RETAIL RESEARCH
RETAIL RESEARCH
GPM (%) 77.9 67.0 75.8 77.4 69.2
Expenditure
Cost of material consumed 78.84 142.13 -44.5% 87.21 -9.6% 271.17 426.72 -36.5%
Decrease/(increase) in stock-in-trade & W-I-P 5.58 -14.69 -138.0% 3.04 83.6% -10.44 -77.63 -86.6%
Purchase of Finished Goods 0 0.0089 -100.0% 0 #DIV/0! 0 1.63 -100.0%
Employees Cost 130.12 113.5 14.6% 123.71 5.2% 377.89 338.93 11.5%
Other Expenditure 64.2 74.81 -14.2% 75.7 -15.2% 229.59 223.74 2.6%
Total Opex 278.7 315.8 -11.7% 289.7 -3.8% 868.2 913.4 -4.9%
Operating Profit 110.0 73.9 48.8% 91.5 20.2% 305.7 238.1 28.4%
OPM % 28.8% 19.2% 960.2 24.5% 26.4% 20.9% 554.9
Other Income 1.67 7.79 -78.6% 7.6 -78.0% 13.59 13.28 2.3%
Interest Expenses 18.5 25.68 -28.0% 23.59 -21.6% 73.97 64.72 14.3%
Depreciation & Amortisation Expense 27.09 25.46 6.4% 26.12 3.7% 79.15 80.04 -1.1%
Profit from ordinary activities before tax 66.1 30.6 116.2% 49.4 33.8% 166.2 106.7 55.8%
PBTM % 17.3% 7.9% 13.2% 14.4% 9.4%
Tax 19.13 6.53 193.0% 12.89 48.4% 45 25.47 76.7%
Effective Tax Rate % 28.9% 21.4% 26.1% 27.1% 23.9%
PAT 47.0 24.0 95.3% 36.5 28.7% 121.2 81.2 49.3%
Income from associates 0 -0.002 0 0.001 0.035
Adj Net Profit 47.0 24.0 95.3% 36.5 28.7% 121.2 81.2 49.2%
NPM % 12.3% 6.2% 9.8% 10.5% 7.1%
Equity Capital 16.1 16.1 16.1 16.1 16.1
EPS 5.8 3.0 95.3% 4.5 28.7% 15.0 10.1 49.2%
(Source: Company, HDFC sec)

Revenues Segment wise Breakup (Rs. in Mn) Q3FY16 Q3FY15 YoY (%) 9MFY16 9MFY15 YoY (%)
CRAMS (% of Total) 76.5% 75.5% 63.0% 63.0%
CRAMS - India 799.8 648.9 23.3% 2038 1862 9.5%
CRAMS - Carbogen Amcis 1874.5 1931.5 -3.0% 5526.1 5546 -0.4%
CRAMS - UK 252.6 333.1 -24.2% 578.2 711.5 -18.7%
Marketable Molecules (% of Total) 24% 25% 37% 37%
Vitamin D 321.9 442.5 -27.3% 1726.8 1646.9 4.9%
Others 575.9 502.4 14.6% 1692.6 1630.8 3.8%
Total 3824.7 3858.4 -0.9% 11561.7 11397.2 1.4%
(Source: Company, HDFC sec)

EBITDA Margin % - Segment wise Q3FY16 Q3FY15 9MFY16 9MFY15

CRAMS
CRAMS - India 52.4% 45.4% 49.7% 40.8%

RETAIL RESEARCH Page |6

 RETAIL RESEARCH
RETAIL RESEARCH
CRAMS - Carbogen Amcis 19.3% 14.0% 18.4% 14.4%
CRAMS - UK 32.0% 28.0% 26.6% 34.9%
Marketable Molecules
Vitamin D 31.9% 14.7% 29.7% 22.9%
Others 23.5% 5.1% 21.3% 12.2%
(Source: Company, HDFC sec)
Conclusion & Recommendation
Improving revenues (though at a slow pace but potential of faster growth in 2-3 quarters) and profitability in the past few quarters, aided by growing contribution
from hitherto unproductive assets, indicates that Dishman is gradually getting back on the recovery path. The turnaround in Chinese assets exemplifies this trend.
Dishman is focusing on high-margin, high-value business and expects a sizeable improvement in the years ahead. The company is focusing on contract manufacturing to
boost margins over volumes in the Vitamin D business. Hipo API and generic API businesses will be some additional future growth drivers. We expect the positive
momentum to be maintained due to better performance in Carbogen Amcis, improvement in Vitamin D margins, better realisation in Netherlands facility,
commercialization of products in the market and products in the Phase 3 stage. Management indicated that the company is unlikely to undertake any large scale capex
for the next two years (was in an investment phase from last five years) which will lead to an improvement in utilization levels, lift profits and improve return ratios.
Also scalability of the Hipo facility at Bavla, approvals from regulatory authorities and interest cost saving will gradually lead to better profitability.

