28 May 2019
4QFY19 Results Update | Sector: Healthcare
Sun Pharma
Buy
BSE SENSEX
39,750
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
S&P CNX
11,929
SUNP IN
Impacted by distribution change; on path to build specialty portfolio
2,399
Change of distribution in India impacts earnings:
On reported basis, sales at
990.7 / 14.2
INR70b, up 5% YoY, while, EBITDA/PAT at INR9.5b/INR6b is down 33%/51%
679 / 350
YoY for the quarter. We note that SUNP’s financials were adversely impacted
-13/-24/-30
by the change of its distribution in the domestic formulations (DF) business
4663
(sales down 44% YoY to INR11b; 16% of sales) from Aditya Medisales to its
45.6
CMP: INR413
TP: INR480(+16%)
Financials & Valuations (INR b)
Y/E Mar
FY19 FY20E
Net Sales
287.7
315.7
EBITDA
57.6
73.1
PAT
36.3
44.8
EPS (INR)
15.1
18.6
Gr. (%)
12.2
23.3
BV/Sh (INR)
172.1
186.6
RoE (%)
9.1
10.4
RoCE (%)
9.1
11.1
P/E (x)
27.4
22.2
P/BV (x)
2.4
2.2
FY21E
351.8
86.6
52.6
21.9
17.4
204.4
11.2
12.6
18.9
2.0
Estimate change
TP change
Rating change
wholly owned subsidiary. US sales grew 20% YoY to USD443m (44% of sales),
led by a considerable order from a US-based customer for generic supply
(which would be for a period six months starting 4QFY19). Excluding the
impact from the aforementioned factors (as shown in Exhibit 2),
sales/EBITDA/PAT would have been INR76b/INR14b/INR9b v/s our estimate
of INR74b/INR17b/INR10b.
FY19 performance:
Sales/EBITDA/PAT stood at INR287b (+10%
YoY)/INR57.5b (+11% YoY)/INR36.3 (+12% YoY).
ROW/API perform better than EM:
ROW sales were up 32% YoY at
USD153m, largely led by the integration of Pola Pharma. API sales, too,
increased strongly by 46% YoY to INR4.8b. However, lower Africa sales led to
a 13% YoY decline in EM sales to USD173m.
Concall highlights:
(a) SUNP guided for single-digit to low-mid-teen YoY
growth in FY20 over reported FY19 sales. (b) Profitability for FY20 would be
restricted by an increase in promotional spend on the specialty portfolio. (c)
The company has started direct to customer promotion of Illumya for 2.5
months now and would continue in FY20 as well. (d) With technical issue
being resolved, SUNP has taken salesforce on board to promote Cequa.
Valuation and view:
We cut our FY20/21 estimate by 9%/8% to factor in
increased marketing spend toward the specialty portfolio in the US market.
We also reduce the P/E multiple to 22x (from 23x) 12M forward earnings
basis to factor in the delayed pick-up in the US generics business post
resolution of the regulatory issue at Halol. Accordingly, we arrive at a TP of
INR480. Maintain
Buy.
Tushar Manudhane – Research analyst
(Tushar.Manudhane@MotilalOswal.com); +91 22 6129 1536
Rajat Srivastava – Research analyst
(Rajat.Srivastava@motilaloswal.com); +91 22 6129 1557
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
Sun Pharma
Other highlights
No further update on the whistle blower-related aspect.
There has been no significant impact of Atlas-related unwinding of transaction
on P&L.
Sudhir Valia would step down from position of Whole-time Director to Non-
Executive director of the company with effect from today.
There is no insider trading case pending on any employee of SUNP.
In 4QFY19, the company filed 9 ANDAs and received approvals for 12.
As of end-FY19, total 118 ANDAs are pending for approval. 13 have tentative
approval status.
R&D spend for the quarter was INR5.3b (7.6% of sales). SUNP guided for R&D
spend at 8-9% of total sales for FY20.
