Divi’s Laboratories
Estimate change
TP change
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7 June 2020
4QFY20 Results Update | Sector: Healthcare
CMP: INR2421
TP: INR2245 (-7%)
4Q miss estimates; outlook remains positive
Neutral
Completion of most brownfield expansions by 2HFY21
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
DIVI IN
265
642.6 / 8.4
2538 / 1467
-1/51/68
1266
Divi’s Lab (DIVI) witnessed marginal 2% YoY decline in FY20 earnings on a
high base (of FY19) and delay in its backward integration project. The
COVID-19 pandemic has impacted the completion timeline of the company’s
major capex program to some extent. However, DIVI is well placed to
benefit from the CRAMS opportunity due to its strong chemistry skillset as
well as manufacturing capability/capacity.
We reduce our earnings estimate by 8%/3% for FY20/FY21E to factor in the
COVID led headwinds on the business over the near term. We value DIVI at
26x 12-month forward earnings to arrive at a price target of INR2,245. While
growth prospects from new capex are promising, the current valuation
adequately factors in the same. Maintain
Neutral.
Sales at INR13.9b (v/s est. INR14.8b) grew 9.7% YoY for the quarter.
Financials & Valuations (INR b)
Y/E MARCH
2020 2021E 2022E
Gross margin was up 160bp YoY to 62.9%, led by superior product mix.
53.9 62.8 71.9
However, EBITDA margin contracted 470bp YoY to 32% due to higher other
Sales
18.4 21.7 27.6
EBITDA
expenses/employee cost (+500bp/+130bp YoY as % of sales), which has
13.0 16.0 20.2
Adj. PAT
more than offset the Gross Margin expansion.
EBIT Margin (%)
30.7 31.2 34.8
48.9 60.2 76.3
EBITDA at INR4.4b (v/s est. INR5.3b) declined 4.4% YoY for the quarter.
Cons. Adj. EPS (INR)
-2.3 23.0 26.8
Adjusting for forex gain in other income (INR571m) and tax reversal
EPS Gr. (%)
275.4 343.1 403.7
BV/Sh. (INR)
(INR337m), PAT declined 3.6% YoY to INR3.1b (v/s est. INR3.9b).
Ratios
Net D:E
0.0 -0.1 -0.2
For FY20, revenue has increased 9% YoY to INR54b, while EBITDA/adj. PAT
has dipped 2% each YoY to INR18.4b/INR13b.
18.2 19.5 20.4
RoE (%)
18.5 19.4 20.4
RoCE (%)
Payout (%)
36.1 20.5 20.5
Highlights from management commentary
Valuations
50.6 41.1 32.5
The CRAMS/custom synthesis mix for the quarter was 59:41.
P/E (x)
35.6 29.9 23.1
DIVI garnered carotenoid sales of INR850m/INR4.4b for 4QF20/FY20.
EV/EBITDA (x)
Div. Yield (%)
0.6
0.4
0.3
Increased employee cost and other operational expenses were on the back
FCF Yield (%)
0.1
1.2
2.1
of commercialization of the DCV SEZ facility.
35.6 29.9 23.1
EV/Sales (x)
DIVI incurred capex of INR13b for FY20 and has guided for INR5b for FY21.
Lower operating margins lead marginal decline in earnings YoY
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Mar-20 Dec-19 Mar-19
52.0
52.0
52.0
15.6
15.5
14.2
19.1
19.7
21.2
13.4
12.8
12.6
FII Includes depository receipts
DIVI has commenced partial commercial production at two sites – the DC-
SEZ unit (in Feb’20) and the DCV-SEZ unit (in Mar’20).
The balance works at the brownfield projects of DC-SEZ/DCV-SEZ, ongoing
projects for backward integration and de-bottlenecking are expected to be
completed in 2HFY21.
During the quarter, the USFDA conducted an inspection at DIVI’s Unit-II
facility at village Chippada, Bheemunipatnam District, Andhra Pradesh, from
27
th
-31
st
Jan’20, which ended with zero observations.
