Download pdf - Biocon (Biocon) | 603content.icicidirect.com/mailimages/IDirect_Biocon_Q3FY18.pdf · ICICI Securities Ltd | Retail Equity Research Page 3 Company Analysis Biocon was established in

January 29, 2018

ICICI Securities Ltd | Retail Equity Research

Result Update

Biologics, Syngene maintain momentum…

Biocon reported flat YoY revenues at | 1058 crore (I-direct estimate:

| 1073 crore). Biopharmaceutical segment declined 9% YoY to 369

crore while the biologics segment (excluding licensing income) grew

24% to | 178 crore

EBITDA margins contracted 548 bps YoY to 21% (I-direct estimate:

19.4%) mainly due to a below expected gross margin performance

and higher employee cost. EBITDA declined 20% YoY to | 222 crore

against I-direct estimate of | 208 crore

Net profit declined 46% YoY to | 92 crore but came in line with I-

direct estimate of | 90 crore

Well poised to capitalise on global biosimilars opportunity

Biologics segment (~14% of FY17 turnover) includes biosimilars,

encompassing Rh-insulin, insulin analogs, monoclonal antibodies &

recombinant proteins. It is the first Indian pharmaceutical company to

receive biosimilar approval in US. The company has invested heavily in

this space in the last two to three years, especially the Malaysian facility.

So far, the progress has been encouraging with Trastuzumab launch in

US, Glargine launch in Japan besides launches in emerging markets. We

expect biologics to grow at ~36% CAGR to | 1390 crore in FY17-20E.

Research services (Syngene) to maintain growth momentum

Biocon’s contract research organisation (CRO) arm Syngene contributes

~29% to its turnover. The company caters to 293 clients including eight

out of global top 10 global players. This segment has consistently been

growing in double digits and has recently been the major growth driver

for the company as the biopharma segment is slowing down. We expect

revenues to grow at a CAGR of ~16% to | 1833 crore in FY17-20E.

Small molecules under pressure; branded formulations growing decently

Small molecules (~41% of FY17 turnover) comprise APIs like statins,

immunosuppressants, specialty APIs & also include generic formulations

business witness steep pricing pressure. The company is exploring fewer

opportunities but with higher profitability in this segment like moving into

formulations & filing own ANDAs, 505 (b)(2) filing, etc. It has already filed

few ANDAs, which include complex generics & injectables. We expect

small molecules segment to grow at a CAGR 4% CAGR to | 1774 crore in

FY17-20E. The branded formulations (14% of FY17 revenue) includes

finished dosages business in India and overseas including UAE. It

comprises Indian domestic formulations. The company owns 80+ brands

encompassing therapies like diabetology, oncology, nephrology,

cardiology, immunotherapy, comprehensive care and bio-products.

Biosimilar deals, approvals and launches to sustain investors interest

In Q3, the company secured its first biosimilar approval (Trastuzumab) in

the US, also the first by an Indian pharma company. Although

Trastuzumab approval does not imply immediate launch of the product in

the US, it endorses the development and manufacturing capabilities of

Biocon in the realm of biosimilars. The company has also announced its

second partnership in the biosimilar space with Sandoz for global

development of next generation biosimilars. This has again vindicated its

capability in the biologics (biosimilars). Progress on the biosimilars

regulatory front in developed markets and launches in the developed as

well as emerging markets are likely to maintain investors optimism for the

company. We continue to value the stock on SOTP basis. Accordingly, we

arrive at a target price of | 680 per share.

Rating matrix

Rating : Buy

Target : | 680

Target Period : 12 months

Potential Upside : 13%

What’s Changed?

