27 May 2020
4QFY20 Results Update | Sector: Healthcare
Sun Pharma
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
SUNP IN
2,399
1081 / 14.5
505 / 315
-8/21/29
3630
CMP: INR450
TP: INR525 (+17%)
Buy
4Q: Miss on profitability due to product mix and COVID-19
Initial signs of uptick in prescription trends in Specialty portfolio
Financials & valuations (INR b)
Y/E MARCH
2020 2021E 2022E
323.3 353.5 390.8
Sales
64.6 74.6 85.8
EBITDA
39.5 47.5 56.5
Adj. PAT
13.6 15.3 16.6
EBIT Margin (%)
16.4 19.7 23.5
Cons. Adj. EPS (INR)
8.7 20.4 18.9
EPS Gr. (%)
188.1 201.0 220.1
BV/Sh. (INR)
Ratios
Net D:E
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
EV/EBITDA (x)
Div. Yield (%)
FCF Yield (%)
EV/Sales (x)
0.03
9.1
10.3
23.5
27.4
16.1
0.8
2.7
3.2
0.05
10.1
11.1
18.5
22.8
14.1
0.8
0.8
3.0
0.00
11.2
11.1
17.1
19.2
12.0
0.8
3.2
2.6
Post the reduction in prescriptions in the Specialty portfolio at the start of
lockdown, a gradual improvement has been witnessed in the same with the
easing of the lockdown. The stockpiling of medicines related to chronic
therapies has been offset, to some extent, by a lower patient-doctor
connect for acute therapies in the key markets of SUNP. The addition of MRs
would further support growth, particularly in Domestic Formulations (DF).
We lower our FY21/FY22E EPS estimates by 6.8%/2% to factor the COVID-
19-led slowdown and revise our price target to INR525 (from INR535 earlier)
on a 22x 12M forward earnings basis. We remain positive on SUNP on
account of a gradually improving outlook for the Specialty portfolio, a robust
ANDA pipeline, and increasing market share in DF. Maintain
Buy.
Benefit of better operating margins offset by higher depreciation, lower
other income on YoY basis
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Mar-20 Dec-19 Mar-19
54.7
54.6
54.4
19.6
19.1
17.3
12.8
13.9
15.5
12.9
12.5
12.8
FII Includes depository receipts
4QFY20 sales were up 14.7% YoY to INR80.8b (in-line), led by India sales
growth of 115% YoY to INR23.7b (29% of sales), partially offset by decline in
US sales (34% of sales; USD375m) by 15% YoY.
DF sales saw a one-time impact of INR10.8b from changes in distribution in
4QFY19. Adjusting for this, DF sales grew 8% YoY. EM sales grew 8% YoY to
USD187m (17% of sales), while RoW sales stood almost flat YoY at USD155m
(14% of sales).
Taro posted sales of USD175m, down 3% YoY.
The gross margin (GM) came in at 71.5% (-240bp YoY, -110bp QoQ).
However, the EBITDA margin at 17.3% (our est.: 21%) expanded 380bp YoY,
led by lower other expenses / employee cost (-450bp/-190bp YoY as a
percentage of sales). Accordingly, EBITDA at INR13.9b (our est.: INR17b) was
up 47% YoY.
Exceptional loss was reported, related to: a) restrictions on the central
excise refund (INR1b) b) the settlement of allegations (INR1.6b), and c) forex
loss (INR1.4b).
Adj. PAT grew at a lower rate of 7.4% YoY to INR7.4b (our est.: INR10.2b) on
higher depreciation, lower other income, and a higher tax rate.
FY20 sales / EBITDA / adj. PAT was INR323b/INR65b/INR40b, up
13%/14%/9%, led by better revenue growth in DF and controlled cost.
The Global Specialty business was at USD126m for the quarter and improved
sequentially despite anticipated seasonal decline in Absorica/Levulan.
While the COVID-19 lockdown has impacted the prescription trend in Cequa,
a prescription uptick has been observed in the recent week.
Specialty R&D accounted for 24% of the total R&D spend for the quarter.