Research Analyst: Tushar Manudhane
(Tushar.Manudhane@motilaloswal.com); +91 22 5036 2498
Hitakshi Chandrani
(Hitakshi.Chandrani@MotilalOswal.com); +91 22 6129 1557 /
Bharat Hegde
(Bharat.Hegde@motilaloswal.com)
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
Divi’s Laboratories
Valuation and view
We reduce our earnings estimate by 8%/3% for FY20/FY21 to factor in the delay
in completion of capex activities.
We expect 25% earnings CAGR over FY20-22E, led by increased business
prospects from custom synthesis as well as the generics segment.
We continue to value DIVI at 26x 12-month forward earnings to arrive at price
target of INR2,245. While growth prospects are promising, the valuation (41x
FY21E EPS of INR60/32.5x FY22E EPS of INR76) adequately factors in the same.
Maintain
Neutral.
(INR Million)
Quarterly Performance
Y/E March
Net Op Revenue
YoY Change (%)
EBITDA
YoY Change (%)
Depreciation
EBIT
YoY Change (%)
Margins (%)
Interest
Other Income
PBT before EO Income
Forex gain /(Loss)
PBT
Tax
Rate (%)
PAT
Adj. PAT
YoY Change (%)
Margins (%)
1Q
9,953
21.2
3,525
44.0
416
3,109
46.3
31.2
6
221
3,324
264
3,588
911
25.4
2,677
2,480
44.7
26.9
FY19
2Q
3Q
13,239 13,600
48.7
31.0
5,215
5,329
88.1
55.8
424
425
4,791
4,904
96.9
60.9
36.2
36.1
2
25
277
344
5,065
5,223
528
0
5,593
5,223
1,556
1,329
27.8
25.4
4,037
3,894
3,656
3,894
72.6
64.7
30.5
28.6
4Q
12,671
16.5
4,650
20.3
424
4,227
21.6
33.4
1
408
4,634
-486
4,148
1,228
29.6
2,920
3,262
32.4
23.0
1Q
11,628
16.8
3,932
11.5
438
3,494
12.4
30.0
3
303
3,794
-61
3,733
1,009
27.0
2,724
2,768
11.6
23.4
FY20
2Q
3Q
14,456 13,963
9.2
2.7
5,106
4,939
-2.1
-7.3
459
467
4,646
4,472
-3.0
-8.8
32.1
32.0
38
16
338
237
4,947
4,694
-68
180
4,879
4,873
1,311
1,282
26.9
26.3
3,568
3,591
3,618
3,459
-1.1
-11.2
24.7
25.7
FY19
4Q
13,897
9.7
4,445
-4.4
498
3,947
-6.6
28.4
4
196
4,139
571
4,710
827
17.6
3,884
3,145
-3.6
28.0
49,463
26.4
18,718
48.4
1,689
17,029
52.2
34.4
35
1,248
18,245
309
18,552
5,023
26.6
13,528
13,292
55.1
27.4
FY20
53,944
9.1
18,422
-1.6
1,862
16,559
-2.8
30.7
61
1,075
17,574
621
18,195
4,429
23.5
13,765
12,990
-2.3
25.5
FY20 Var.