Target Changed from | 560 to | 680

EPS FY18E Changed from | 8.2 to | 8.4



Rating Changed from Hold to Buy

Quarterly Performance

Q3FY18 Q3FY17 YoY (%) Q2FY18 QoQ (%)

Revenue 1,057.9 1,044.4 1.3 968.6 9.2

EBITDA 221.7 276.1 -19.7 182.3 21.6

EBITDA (%) 21.0 26.4 -548 bps 18.8 214 bps

Net Profit 91.9 171.4 -46.4 68.8 33.6

Key Financials

(| Crore) FY17 FY18E FY19E FY20E

Revenues 3921.6 4158.7 4921.5 5801.9

EBITDA 851.2 973.8 1273.1 1557.8

Adj. Net Profit 508.7 501.7 711.3 1015.5

Adj. EPS (|) 8.5 8.4 11.9 16.9

Valuation summary

FY17 FY18E FY19E FY20E

PE(x) 59.1 72.1 50.9 35.6

EV to EBITDA (x) 10.5 9.6 12.3 15.4

Price to book (x) 9.6 10.2 13.9 17.1

RoNW (%) 42.3 36.9 28.1 22.7

RoCE (%) 9.6 10.2 13.9 17.1

Stock data

Particular

Market Capitalisation

Debt (FY17)

Cash (FY17)

EV

52 week H/L 439/268

Equity capital (|Crore)

Face value (|) | 5

| 300 crore

| 37341 crore

Amount

| 36180 crore

| 2205 crore

| 1044 crore

Price performance (%)

1M 3M 6M 1Y

Biocon 17.7 76.2 61.9 86.6

Glenmark 6.0 3.4 -11.8 -29.6

Torrent Pharma -2.6 9.3 10.9 7.7

Aurobindo Pharma -6.5 -15.4 -10.9 -9.4

Research Analyst

Siddhant Khandekar

[email protected]

Mitesh Shah

[email protected]

Harshal Mehta

[email protected]

Biocon (Biocon) | 603

ICICI Securities Ltd | Retail Equity Research Page 2

Variance analysis

Q3FY18 Q3FY18E Q3FY17 Q2FY18 YoY (%) QoQ (%) Comments

Revenue 1,057.9 1,072.6 1,044.4 968.6 1.3 9.2 YoY growth of 24% in biopharma business (ex-licensing income) was largely offset

by lower licensing income and decline in small molecules

Raw Material cost 423.8 418.3 374.7 377.6 13.1 12.2

Employee cost 235.3 236.0 194.2 225.5 21.2 4.3 Increased mainly due to commissioning of Malaysian facility

R & D Expenditure 52.9 71.0 85.0 53.9 -37.8 -1.9

Other Expenditures 124.2 139.4 114.4 129.3 8.6 -3.9

Total Expenditure 836.2 864.7 768.3 786.3 8.8 6.3

EBITDA 221.7 207.9 276.1 182.3 -19.7 21.6

EBITDA (%) 21.0 19.4 26.4 18.8 -548 bps 214 bps YoY contraction was led by higher raw material and employee expenditure.

Interest 14.7 13.8 8.8 13.8 67.0 6.5

Depreciation 97.4 93.6 70.3 93.6 38.5 4.1 Increased YoY mainly due to commissioning of Malaysian facility

Other income 33.9 42.6 47.5 50.8 -28.6 -33.3 Includes | 7 crore of forex gain

EO 0.0 0.0 0.0 0.0 0.0 0.0

PBT 143.5 143.1 244.5 125.7 -41.3 14.2

Tax 36.1 31.5 54.4 42.5 -33.6 -15.1

MI 21.7 21.7 19.5 20.3 11.3 6.9

PAT 91.9 89.9 171.4 68.8 -46.4 33.6 Delta vis-à-vis EBITDA was due to higher Interest, Depreciation and Taxation

Key Metrics

Biopharmaceuticals 368.8 370.5 406.9 349.5 -9.4 5.5 YoY impact was mainly due to persistent pricing pressure and channel

consolidation in the US impacting statins business

Biologics 178.0 162.0 143.4 155.7 24.1 14.3 YoY growth on the back of strong growth in insulins and biosimilar antibodies

portfolio

Branded Formulations 156.1 147.6 123.3 175.9 26.6 -11.3 YoY growth and beat vis-à-vis I-direct estimates mainly due to strong UAE revenue

growth driven by metabolics portfolio and brand of biosimilar Insulin Glargine.