RoW sales were up 32% YoY, largely on the back of integration of the recently
acquired Pola Pharma (Japan).
Emerging market sales declined YoY due to lower business in Africa.
Distribution-related impact has been completely absorbed in 4QFY19 and
normalized domestic formulation sales would happen going forward.
SUNP has slightly above 10.5% market share in Odomzo.
Effective tax rate would move upward, going forward.
Expansion capex would be USD200m for FY20.
Exhibit 1: Excluding the impact on India and US business, PAT would be INR9b for 4QFY19
INRm
Sales
EBITDA
PAT
EPS (INR)
Reported basis
70,443
9,491
6,359
2.9
Excluding impact change in distribution of DF
sales and increased US sales
75,853
13,297
9,014
3.8
Source: MOFSL, Company
Taro’s 4QFY19 results
Taro revenue grew 3% YoY/2% QoQ to USD180m. Volume growth came in at 4%
YoY, implying a stable pricing environment during the quarter. Gross margin stood
at 66% (-140bp YoY, -20bp QoQ). EBITDA margin shrank 65bp YoY (-280bp QoQ) to
45%. Absolute EBITDA was flat YoY at USD80m. Forex loss of USD9m and a higher
tax rate led to a 32% YoY decline in PAT to USD58m.
28 May 2019
2
 Motilal Oswal Financial Services
Sun Pharma
Exhibit 2: 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)
4QFY19A
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
4QFY18A
175.2
56.3
118.9
67.9
20.3
11.6
23.8
13.6
74.8
42.7
79.3
45.3
-5.9
-16.0
0.5
97.2
10.7
11.0
86.5
0.1
86.5
16.0
70.4
% YoY
2.7
7.2
0.5
(143)bp
0.9
-0.6
0.8
(80)bp
1.2
(65)bp
3QFY19A
176.4
58.9
117.5
66.6
14.7
8.3
23.9
13.5
78.9
44.7
83.8
47.5
-8.4
-30.7
1.4
119.3
25.8
21.6
93.6
0.0
93.6
30.7
62.9
% QoQ
2.0
2.5
1.7
(16)bp
39.2
-1.1
-4.4
(280)bp
-4.2
(289)bp
-23.8
-37.9
-32.4
-32.4
-3.7
-37.5
-37.6
7.9
Source: MOFSL, Company
Exhibit 3: Key operating metrics
4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19
Revenue Mix (%)
India
USA
RoW
API
Revenue Growth (%)
India
USA
RoW
API
Cost of sales (%)
Raw material
Staff cost
R&D cost
Other expenses
Tax Rate
Margins (%)
Gross Margins
EBITDA Margins
EBIT Margins
PAT margins
24.2
52.3
18.3
5.0
20.4
15.1
28.3
5.8
88.2
69.0
19.6
15.9
9.1
24.4
8.0
80.4
33.0
30.0
26.5
23.2
50.8
19.9
5.9
22.7
7.6
31.7
12.3
168.2
66.5
23.1
15.5
6.5
21.5
13.4
76.9
35.4
34.5
28.4
25.9
47.8
21.5
4.7
13.2
11.1
12.0
18.7
53.9
65.7
23.7
15.4
7.1
19.4
15.1
76.3
38.3
38.4
32.0
25.6
44.5
25.0
4.8
8.2
4.2
6.8
23.8
14.0
71.1
29.3
15.8
8.0
18.0
17.7
70.7
31.0
29.5
22.5
28.1
37.4
28.5
5.8
(8.7)
6.1
(34.7)
42.0
5.2
81.9
32.2
18.3
8.8
22.6
3.2
67.8
21.7
21.0
19.7
28.4
36.5
29.5
5.0
(22.6)
(5.0)
(44.4)
14.5
(34.2)
82.9
27.2
21.6
8.5
25.7
20.4
72.8
17.6
14.6
(5.2)
33.7
30.0
29.8
5.9
(15.1)
10.5
(46.7)
17.8
5.8
80.0
28.5
20.1
7.8
23.7
10.0
71.5
20.7
19.3
15.2
31.4
32.1
30.3
5.6
(13.7)
5.9
(37.6)
4.6
1.2
78.8
31.8
20.8
7.2
19.0
65.2
68.2