4QE (%)
14,849 -6.4
17.2
5,346 -16.9
17
491
4,856
-19
17
33 -13
48
397
5,205
0
5,205 -9.5
1,257
24.2
3,950 -1.7
3,948 -20.3
23.0
26.6
Key performance Indicators (Consolidated)
Y/E March
1Q
Cost Break-up
RM Cost (% of Sales)
37.1
Staff Cost (% of Sales)
12.5
Other Expenses(% of Sales)
15.1
Tax rate (%)
25.4
Gross Margins(%)
62.9
EBITDA Margins(%)
35.4
EBIT Margins(%)
31.2
2Q
37.2
10.4
13.0
27.8
62.8
39.4
36.2
FY19
3Q
34.8
10.3
15.7
25.4
65.2
39.2
36.1
4Q
38.7
11.2
13.4
29.6
61.3
36.7
33.4
1Q
38.9
12.1
15.2
27.0
61.1
33.8
30.0
2Q
41.1
10.4
13.2
26.9
58.9
35.3
32.1
FY20
3Q
39.2
11.2
14.2
26.3
60.8
35.4
32.0
4Q
37.1
12.5
18.5
17.6
62.9
32.0
28.4
FY19
FY20
36.9
11.0
14.3
27.1
63.1
37.8
34.4
39.1
11.5
15.3
24.3
60.9
34.1
30.7
Valuation and view
Global spending on medicines has reached USD1.3t in CY19 and is expected at 4-5%
CAGR to reach USD1.5t over FY19-23E. Within this, the outsourcing research as well
as manufacturing would continue to rise owing to increased cost of developing new
drug and sharp price-erosion at the onset of generics. Accordingly, companies with
strong chemistry skillsets and ability to manufacture with consistent compliance
7 June 2020
Outlook for CRAMS (particularly for DIVI) remains promising
2
 Motilal Oswal Financial Services
Divi’s Laboratories
would continue to have robust business opportunities. CRO constitutes ~40% of the
CRAMS segment with the rest coming from Contract Manufacturing Services.
Indian CRAMS players offer end-to-end services right from pre-clinical trials to
manufacturing of finished dosages. India has abundant high quality lower-cost talent
to support drug discovery and research processes. Further, the cost of setting up a
facility in India is lower by up to 50% compared to that in the US and Europe.
Considering the sound track record of DIVI in terms of custom synthesis, successful
compliance and long-term relationship with innovators, DIVI is well placed to garner
benefits from this opportunity.
To support commercial manufacturing, DIVI has incurred capex of INR13b for FY20
and is in the last phase of major capital expenditure (INR5b to be spent in FY21). The
COVID-19 crisis has led some slowdown in the completion of the company’s capex
program. However, outlook remains intact in terms of opportunities post the
commercialization of manufacturing facilities.
At the end of a huge capex program
We reduce our earnings estimate by 8%/3% for FY20/FY21E to factor in the COVID-
19 led headwinds on the business over the near term. We value DIVI at 26x 12-
month forward earnings to arrive at a price target of INR2,245. We expect 25%
earnings CAGR for DIVI over FY20-22E. While growth prospects are promising, the
valuation (41x FY21E EPS of INR60/32.5x FY22E EPS of INR76) adequately factor in
the same. Maintain
Neutral.
Exhibit 1: P/E chart
P/E (x)
Min (x)
40.0
30.0
20.0
10.0
28.4
23.0
17.5
14.9
Avg (x)
+1SD
Max (x)
-1SD
36.4
35.3
Valuation and view
Exhibit 2: P/B chart
8.0
6.5
5.0
3.5
2.0
P/B (x)
Min (x)
Avg (x)
+1SD
5.7
3.9
2.5
Max (x)
-1SD
6.6
4.8
6.6
Source: MOFSL, Company, Bloomberg
Source: MOFSL, Company, Bloomberg
7 June 2020
3
 Motilal Oswal Financial Services
Divi’s Laboratories
Story in charts
Exhibit 3: Revenue growth moderated to 10% YoY
Sales (INR b)
49
10.9
31
21
10.0
13.6
13.2
12.7
11.6
16
17
9
YoY Growth (%)
14.5
14.0
13.9
62.5
62.9
Exhibit 4: Gross margins expanded 160bp YoY
Gross Profit (INR b)
65.2
62.8
61.3
61.1
58.9
62.9
60.8
Gross Margin (%)
2
3
10
6.8
6.3
8.3
8.9
7.8
7.1
8.5
8.5
8.7
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 5: EBITDA margin declined 470bp YoY
EBITDA (INR b)
35.5
35.4
39.4
39.2 36.7
EBITDA Margin (%)
33.8
35.3
35.4
Exhibit 6: Revenue estimated at ~15% CAGR over FY20-22E
Sales (INR b)
22.9
32.0
7.8
39.1
-4.5
9.1
22.4
26.4
16.4
14.6
YoY Growth (%)
3.9
3.5
5.2
5.3
4.7
3.9
5.1
4.9
4.4
31.0
38.0
41.0
49.5
53.9
62.8
71.9
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 7: EBITDA margin to gradually improve
EBITDA (INR b)
37.2
37.1
35.0
32.2
37.8
34.1
34.5
Margin (%)
38.3
Exhibit 8: EPS estimated at ~25% CAGR over FY20-22E
EPS (INR)
60.2
76.3
48.9
29.1
32.1
42.4
39.9
50.1
32.3
Source: Company, MOFSL
Source: Company, MOFSL
7 June 2020
4
 Motilal Oswal Financial Services
Divi’s Laboratories
Financials and Valuations
Income Statement
Y/E March
Net Sales
Change (%)
EBITDA
Growth (%)
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income - Rec.