Sales momentum in other branded generic products also boosted revenues during

the quarter

Contract Research 387.7 355.0 332.2 335.2 16.7 15.7 YoY growth and beat vis-à-vis I-direct estimates due to strong performance by

chemicals vertical from the development & manufacturing vertical and traction in

Discovery Services vertical

Licensing income 11.8 30.0 79.0 1.0 -85.1 1,080.0

Source: Company, ICICIdirect.com Research

Change in estimates

(| Crore) Old New % Change Old New % Change

Revenues 4,191.2 4,158.7 -0.8 5,006.4 4,921.5 -1.7

EBITDA 960.3 973.8 1.4 1,284.2 1,273.1 -0.9

EBITDA Margin (%) 22.9 23.4 52 bps 25.7 25.9 17 bps

Net Profit 489.2 501.7 2.6 701.2 711.3 1.4

EPS (|) 8.2 8.4 2.0 11.7 11.9 1.3

FY18E FY19E


Assumptions

Current

Growth (%) FY16 FY17 FY18E FY19E FY18E FY19E

Biopharmaceuticals 1,729.0 2,194.0 2,148.9 2,460.3 2,182.8 2,569.3

Branded Formulations 440.0 548.9 619.6 699.2 598.4 707.7

Contract Research 1,060.0 1,181.7 1,324.1 1,602.1 1,294.6 1,553.5

Licensing income 108.0 144.2 32.5 120.0 68.7 120.0

Earlier

Source: Company, ICICIdirect.com Research; * excludes Licensing income


Company Analysis

Biocon was established in 1978 by first generation entrepreneur Dr Kiran

Mazumdar-Shaw. Unlike most pharma companies that are chemical

based, Biocon has carved out its niche in the more complex

biotechnology field. Over the decades, Biocon has successfully evolved

into an emerging global biopharma enterprise, serving its partners and

customers in over 75 countries. As a fully integrated biopharma company,

it delivers innovative biopharmaceutical solutions, ranging from discovery

to development & commercialisation. In 2004, it came out with its maiden

IPO.

Four of its biosimilar products (Trastuzumab, Pegfilgrastim, Adalimumab

and Insulin Glargine) have already reached the critical milestone of global

Phase III clinical trials. The company has initiated filings of biosimilars in

the US and EU besides launches in Japan. Biocon entered into a

partnership with Mylan for six biosimilar programs (Trastuzumab,

Pegfilgrastim, Adalimumab, Bevacizumab, Etanercept and Filgrastim) and

three insulin analog programmes (Glargine, Lispro and Aspart).

The company has received approval for its Insulin Glargine from the

Japanese regulator in March 2016. Biocon has developed and

manufactured Insulin Glargine BS Injection Kit (FFP). FFP in Japan has

commercialised it. The company also achieved its first ANDA approval,

Rosuvastatin Calcium in US.

Biocon announced a partnership with Sandoz, a Novartis division and a

global leader in biosimilars, for an exclusive portfolio of next-generation

biosimilars in the area of immunology and oncology. This synergistic

partnership will leverage the capabilities of both partners for an ‘end to

end’ play encompassing development, manufacturing, regulatory

approval and commercialization globally. This collaboration addresses

some of the long term biosimilars opportunities beyond the near term

opportunities being addressed by existing partnership with Mylan.

Exhibit 1: Biosimilars: Insulin pipeline

Molecule Type Status Market Size (US$ billion)

Rh Insulin Recombinant Human Insulin US Development-Preclinical 3.2

Glargine Long Acting Basal Insulin Global Phase III, Japan Aprvd. 6.4

Aspart Rapid Acting Insulin Analog Preclinical/Scale Up 4.5

Lispro Rapid Acting Insulin Analog Preclinical/Scale Up 2.8

Total Market Size 16.9


Exhibit 2: Biosimilars: MAbs & biologics pipeline

Molecule Indication Status Market Size (US$ billion)