21.8
18.8
6.1
29.0
35.3
30.2
4.9
(0.8)
2.4
(6.4)
5.3
(16.0)
78.9
26.4
20.0
11.1
21.4
(12.8)
73.6
24.1
22.8
23.1
30.0
35.5
28.2
5.5
15.7
22.2
12.5
10.8
27.5
78.7
29.5
20.1
7.0
22.1
12.9
70.5
22.2
19.7
15.5
27.2
35.0
31.2
6.2
3.9
(16.3)
21.2
8.5
9.9
79.0
25.7
21.5
6.6
25.2
16.5
74.3
22.1
21.3
(1.6)
29.2
34.0
30.8
5.6
15.4
7.2
22.2
17.5
15.2
76.9
28.3
19.5
6.1
23.0
18.9
71.7
23.9
20.6
19.1
15.8
43.4
32.3
6.9
2.9
(43.9)
26.5
9.9
45.8
86.5
26.1
22.3
7.6
30.6
(3.9)
73.9
14.9
12.7
10.3
Source: Company, MOFSL
Valuation and view:
We cut our FY20/21 estimate by 9%/8% to factor in increased
marketing spend toward the specialty portfolio in the US market. We also reduce
the P/E multiple to 22x (from 23x) 12M forward earnings basis to factor in the
delayed pick-up in the US generics business post resolution of the regulatory issue at
Halol. Accordingly, we arrive at a TP of INR480. Maintain
Buy.
28 May 2019
3
 Motilal Oswal Financial Services
Sun Pharma
Story in charts
Exhibit 4: Revenues grew by ~5% YoY in 4QFY19…
Sales (INR b)
24.0
18.4
13.0
Growth YoY (%)
15.8
62
-1.7
3.9
16.0 5.0
21
25
9
-16
-36
71
68 77
70
592 609 554 510 381
351 309
-42 -44
-3
-36
328 368 380 342 362 443
8
11
10
Exhibit 5: …led by US business which saw 20% YoY growth
US sales (USD m)
Growth YoY (%)
20
8.5
-10.6
-15.1-14.1
-23.0
68
66 66 67
76
80
78
77
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 6: 44% YoY decline in India sales due to one-off
Domestic formulations (INR b)
15.1
7.6 11.1 4.2 6.1
10.5 5.9
2.4
Growth YoY (%)
22.2
7.2
11
-16.3
18
19
20
20
19
18
22
21
20
22
19
22
-43.9
Exhibit 7: Taro sales see subdued 2.7% YoY growth
Taro Sales (USD m)
8.6 8.6 7.9
161 170 155
-10.8
-4.2 -6.4
Growth YoY (%)
13.5
2.7
-5.0
-14.7
-25.7
-25.9
-29.5
-31.0
265 234 229 220 196
175
155 159 176 180
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 8: EBITDA margin contracted 760bp YoY
EBITDA (INR b)
33.0 33.5 34.3
28.9
18.1 17.1
20.0 21.2 21.1 21.3 21.0
23.1
13.5
13
14
14
15
14
18
9
EBITDA Margin (%)
Exhibit 9: R&D was lower on YoY basis at 7.6% of sales
R&D cost (INR b)
9.1
6.5
7.1
8.0
8.8 8.5
% of sales
11.1
7.6
7.0 6.6
6.1
7.8 7.2
25
27
27
22
12
11
6.7 5.2 5.5 6.1 6.0 5.2 5.1 4.7 7.4 5.0
4.5 4.7 5.3
Source: Company, MOFSL
Source: Company, MOFSL
28 May 2019
4
 Motilal Oswal Financial Services
Sun Pharma
Exhibit 10: Expect revenue CAGR of 11% over FY19-21E
Formulations (INR b)
API (INR b)
23
11
8
106
FY13
8
265
FY15
265
FY16
286
FY17
247
FY18
266
295
329
15
16
15
19
21
-7.7
-1.1
1357
-33.9
FY18
Exhibit 11: US generics to see 8% YoY growth over FY19-21E
US Sales (USD m)
55.0
42.9
39.3
12.5
8.0
9.5
Growth YoY (%)
154
FY14
1130 1615 2249 2076 2054
FY13
FY14
FY15
FY16
FY17
1526 1649 1805
FY19 FY20E FY21E
FY19 FY20E FY21E
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 12: Expect India biz CAGR of 8% over FY19-21E