Clinical trials for Phase III of the new indication of Illumya have been delayed
due to COVID-19.
Highlights from management commentary
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Tushar Manudhane - Research Analyst
(Tushar.Manudhane@MotilalOswal.com); +91 22 6129 1536
Hitakshi Chandrani - Research Analyst
(Hitakshi.Chandrani@motilaloswal.com);
+91 226129 1557/
Bharat Hegde - Research Analyst
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Sun Pharma
In DF, while stockpiling has been witnessed in chronic therapies, the patient-
doctor connect has been reduced to 25% of the steady state scenario in acute
therapy.
We lower our earnings estimate by 6.8%/2% for FY21/FY22 to factor weakness
in the key markets in India and other emerging markets on account of the
COVID-19-led disruption. Accordingly, we reduce our price target to INR525
(from INR535 earlier) on a 22x (unchanged) 12M forward earnings basis.
We believe SUNP’s ROE is at a trough and would improve with a 20% earnings
CAGR over FY20–22, led by improving traction in the Specialty portfolio,
enhanced MR effort in DF, and better operating leverage. Maintain
Buy.
(INR m)
FY19
FY20
FY19
FY20 FY20E
2Q
3Q
4Q
1Q
2Q
3Q
4Q
4QE
68,465 76,567 70,443 82,593 79,492 80,387 80,780 286,863 323,252 81,478
3.9
16.0
5.0
15.7
16.1
5.0
14.7
10.1
12.7
15.7
54,064 58,873 60,951 64,461 63,421 63,953 66,799 230,063 258,634 64,393
14,401 17,694 9,491 18,132 16,071 16,434 13,982 56,800 64,618 17,084
9.5
26.5
-33.0
19.2
11.6
-7.1
47.3
9.6
14
80
4,265
4,711 4,541 4,571 4,733
5,470 5,754 17,533 20,528 5,180
10,136 12,984 4,951 13,560 11,338 10,964 8,228 39,267
44,090 11,904
5.9
22.6
-48.5
21.1
11.9
-15.6
66.2
6.6
12.3 140.4
1,295
1,448 1,500 1,041
839
630
518
5,553
3,027
593
4,423
2,765 4,012 3,281 3,750
2,361 2,091 14,051 11,483 2,708
13,263 14,301 7,462 15,801 14,249 12,695 9,802 47,766 52,546 14,019
12,144
-3,000
520
-674
-85
-818 4,027
9,664
2,450
0
1,119 17,301 6,942 16,474 14,334 13,513 5,774 38,102 50,096 14,019
2,189
2,709
-288 1,461 2,660
3,276
831
6,009
8,228 2,764
16.5
18.9
-3.9
9.2
18.7
25.8
8.5
12.6
15.7
19.7
-1,070 14,832 7,231 15,014 11,674 10,237 4,944 32,093 41,868 11,256
1,119
2,173
871 1,139 1,033
1,102
946
5,439
4,219 1,082
-1,949 12,419 6,359 13,875 10,641
9,135 3,998 26,654 37,649 10,174
10,196
9,419 6,879 13,208 10,556
8,317 7,385
36,318 39,466 10,174
11.8
7.2
-25.2
34.4
3.5
-11.7
7.4
12.2
8.7
47.9
-2.8
16.2
9.0
16.8
13.4
11.4
4.9
9.3
11.6
12.5
Var
%
-0.9
-18.2
Valuation and view