Adalimumab Chronic Plaque Psoriasis Global Phase III 16.1

Trastuzumab mBreast Cancer Global Phase III, US,EU U.review 6.9

Pegfilgrastim Chemo-induced Neutropenia Under Review in EU 4.6

Bevacizumab mColorectal Cancer Global Phase III, RoW Phase III 6.9

Filgrastim Chemo-induced Neutropenia Preclinical/Scale Up 0.8

Etanercept Auto-immune Preclinical/Scale Up 8.9

Total Market Size 44.2



Exhibit 3: Revenues to grow at CAGR of 13.9% in FY17-20E

2485.3

2877.33089.8

3381.0

3921.64158.7

4921.5

5801.9

0.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0

7000.0

FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E

Revenues

(| c

rore

)


Biocon has realigned its segments after the adoption of Ind-As. They are-

1) small molecules, 2) research services (Syngene), 3) branded

formulations and 4) biologics.

Small molecules- The small molecules segment accounts for ~41% of the

turnover (FY17) and comprises APIs like statins, immunosuppressants,

specialty APIs and also includes generic formulations business. This

vertical has been witnessing pricing pressure in some products. The

company is exploring fewer opportunities but with higher profitability in

this segment such as moving into formulations and filing own ANDAs,

505 (b)(2) filings, etc. It has already filed seven or eight ANDAs

cumulatively. These include complex generics and injectables. We expect

small molecules segment to grow at a CAGR 1% CAGR to | 1647 crore in

FY17-20E

Biologics – The biologics segment includes novel biologics and

biosimilars, including Rh-insulin, insulin analogs, monoclonal antibodies

and recombinant proteins. This segment accounts for ~14% of turnover

in FY17E. Biocon is mainly focusing on the following therapies-

diabetology, oncology and immunology. This segment has been

specifically carved out to tap numerous biosimilar opportunities

especially in the next three to five years. Globally, the biosimilar space is

still in a nascent state for want of guidelines by most countries including

the US. The now defunct Pfizer deal was also based on biosimilar

opportunities. Biocon’s biosimilar pipeline currently includes 10 products

in different phases of completion. Out of these 10 products, the four

diabetic products- Rh Insulin, Glargine, Lispro and Aspart were the

subject matter of two deals first with Pfizer and then with Mylan

(excluding Rh Insulin). In Q3, Biocon has secured first ever biosimilar

approval (gTrastuzumab) by an Indian pharma company in the US.

Although Trastuzumab approval does not imply immediate launch of the

product in the US, it endorses the development and manufacturing

capabilities of Biocon in the realm of biosimilars. The company has also

announced second partnership in biosimilar space with Sandoz for global

development of next generation biosimilars. The company has invested

heavily in this space over the last two to three years, especially the

Malaysian facility, which is now functional. The progress, so far, has been

encouraging with launches in emerging markets, Glargine launch in Japan

and filing arrangements in the EU and US. We expect biologics to grow at

a CAGR of ~31% to | 1309 crore in FY17-20E.


Exhibit 4: Recent Progress on biosimilar front

Date Event

Jan-18 Collaborates with Sandoz for a global partnership to develop, manufacture and commercialize a number of next generation biosimilars

Dec-17 USFDA approval for Ogivri, a biosimilar Trastuzumab co-developed by Biocon and Mylan

Jul-17 Biocon's partner Fujifilm launches insulin Glargine in Japan

Jul-17 USFDA Oncologic Drugs Advisory Committee (ODAC) recommended approval of Biocon-Mylan's proposed biosimilar Trastuzumab in all eligible indications

Jan-17 USFDA accepts Biocon’s biologics licence application for its biosimilar oncology drug Trastuzumab

Aug-16 European Medicines Agency has accepted Biocon-Mylan Proposed Biosimilar Trastuzumab (gHerceptin) for Review

Jul-16 European Medicines Agency has accepted Biocon-Mylan Proposed Biosimilar Pegfilgrastim (gNeulasta) for Review

Jul-16 Biocon's Insulin Glargine Launched in Japan

Jun-16 Biocon and Mylan to present Phase 3 Trastuzumab Biosimilar Data at the American Society of Clinical Oncology (ASCO) Annual Meeting

Mar-16 Biocon's Insulin Glargine Receives Regulatory Approval in Japan

Mar-16 Biocon inks co-development & commercialisation agreement with Lab PiSA for Rh-insulin in US