India sales (INR b)
82%
Growth YoY (%)
Exhibit 13: EBITDA margin to improve gradually
43.7
EBITDA (INR b)
43.3
28.3
28.7
29.0
19.9
20.0
23.2
EBITDA Margin (%)
24%
2%
30
37
67
8%
73
7%
77
4%
80
73
8%
-8%
79
9%
87
49
FY13
Source: Company, MOFSL
69
FY14
77
FY15
80
FY16
88
FY17
24.6
52
FY18
58
73
87
FY19 FY20E FY21E
Source: Company, MOFSL
Exhibit 14: EPS to exhibit ~20% CAGR over FY19-21E
14.5
FY13
22.0
FY14
19.7
FY15
19.6
FY16
26.1
FY17
13.5
FY18
15.1
FY19
18.6
FY20E
21.9
FY21E
Source: Company, MOFSL
28 May 2019
5
 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: Mionrity 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
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
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
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
26
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
4722
21,616
32,362
2019
287,659
10.4
230,063
80.0
57,596
20.0
17,533
40,063
5,553
13,255
9,664
38,102
6,009
15.8
32,093
21.9
11
5439
26,654
36,318
(INR Million)
2020E
315,690
9.7
242,597
76.8
73,093
23.2
17,411
55,682
5,303
14,000
0
64,379
11,588
18.0
52,791
64.5
17
8000
44,791
44,791
2021E
351,760
11.4
265,155
75.4
86,605
24.6
19,163
67,442
5,003
14,500
0
76,939
13,849
18.0
63,090
19.5
18
10500
52,590
52,590
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
(INR Million)
2020E
2,399
446,657
449,057
33,135
-24506
70,776
528,462
210,630
98,983
111,647
10,019
123,095
39,518
357,728
85,421
96,066
56,757
119,485
113,544
74,873
38,671
244,184
528,462
2021E
2,399
489,422
491,822
33,135
-24506
50,761
551,213
245,630
118,146
127,484
11,021
123,095
39,518
377,068
94,123
111,788
44,286
126,870
126,973
82,501
44,472
250,095
551,213
28 May 2019
6
 Motilal Oswal Financial Services
Sun Pharma
Financials and valuations
Ratios
Y/E March
Reported EPS
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
Fixed Asset Turnover (x)
Debtor (Days)
Creditor (Days)
Inventory (Days)
Leverage Ratio
Debt/Equity (x)
2014
13.1
22.0
14.8
77.0
2.6
18.7
18.8
5.4
5.7
13.2
0.6
31.5
33.4
55.5
4.8
50
209
71
0.2
2015
18.9
19.7
23.8
106.5
3.0
15.4
21.0
3.9
3.4
12.1
0.7
21.5
22.7
37.8
5.2
71
321
76
0.3
2016
19.6
19.6
23.8
137.1
1.0
4.8
21.1
3.0
3.4
11.7
0.2
16.1
18.3
26.2
3.8
89
291
84
0.3
2017
28.9
26.1
34.2
152.3
3.5
12.5
15.8
2.7
3.0
10.4
0.8
18.1
19.0
23.4
3.8
87
330
82
0.2
2018
9.0
13.5
15.2
158.4
3.5
37.3
30.7
2.6
3.7
18.5
0.8
8.7
8.1
8.7
3.0
109
336
96
0.3
2019
11.1
15.1
18.4
172.1
3.5
30.6
27.4
2.4
3.4
17.0
0.8
9.1
9.1
9.0
3.0
113
307
100
0.3
2020E
18.6
18.6
25.9
186.6
3.5
18.6
22.2
2.2
3.1
13.2
0.8
10.4
11.1
11.1
3.0
111
321
99
0.2
2021E
21.9
21.9
29.8
204.4
3.5
15.6
18.9
2.0
2.7
11.1
0.8
11.2
12.6
12.6
2.9
116
321
98
0.1
Cash Flow Statement
Y/E March
OP/(Loss) bef. Tax
Int./Dividends Recd.