Quarterly performance (consolidated)
Y/E March
Net Revenues
YoY Change (%)
Total Expenditure
EBITDA
YoY Change (%)
Depreciation
EBIT
YoY Change (%)
Interest
Net Other Income
PBT before EO Exp
Less: EO Exp/(Inc)
PBT
Tax
Rate (%)
PAT (pre Minority Interest)
Minority Interest
Reported PAT
Adj Net Profit*
YoY Change (%)
Margins (%)
1Q
71,388
15.8
56,175
15,214
44.4
4,016
11,197
58.4
1,309
2,851
12,739
0
12,739
1,639
12.9
11,101
1,275
9,825
9,825
86.9
13.8
-30.1
-60.7
-27.4
Key performance indicators (consolidated)
Y/E March
Domestic formulations
YoY Change (%)
US sales
YoY Change (%)
ROW
YoY Change (%)
APIs
YoY Change (%)
Cost Break-up
RM Cost (% of Sales)
Staff Cost (% of Sales)
R&D Expenses(% of Sales)
Other Cost (% of Sales)
Gross Margins(%)
EBITDA Margins(%)
EBIT Margins(%)
1Q
21,520
22.2
25,460
12.5
20,234
10.8
3,940
27.5
29.5
20.1
7.0
22.1
70.5
21.3
15.7
FY19
2Q
18,597
(16.3)
23,979
21.2
21,336
8.5
4,263
9.9
25.7
21.5
6.6
25.2
74.3
21.0
14.8
3Q
4Q
1Q
22,353 11,010 23,140
7.2
(43.9)
7.5
26,059 30,767 29,680
22.2
28.6
16.6
23,598 22,494 25,270
17.5
9.9
24.9
4,261
4,840
4,610
15.2
45.8
17.0
28.3
19.5
6.1
23.0
71.7
23.1
17.0
26.1
22.3
7.6
30.6
73.9
13.5
7.0
29.8
18.7
5.1
24.5
70.2
22.0
16.4
FY20
FY19
FY20
2Q
3Q
4QE
25,148
25,170 23,648
73,483 97,102
35.2
12.6
114.8
(8.5)
32.1
23,898
24,924 27,129 106,713 105,425
(0.3)
(4.4)
(11.8)
21.0
(1.2)
25,702
24,937 24,752
88,178 100,253
20.5
5.7
10.0
11.9
13.7
4,680
5,032
4,834
17,303 19,159
9.8
18.1
(0.1)
23.7
10.7
28.5
20.4
6.1
24.7
71.5
20.2
14.3
27.4
19.3
6.6
26.4
72.6
20.4
13.6
28.5
20.4
6.6
27.1
71.5
17.3
10.2
27.9
20.8
6.9
25.0
72.1
19.8
13.7
28.2
19.7
6.1
25.7
71.8
20.0
13.6
27 May 2020
2
 Motilal Oswal Financial Services
Sun Pharma
Conference call highlights
EM sales are down due to a reduction in tender revenues in SA; adjusting for
this, growth is in the double digits on a YoY basis. Key markets in the segment
are Russia, Brazil, and Romania.
SUNP is engaging with the USFDA on a monthly basis to resolve the situation at
the Halol plant.
COVID-19-led supply challenges have led to lower execution in US Generics.
No greenfield projects have been planned, and most of the capex in FY21 is to
be utilized for upgrades and expansions.
The company is currently awaiting approval for 98 ANDAs / 5 NDAs.
As guided earlier (10% addition in MRs for DF), 75% of incremental MRs have
been added currently.
SUNP remains focused on acquiring approval for Illumya and its subsequent
launch in the Japan market.