The recent Amalgamation Scheme (details provided above) will provide a high level of synergistic integration, better operational management and provide value
addition. It would re-emphasise the strategy of One Company, Two Brands with both Dishman and Carbogen Amcis brands being reflected in the trade name of
one company. Synergies arising out of consolidation of business will lead to enhancement of net worth of the combined business and reflection of true net-worth in the
financial statements, improved alignment of debt and enhancement in earnings and cash flow. The next stage of consolidation (though a few years away) could be
merging Carbogen Amcis with Dishman to create one large integrated company with both Dishman and Carbogen brands facing the entire client community.

At the CMP of Rs.343.45, the stock is trading at 14.4x FY17RE EPS of Rs.23.9 and 11.4x FY18E EPS of Rs 30.2. We think investors can buy the stock at the CMP and add on
dips between Rs. 315-321 band (~10.5x FY18E EPS) for sequential targets of Rs. 378 and Rs. 423 (~12.5-14x FY18E EPS) over the next 2-3 quarters.

Financial Estimates

Particulars (Rs in Cr) FY12 FY13 FY14 FY15 FY16OE FY16RE FY17OE FY17RE FY18E
Net Sales 1124.1 1272.2 1385.3 1575.2 1733.4 1569.3 1994.3 1758.3 2013.3
Operating Profit 224.5 290.1 332.1 313.6 431.3 419.4 492.7 455.6 537.2
OPM (%) 20.0% 22.8% 24.0% 19.9% 24.9% 26.7% 24.7% 25.9% 26.7%
PAT 56.8 100.3 109.3 119.8 146.4 169.5 165.6 192.7 243.4
PAT Margin (%) 5.0% 7.9% 7.9% 7.6% 8.4% 10.8% 8.3% 11.0% 12.1%
EPS (Rs.) 7.0 12.4 13.5 14.8 18.1 21.0 20.5 23.9 30.2
PE (x) 48.8 27.6 25.4 23.1 18.9 16.3 16.7 14.4 11.4
(OE: Original Estimates, RE: Revised Estimates) (Source: Company, HDFC sec)

RETAIL RESEARCH Page |7

 RETAIL RESEARCH
RETAIL RESEARCH
Profit & Loss Account
Particulars (Rs. Cr.) FY12 FY13 FY14 FY15 FY16E FY17E FY18E
INCOME:
Net Sales 1124.11 1272.21 1385.32 1575.19 1569.27 1758.26 2013.30
% growth rate(YOY) 13.2% 8.9% 13.7% 4.4% 12.0% 14.5%
EXPENDITURE:
Materials Cost 376.88 409.20 395.94 551.72 400.16 451.87 519.43
Changes in inventories of FG, WIP and scrap -5.31 -50.21 -27.76 -42.59 -60.00 -55.00 -60.00
Purchase of stock-in-trade 12.98 16.86 5.16 25.87 18.83 23.10 26.16
Employee Cost 294.10 350.91 412.33 423.20 480.20 539.79 612.04
Other Expenditure 221.00 255.33 267.53 303.36 310.72 342.86 378.50
Total Operating Expenses 899.65 982.09 1053.20 1261.56 1149.91 1302.62 1476.13
Operating Profit 224.46 290.12 332.12 313.63 419.36 455.64 537.16
Other Income 12.9 17.8 24.9 86.0 17.0 20.0 22.0
EBITDA 237.37 307.94 357.03 399.67 436.36 475.64 559.16
Interest 72.94 78.82 92.05 89.71 94.63 101.25 110.36
Depreciation & Amortisation 76.52 83.84 108.56 150.71 108.53 113.96 120.80
Profit Before Tax 87.91 145.28 156.42 159.25 233.20 260.43 328.00
Total Tax 31.15 45.00 47.13 39.43 63.66 67.71 84.63
Reported PAT 56.76 100.28 109.29 119.82 169.54 192.72 243.38
% growth rate(YOY) 76.67% 8.98% 9.63% 41.5% 13.7% 26.3%
(Source: Company, HDFC sec)
Balance Sheet

Particulars (Rs. Cr.) FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Equity & Liabilities
Shareholders Funds 928.8 1030.8 1177.2 1237.8 1368.5 1507.7 1688.0
Share Capital* 16.1 16.1 16.1 16.1 16.1 16.1 16.1
Reserves & Surplus 912.7 1014.7 1161.1 1221.7 1352.3 1491.6 1671.8
Share Application money pending allotment 1.8 3.7 4.1 0.0 0.0 0.0 0.0