PBT
Current Tax
Deferred Tax
Tax Rate (%)
Reported PAT
Adj. PAT
Change (%)
Margin (%)
FY15
31,032
22.9
11,535
14.5
37.2
1,360
10,175
19
564
10,721
2,206
0
20.6
8,515
8,515
10.1
27.4
FY16
37,975
22.4
14,100
22.2
37.1
1,182
12,918
38
1,048
13,928
2,842
-172
19.2
11,258
11,258
32.2
29.6
FY17
40,952
7.8
14,350
1.8
35.0
1,233
13,117
23
859
13,953
2,852
497
24.0
10,604
10,604
-5.8
25.9
FY18
39,128
-4.5
12,617
-12.1
32.2
1,425
11,192
13
855
12,313
2,898
645
28.8
8,770
8,571
-19.2
21.9
FY19
49,463
26.4
18,718
48.4
37.8
1,689
17,029
35
1,248
18,551
4,755
268
27.1
13,527
13,292
55.1
26.9
FY20
53,944
9.1
18,422
-1.6
34.1
1,862
16,559
61
1,075
18,195
3,928
501
24.3
13,765
12,990
-2.3
24.1
FY21E
62,779
16.4
21,659
17.6
34.5
2,042
19,617
60
1,190
20,747
4,979
-207
23.0
15,976
15,976
23.0
25.4
(INR M)
FY22E
71,946
14.6
27,555
27.2
38.3
2,498
25,057
53
1,124
26,128
5,879
0
22.5
20,250
20,250
26.8
28.1
Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Deferred liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Investments
Curr. Assets
Inventory
Account Receivables
Cash and Bank Balance
Loans & Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
FY15
531
34,423
34,954
1262
261
36,477
19,634
6,545
13,089
2,182
7,330
21,451
11,626
7,416
652
1,756
7,575
4,303
3,271
13,876
36,477
FY16
531
42,402
42,933
731
419
44,083
21,938
7,551
14,388
2,639
8,025
23,924
12,078
8,809
734
2,303
4,896
4,759
137
19,028
44,083
FY17
531
53,043
53,574
1228
357
55,160
24,339
8,747
15,592
4,436
16,307
25,215
13,199
8,984
787
2,244
6,390
6,224
166
18,825
55,160
FY18
531
58,717
59,248
1917
631
61,796
30,134
10,172
19,962
1,198
18,894
27,769
13,507
10,144
1,125
2,994
6,026
5,867
159
21,743
61,796
FY19
531
69,041
69,572
2188
1,056
72,816
32,739
11,861
20,878
4,919
19,456
35,106
17,723
11,634
1,153
4,597
7,543
7,400
143
27,563
72,816
FY20
531
72,568
73,099
2696
336
76,131
41,542
13,723
27,819
9,197
9,714
38,584
18,639
14,134
1,226
4,586
9,182
8,952
230
29,402
76,131
FY21E
531
90,536
91,067
2488
336
93,892
53,934
15,765
38,168
2,000
9,714
53,029
23,228
15,695
10,967
3,139
9,019
8,789
230
44,010
93,892
FY22E
531
106,635
107,166
2488
336
109,990
56,934
18,264
38,670
2,000
9,714
70,628
27,340
18,706
20,266
4,317
11,022
10,792
230
59,607
109,990
(INR M)
7 June 2020
5
 Motilal Oswal Financial Services
Divi’s Laboratories
Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Accumulated Dep/Gross Block (x)
Fixed Asset Turnover (x)
Debtor (Days)