Exhibit 1: Taro Financials
TARO FINANCIALS
USD M
Sales
Growth (%)
Cost of sales (incl Depn)
Gross profit
GP Margin (%)
Operating expenses:
R&D
R&D as a % of sales
SG&A
SG&A as a % of sales
Operating Profit
Operating Profit Margin (%)
EBITDA
EBITDA margin (%)
Financial expenses
Extraordinary items incl forex
Other income
PBT
Taxes
Effective tax rate (%)
Net income before MI
Minority interest
Net income (Reported)
Forex fluctuations
Net income (Adjusted)
4QFY20
174.9
72.7
102.3
58.5
15.8
9.0
29.3
16.7
57.2
32.7
62.5
35.7
-6.6
-3.7
0.8
68.3
13.9
20.3
54.4
0.2
54.2
3.7
50.5
4QFY19
179.9
60.4
119.5
66.4
20.5
11.4
23.6
13.1
75.4
41.9
80.3
44.6
-8.2
9.4
-0.1
74.1
15.6
21.0
58.5
0.1
58.4
-9.4
67.8
% YoY
-2.8
20.4
-14.4
(799)bp
-22.9
23.9
-24.1
(922)bp
-22.2
(890)bp
3QFY20
147.6
53.5
94.1
63.8
% QoQ
18.5
35.9
8.7
(531)bp
-7.8
-7.0
-7.2
-25.5
14.9
6.0
10.1
20.9
40.0
14.2
58.3
-1.9
39.5
(681)bp
63.8
-2.1
43.2
(752)bp
-8.5
0.0
0.5
67.4
1.4
2.9
4.3
64.5
-15.6
0.0
64.5
-15.9
3.3
61.2
-17.5
Source: MOSL, Company
Valuation and view
US (34% of sales): Outlook intact despite near-term headwinds
Due to COVID-19, some reduction has been seen in prescriptions in the Specialty
portfolio. However, SUNP’s market share has remained intact. The company
continues to focus on marketing efforts for the Specialty portfolio, comprising nine
products for derma and ophthalmic indication. SUNP reported sales of ~USD126m
for 4QFY20 from these products at a global level, with their traction improving
sequentially. Also, it had 30 ANDA approvals over FY20, with the pace of approvals
improving for the company. The ANDA pipeline remains robust, with 98 ANDAs
21 January 2020
3
 Motilal Oswal Financial Services
Sun Pharma
pending approval. Also, excluding sales in the Specialty portfolio, the base business
has seen a nominal decline on account of price erosion. We expect traction to
gradually improve at an 8% CAGR over FY20–22.
DF (29% of sales): On track to improve market share
Adjusting for the low base, SUNP delivered 15% YoY growth in FY20. Growth was
driven by the Top 25 brands and thus remains spread across brands. Therapy-wise,
Cardiac, CNS, GI, and AI remain the key drivers of growth. Increased business from
products in chronic therapies and the addition of MRs would be offset, to some
extent, by lower business prospects in acute therapies. Accordingly, we expect an
8.5% CAGR in India sales over FY20–22.
Increased traction in existing products to drive growth in EM/ROW market
The key markets in EM are Brazil, Russia, Romania, and Thailand. The ROW market
comprises business from the recently acquired Pola Pharma (Japan) business. We
expect an 11% sales CAGR over FY20–22 in this segment, led by increased traction in
existing products.
Valuation and view
We lower our earnings estimate by 6.8%/2% for FY21/FY22 to factor weakness in
the key markets in India and other emerging markets on account of the COVID-19-
led disruption. Accordingly, we reduce our price target to INR525 (from INR535
earlier) on a 22x (unchanged) 12M forward earnings basis.
We believe SUNP’s ROE is at a trough and would improve with a 20% earnings CAGR
over FY20–22, led by improving traction in Specialty portfolio, enhanced MR efforts
in DF, and better operating leverage. Maintain
Buy.