Non-Current Liabilities 663.6 543.9 543.7 466.4 577.9 563.5 549.8

Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Long Term borrowings 512.1 433.6 412.1 330.2 405.4 391.2 367.7
Deferred Tax liabilities (net) 44.6 58.0 67.7 62.9 69.4 65.9 67.2
Other Long Term Liabilities 66.4 9.5 0.1 0.0 4.6 0.0 0.0

RETAIL RESEARCH Page |8

 RETAIL RESEARCH
RETAIL RESEARCH
Long Term Provisions 40.5 42.8 63.8 73.3 98.5 106.4 114.9

Current Liabilities 654.7 712.6 902.8 1104.8 993.9 1037.3 1109.8

Short Term Borrowings 233.6 330.6 378.7 406.8 318.8 302.2 296.2
Trade Payables 165.8 105.6 84.2 151.4 150.7 159.7 172.5
Other Current Liabilities 235.6 236.9 375.6 475.2 448.6 493.5 552.7
Short Term Provisions 19.8 39.6 64.4 71.3 75.8 81.8 88.4

Total Equity & Liabilities 2248.9 2291.0 2627.8 2809.0 2940.2 3108.5 3347.6

Assets
Non-Current Assets 1625.1 1617.8 1803.2 1795.4 1941.6 2071.7 2204.6
Fixed Assets 1451.3 1470.2 1584.1 1582.7 1686.3 1803.9 1930.3
Tangible Assets 809.5 1145.7 1257.8 1184.5 1279.2 1381.6 1492.1
Intangible Assets 211.3 214.9 235.1 244.2 249.1 261.5 274.6
Capital Work-in-Progress 418.2 97.4 78.9 141.8 137.6 140.3 143.1
Goodwill on consolidation 12.3 12.3 12.3 12.3 20.5 20.5 20.5
Non-Current Investments 26.3 24.9 24.9 25.0 28.4 30.0 32.0
Long -term Loans and Advances 146.2 119.9 193.0 187.1 225.5 236.8 241.5
Other non-current assets 1.2 2.8 1.2 0.6 1.3 1.0 0.8

Current Assets 623.9 673.3 824.6 1013.5 998.6 1036.8 1143.0

Current investments 0.0 0.0 0.0 13.2 13.2 13.2 20.0
Inventories 267.1 338.3 423.3 448.3 438.3 462.4 506.3
Trade Receivables 187.0 72.9 144.0 217.1 206.3 237.3 265.8
Cash & Cash Equivalents 24.0 21.0 35.3 36.2 43.6 53.6 67.0
Short Term Loans & Advances 145.8 241.1 218.4 289.8 278.4 250.5 263.1
Other Current Assets 0.0 0.0 3.7 9.0 18.9 19.8 20.8

Total Assets 2248.9 2291.0 2627.8 2808.9 2940.2 3108.5 3347.6

* Not adjusted for Bonus Shares (Source: Company, HDFC sec)

RETAIL RESEARCH Page |9

 RETAIL RESEARCH
RETAIL RESEARCH
One Year Price Chart

RETAIL RESEARCH P a g e | 10
 RETAIL RESEARCH
RETAIL RESEARCH

Fundamental Research Analyst: Zececa Mehta (zececa.mehta@hdfcsec.com)

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website:
www.hdfcsec.com Email: hdfcsecretailresearch@hdfcsec.com.
____________________________________________________________________________________________________________________________________________________________________________________________

"HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475."

Disclosure:
We /I, (Zececa Mehta), (MMS), authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also
certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of
1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any
material conflict of interest. Any holding in stock No
Disclaimer:
This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information
obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or
correctness. All such information and opinions are subject to change without notice. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended
to be complete and this document is not, and should not be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments.
This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction
where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject HDFC Securities Ltd or its affiliates to any registration or licensing requirement within such
jurisdiction.
If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may not be reproduced, distributed or published
for any purposes without prior written approval of HDFC Securities Ltd.
Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from them. In addition, investors in
securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk.
It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HDFC Securities Ltd may from time to time solicit from, or perform broking, or other services for, any company mentioned in this mail
and/or its attachments.
HDFC Securities and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any
other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such
company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.
HDFC Securities Ltd, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report, including
but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc.
HDFC Securities Ltd and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other
deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report.
HDFC Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.
HDFC Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-
managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal course of business.
HDFC Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither HDFC
Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage
service transactions. HDFC Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any
compensation/benefits from the subject company or third party in connection with the Research Report.
This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or other parameters mentioned in this document may or may not match or
may be contrary with those of the other Research teams (Institutional, PCG) of HDFC Securities Ltd

RETAIL RESEARCH P a g e | 11