Inventory (Days)
Working Capital Turnover (Days)
Leverage Ratio (x)
Current Ratio
Debt/Equity
FY15
32.1
37.2
131.7
10.0
37.5
77.2
66.6
18.8
21.2
56.9
0.4
26.3
26.1
32.1
0.3
1.7
86
137
156
2.8
-0.01
FY16
42.4
46.9
161.7
10.0
28.4
58.4
52.8
15.3
17.3
46.6
0.4
28.9
28.7
35.4
0.3
1.8
83
116
176
4.9
-0.01
FY17
39.9
44.6
201.8
10.0
30.1
62.0
55.5
12.3
16.0
45.8
0.4
22.0
21.8
30.1
0.4
1.8
78
118
161
3.9
-0.01
FY18
32.3
37.7
223.2
10.0
35.4
76.7
65.8
11.1
16.8
52.1
0.4
15.2
15.1
21.5
0.3
1.4
91
126
192
4.6
-0.01
FY19
50.1
56.4
262.0
16.0
36.7
49.5
43.9
9.4
13.3
35.1
0.6
20.6
20.4
28.3
0.4
1.6
82
131
195
4.7
0.00
FY20
48.9
56.0
275.4
16.0
36.1
50.6
44.3
9.0
12.2
35.6
0.6
18.2
18.5
24.3
0.3
1.5
91
126
191
4.2
-0.01
FY21E
60.2
67.9
343.1
10.5
20.5
41.1
36.5
7.2
10.3
29.9
0.4
19.5
19.4
23.7
0.3
1.3
86
135
192
5.9
-0.1
FY22E
76.3
85.7
403.7
7.2
20.5
32.5
28.9
6.1
8.9
23.1
0.3
20.4
20.4
26.0
0.3
1.3
88
139
200
6.4
-0.2
Cash Flow Statement
Y/E March
Op.Profit/(Loss) bef. Tax
Interest/Dividends Recd.
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Investments
CF from Investments
Change in networth
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
FY15
11,535
564
-2,206
-1,349
8,545
-2,967
5,578
-2,199
-5,167
82
-19
-3,195
-265
-3,397
-18
671
652
FY16
14,100
1,048
-2,842
-5,070
7,236
-2,762
4,474
-695
-3,457
158
-38
-3,195
-622
-3,697
82
652
734
FY17
14,350
859
-2,852
256
12,613
-4,197
8,416
-8,282
-12,479
-61
-23
-3,195
3,198
-81
53
734
787
FY18
12,617
855
-2,898
-2,581
7,993
-2,557
5,436
-2,586
-5,143
274
-13
-3,106
54
-2,791
338
787
1,125
FY19
18,718
1,248
-4,755
-5,792
9,419
-6,326
3,093
-562
-6,889
425
-35
-4,970
1,770
-2,810
29
1,125
1,153
FY20
18,422
1,075
-3,928
-1,766
13,804
-13,081
722
9,742
-3,339
-720
-61
-4,970
-5,262
-11,013
73
1,153
1,226
FY21E
21,659
1,190
-4,979
-4,867
13,003
-5,195
7,807
0
-5,195
0
-60
-3,275
5,268
1,933
9,740
1,226
10,967
(INR Million)
FY22E
27,555
1,124
-5,879
-6,298
16,503
-3,000
13,503
0
-3,000
0
-53
-4,153
2
-4,204
9,299
10,967
20,266
7 June 2020
6
 Motilal Oswal Financial Services
Divi’s Laboratories
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
7 June 2020
7
 Motilal Oswal Financial Services
Divi’s Laboratories
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
********************************************************************************************************************************
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.
7 June 2020
8