Exhibit 2: P/E chart
55.0
40.0
29.6
25.0
10.0
16.6
20.3
P/E (x)
Min (x)
Avg (x)
+1SD
38.9
Max (x)
-1SD
52.3
Exhibit 3: P/B chart
7.8
6.1
4.4
21.7
2.7
1.0
P/B (x)
Min (x)
Avg (x)
+1SD
6.0
4.5
3.0
1.7
Max (x)
-1SD
7.5
2.3
Source: MOFSL, Company, Bloomberg
Source: MOFSL, Company, Bloomberg
27 May 2020
4
 Motilal Oswal Financial Services
Sun Pharma
Story in charts
Exhibit 1: Revenues grew ~15% YoY in 4QFY20
Sales (INR b)
15.8
62
-23.0
68
-1.7
-15.1-14.1
66
66
67
71
68
77
70
83
79 80
81
3.9
Growth YoY (%)
16.0
5.0
15.7 16.1
5.0
-36
-42 -44
-36
328 368 380 342 362 443 424 339 350 375
14.7
-3
Exhibit 2: US business declined 15% YoY
US sales (USD m)
8
11
10
20
Growth YoY (%)
12
-1
-3
-10.6
-15
381 351 309
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 3: 115% YoY growth was seen in India sales on a low
base
Domestic formulations (INR b)
Growth YoY (%)
114.8
7.2
6.1 -5.0 10.5 5.9 2.4 22.2
-16.3
19
18
22
21
20
22
19
22
7.5
-43.9
11
23
25
25
24
35.2
Exhibit 4: Taro sales saw a decline of 2.8% YoY
Taro Sales (USD m)
13.5
-10.8
-4.2 -6.4
Growth YoY (%)
2.7 4.3 1.2
-16.3
-2.8
12.6
-25.7-29.5
-25.9
-31.0
196 161 170 155 175 155 159 176 180 161 161 148 175
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 5: EBITDA margins expanded 380bp YoY
EBITDA Margin (%)
23.1
22.0
20.2 20.4
20.0 21.2 21.1 21.3 21.0
13.5
EBITDA (INR b)
Exhibit 6: R&D was 6.6% of sales for 4QFY20
R&D cost (INR b)
11.1
17.3
8.8 8.5
7.8 7.2
7.6
7.0 6.6
6.1
% of sales
18.1 17.1
5.1
6.1 6.6 6.6
12
11
13
14
14
15
14
18
9
18
16
16
14
6.0 5.2 5.1 4.7 7.4 5.0 4.5 4.7 5.3 4.2
4.9 5.3 5.4
Source: Company, MOFSL
Source: Company, MOFSL
27 May 2020
5
 Motilal Oswal Financial Services
Sun Pharma
Exhibit 7: Expect revenue CAGR of 10% over FY20–22E
Formulations (INR b)
API (INR b)
39.3
21
11
8
154
265
265
286
15
16
15
18
20
19
-7.7
2,249
FY15
2,076
FY16
-1.1
1,357
14.0
-3.3
6.1
9.4
Exhibit 8: US Generics to see 8% CAGR over FY20–22E
US Sales (USD m)
Growth YoY (%)
247
268
303
334
369
2,054
FY17
-33.9
FY18
1,547
FY19
1,495
FY20
1,587
1,736
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E
Source: Company, MOFSL
FY21E FY22E
Source: Company, MOFSL
Exhibit 9: Expect India biz CAGR of 8.5% over FY20–22E
India sales (INR b)
82%
Growth YoY (%)
Exhibit 10: EBITDA margin to improve gradually
EBITDA (INR b)
EBITDA Margin (%)
43.3
28.3
28.7
29.0
19.9
19.8
20.0
21.1
22.0
24%
8%
37
FY14
67
FY15
73
FY16
7%
77
FY17
4%
80
FY18
73
-8%
FY19
32%
8%
97
105
9%
114
69
FY14
77
FY15
80
FY16
88
FY17
52
FY18
57
FY19
65
75
86
FY20 FY21E FY22E
FY20 FY21E FY22E
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 11: EPS to exhibit 20% CAGR over FY20–22E
22.0
FY14
19.7
FY15
19.6
FY16
26.1
FY17
13.5
FY18
15.1
FY19
16.4
FY20
19.7
FY21E
23.5
FY22E
Source: Company, MOFSL
27 May 2020
6
 Motilal Oswal Financial Services
Sun Pharma
Financials and valuations
Income statement
Y/E March
Net Sales
Change (%)
Total Expenditure
% of Sales
EBITDA (INR b)
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income - Rec.