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Invest.
CF from investments
Change in networth
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
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
30,296
5,337
-4,769
-2,816
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
-34,910
-2,254
-3,998
-9,825
-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
-971
16,608
-5,176
-9,825
636
-52,115
151,408
99,294
2019E
47,932
13,255
-10,767
-22,280
28,140
-36,831
-8,691
-8,996
-45,827
5,111
1,416
-5,553
-9,825
-8,851
-26,538
99,294
72,756
(INR Million)
2020E
73,093
14,000
-11,588
-10,524
64,981
-29,694
35,286
0
-29,694
0
-28,158
-5,303
-9,825
-43,285
-7,999
72,756
56,757
2021E
86,605
14,500
-13,849
-18,382
68,874
-36,002
32,872
0
-36,002
0
-20,015
-5,003
-9,825
-34,842
-12,471
56,757
44,286
28 May 2019
7
 Motilal Oswal Financial Services
Sun Pharma
Corporate profile
Company description
Sun Pharma is among the largest players in the
domestic formulations market and the most
profitable one. It makes and markets specialty
medicines and APIs for chronic therapy areas such
as cardiology, psychiatry, neurology, etc. Sun has
forayed into regulated markets by acquiring
majority stake in CaracoPharma and has
strengthened its presence in US by recent
acquisition of Taro.
Exhibit 1: Sensex rebased
Source: MOFSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Mar-19
Promoter
DII
FII
Others
54.4
17.3
15.5
12.8
Dec-18
54.4
17.7
14.9
13.1
Mar-18
54.4
16.2
16.3
13.1
Source: Capitaline
Exhibit 3: Top holders
Holder Name
LIC of India
ICICI Prudential Value Discovery Fund and
various Fund Accounts
Government Of Singapore
Lakshdeep Investments & Finance (P) Ltd.
Reliance Capital Trustee Co Ltd.A/C Reliance
Large Cap Fund and various Fund Accounts
% Holding
5.9
3.4
1.4
1.3
1.3
Source: Capitaline
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Israel Makov
Dilip S Shanghvi
Sunil R Ajmera
Designation
Chairman
Managing Director
Company Secretary
Exhibit 5: Directors
Name
Ashwin Dani
Keki M Mistry
Sailesh T Desai
Rekha Sethi
Name
Hasmukh S Shah
S Mohanchand Dadha
Sudhir V Valia
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
C J Goswami & Associates
Kailash Sankhlecha & Associates
S R B C & Co LLP
Type
Secretarial Audit
Cost Auditor
Statutory
Exhibit 7: MOFSL forecast v/s consensus
EPS
(INR)
FY20
FY21
MOFSL
forecast
18.6
21.9
Consensus
forecast
21.1
25.0
Variation (%)
-12.0
-12.5
Source: Bloomberg
Source: Capitaline
28 May 2019
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
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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
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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 MOSL, 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 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOSL, 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 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOSL has not received any compensation or other benefits from third party in connection with the research report
28 May 2019
9
 Motilal Oswal Financial Services
Sun Pharma
10 MOSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
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.
28 May 2019
10