Extra-ordinary Exp
PBT
Tax
Tax Rate (%)
Profit after Tax
Change (%)
Margin (%)
Less: Minority Interest
Reported PAT
Adjusted PAT (excl. Ex. Items)
2014
160,044
42.4
90,787
56.7
69,257
43.3
4,092
65,165
442
6,282
25,174
45,831
7,022
15.3
38,809
11.9
24.2
7375
31,434
52,813
2015
272,865
70.5
195,667
71.7
77,198
28.3
11,947
65,250
5,790
6,946
2,378
64,029
9,147
14.3
54,882
41.4
20.1
9488
45,394
47,415
2016
277,442
1.7
197,881
71.3
79,561
28.7
10,135
69,426
4,769
9,848
6,852
67,653
9,349
13.8
58,304
6.2
21.0
11145
47,159
47,069
2017
302,642
9.1
214,892
71.0
87,751
29.0
12,648
75,103
3,998
19,374
0
90,479
12,116
13.4
78,363
34.4
25.9
8719
69,644
62,890
2018
260,659
-13.9
208,813
80.1
51,846
19.9
14,998
36,848
5,176
12,623
9,505
34,790
8,452
24.3
26,338
-66.4
10.1
4722
21,616
32,362
2019
286,863
10.1
230,063
80.2
56,800
19.8
17,533
39,267
5,553
14,051
9,664
38,102
6,009
15.8
32,093
21.9
11.2
5439
26,654
36,318
2020
323,252
12.7
258,634
80.0
64,618
20.0
20,528
44,090
3,027
11,483
2,450
50,096
8,228
16.4
41,868
30.5
13.0
4219
37,649
39,466
2021E
353,471
9.3
278,896
78.9
74,575
21.1
20,532
54,043
2,427
11,500
0
63,116
10,098
16.0
53,017
26.6
15.0
5500
47,517
47,517
(INR m)
2022E
390,825
10.6
305,037
78.0
85,788
22.0
20,962
64,826
2,127
11,700
0
74,399
11,904
16.0
62,495
17.9
16.0
6000
56,495
56,495
Balance sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Goodwill
Investments
Curr. Assets
Inventory
Account Receivables
Cash and Bank Balance
L & A and Others
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
2014
2,071
183,178
185,249
19,212
-9110
24,982
220,333
63,886
28,904
34,982
8,415
33,191
27,860
177,393
31,230
22,004
75,902
48,257
61,509
15,887
45,622
115,884
220,333
2015
2,406
253,826
256,232
28,661
-17516
77,827
345,203
130,369
60,617
69,752
20,386
57,073
27,163
297,403
56,680
53,123
109,980
77,619
126,574
59,198
67,376
170,828
345,203
2016
2,407
327,418
329,825
40,853
-30462
83,164
423,379
123,033
47,201
75,831
12,035
92,611
11,161
332,175
64,225
67,757
131,817
68,377
100,434
51,741
48,693
231,742
423,379
2017
2,399
363,997
366,397
37,909
-21780
80,910
463,435
133,994
49,041
84,953
15,648
104,165
9,610
374,799
68,328
72,026
151,408
83,036
125,739
73,469
52,270
249,060
463,435
2018
2,399
378,606
381,006
38,842
-19748
97,518
497,617
155,630
64,040
91,590
14,345
107,243
30,523
377,390
68,807
78,153
99,294
131,136
123,473
68,332
55,141
253,916
497,617
2019
2,399
411,691
414,091
33,135
-24506
98,934
521,654
181,846
81,572
100,274
9,108
123,095
39,518
349,394
78,860
88,842
72,756
108,937
99,736
66,108
33,627
249,659
521,654
2020
2,399
450,245
452,645
38,602
-31172
75,783
535,858
207,774
102,100
105,674
6,589
128,409
52,458
357,642
78,750
94,212
64,876
119,804
114,913
70,102
44,812
242,728
535,858
2021E
2,399
481,255
483,655
44,102
-31172
55,077
551,663
240,630
122,632
117,998
7,248
128,409
52,458
377,414
95,869
104,646
33,936
142,962
131,863
80,330
51,534
245,551
551,663
(INR m)
2022E
2,399
527,083
529,483
50,102
-31172
40,177
588,590
270,630
143,594
127,036
7,973
128,409
52,458
418,765
105,924
120,998
40,387
151,457
146,050
86,786
59,264
272,716
588,591
27 May 2020
7
 Motilal Oswal Financial Services
Sun Pharma
Financials and valuations
Ratios
Y/E March
Adjusted EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Asset Turnover (x)
Fixed Asset Turnover (x)
Debtor (Days)
Creditor (Days)
Inventory (Days)
Leverage Ratio
Debt/Equity (x)
2014
22.0
14.8
77.0
2.6
18.7
20.5
5.8
6.3
14.5
0.6
31.5
33.4
55.5
0.7
4.8
50
209
71
0.2
2015
19.7
23.8
106.5
3.0
15.4
22.8
4.2
3.7
13.2
0.7
21.5
22.7
37.8
0.8
5.2
71
321
76
0.3
2016
19.6
23.8
137.1
3.0
14.9
23.0
3.3
3.7
12.8
0.7
16.1
18.3
26.2
0.7
3.8
89
291
84
0.3
2017
26.1
34.2
152.3
1.0
3.7
17.2
3.0
3.3
11.4
0.2
18.1
19.0
23.4
0.7
3.8
87
330
82
0.2
2018
13.5
15.2
158.4
3.3
36.5
33.5
2.8
4.0
20.2
0.7
8.7
8.1
8.7
0.5
3.0
109
336
96
0.3
2019
15.1
18.4
172.1
2.0
18.0
29.8
2.6
3.7
18.8
0.4
9.1
9.1
8.8
0.5
3.0
113
307
100
0.3
2020
16.4
24.2
188.1
3.5
23.5
27.4
2.4
3.2
16.1
0.8
9.1
10.3
9.1
0.6
3.1
106
277
89
0.0
2021E
19.7
28.3
201.0
3.5
18.5
22.8
2.2
3.0
14.1
0.8
10.1
11.1
10.4
0.6
3.2
108
299
99
0.0
2022E
23.5
32.2
220.1
3.8
17.1
19.2
2.0
2.6
12.0
0.8
11.2
11.1
11.5
0.7
3.2
113
296
99
0.0
Cash flow statement
Y/E March
OP/(Loss) bef. Tax
Int./Dividends Recd.
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Invest.
CF from investments
Change in networth
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
2014
44,083
6,282
-9,010
-5,589
35,767
-18,580
17,187
-3,745
-22,324
6,674
22,910
-442
-7,270
21,872
35,315
40,587
75,902
2015
74,820
6,946
-17,553
-20,865
43,348
-82,570
-39,223
697
-81,873
33,994
52,845
-5,790
-8,445
72,605
34,079
75,902
109,981
2016
72,709
9,848
-22,295
-39,077
21,185
-43,401
-22,216
16,002
-27,399
36,170
5,337
-4,769
-8,689
28,049
21,836
109,980
131,816
2017
87,751
19,374
-3,434
2,274
105,964
-36,936
69,028
1,551
-35,385
-41,838
-2,254
-3,998
-2,897
-50,987
19,592
131,817
151,408
2018
42,341
12,623
-6,420
-56,971
-8,427
-23,411
-31,838
-20,913
-44,324
-1,195
16,608
-5,176
-9,601
636
-52,115
151,408
99,294
2019
47,136
14,051
-10,767
-22,280
28,140
-36,831
-8,691
-8,996
-45,827
1,062
1,416
-5,553
-5,777
-8,851
-26,538
99,294
72,756
2020
62,168
11,483
-14,894
-950
57,807
-28,723
29,084
-12,939
-41,663
11,978
-23,151
-3,027
-9,825
-24,025
-7,880
72,756
64,876
2021E
74,575
11,500
-10,098
-33,762
42,215
-33,515
8,700
0
-33,515
-6,682
-20,706
-2,427
-9,825
-39,640
-30,940
64,876
33,936
(INR m)
2022E
85,788
11,700
-11,904
-20,714
64,870
-30,725
34,145
0
-30,725
0
-14,900
-2,127
-10,667
-27,695
6,450
33,936
40,387
27 May 2020
8
 Motilal Oswal Financial Services
Sun Pharma
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (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.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
27 May 2020
9
 Motilal Oswal Financial Services
Sun Pharma
***************************************************************************************
*****************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
-
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on
the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL
even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
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)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other 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. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
27 May 2020
10