May-15 Biocon-Mylan's PEG-G-CSF and Adalimumab enter Phase III clinical trials; patient recruitment for one Insulin Glargine Phase III study completed


Exhibit 5: Small molecules & biologics to grow at CAGR of 14% in FY17-20E

1503.7

1732.0 1765.0 1729.0

2194.0 2148.9

2460.3

2956.3

0

500

1000

1500

2000

2500

3000

3500


(|

crore)

Small Molecules+Biologics


Exhibit 6: Licensing income

25.0

15.4

43.0

108.0

144.2

32.5

120.0 120.0

0

20

40

60

80

100

120

140

160


(|

crore)

Licensing income


Branded formulations - It comprises Indian domestic formulations. Biocon

owns 80+ brands encompassing seven therapeutic segments viz.

diabetology, oncology, nephrology, cardiology, immunotherapy,

comprehensive care and bio-products. However, with ~0.33% market

share (AIOCD MAT September 2017) and 55th rank in the IPM market

(AIOCD), the company is still a marginal player in the Indian context.

Among therapies, diabetology is the largest therapy, which accounts for

9.9% CAGR

10.5% CAGR


58% of branded formulations. Some of its unique launches are INSUPen

(insulin delivery device), Biomab (novel biologic for oncology) and

Alzumab (novel biologic for psoriasis). The list includes CANMAb

(biosimilar version of oncology product Herceptin). This segment

constitutes ~14% of overall sales (FY17).

Exhibit 7: Branded formulation sales to grow at CAGR of 14% in FY17-20E

347.9

391.4430.0 440.0

548.9

619.6

699.2

804.1

0

100

200

300

400

500

600

700

800

900


(|

crore)

Branded Formulations


Research services (Syngene) - Biocon’s research arm Syngene

contributed ~30% to its turnover (FY17). This is the CRO business of

Biocon, which deploys over 3053 scientists (FY17). The company

provides end-to-end discovery and development services for novel

molecular entities (NMEs) across industrial sectors including

pharmaceutical, biotechnology, agrochemicals, consumer health, animal

health, cosmetic and nutrition companies under one roof with a

distinctive economic advantage. It also provides support for biosimilar

and generic molecules development. The company provides variable cost

alternative like full-time equivalent (FTE) and fee-for-service (FFS) to the

traditionally fixed cost, in-house, resource intensive business model of

R&D focused organisations. Currently, the company has 293 clients

ranging from large multinational corporations to start-ups, including eight

of the top 10 global pharmaceutical companies. The company has

developed long-term relationships and has multi-year contracts with its

clients, including four long-duration multidisciplinary partnerships with

Bristol-Myers Squibb (BMS), Abbott Laboratories (Singapore), Baxter

International and Amgen. This segment has consistently been growing at

double digit and has recently been the major growth driver for the

company as the biopharma segment is slowing down. We expect

revenues to grow at a CAGR of ~17% to | 1875 crore in FY17-20E.

Research services revenues (FY17)

Dedicated

R&D

services

(34%)

Discovery

services

(26%)

Development

& Mfg

services

(40%)

12.1% CAGR

13.6% CAGR


Exhibit 9: Trends in overall R&D cost (Ex Capitalise)

167.8

130.6

168.8

265.5 272.4

219.7

262.4

310.4

6.8

4.5

5.5

7.9

6.9

5.3 5.4

5.3

0

100

200

300

400


(|

crore)

3.0

4.5

6.0

7.5

9.0

(%

)

R & D cost R & D cost (% revenues)


Exhibit 10: Trends in EBITDA margins

543.0

687.1 695.8635.8

851.2

973.8

1273.1

1557.8

23.9

22.5

18.8

21.7

21.8

23.425.9

26.8

0

400

800

1200

1600


(|

crore)

18

20

22

24

26

28

(%

)

EBITDA EBITDA Margins (%)


Exhibit 8: Contract research to grow at CAGR of 17% in FY17-20E

558.0

714.7

822.0

1060.0

1181.7

1324.1

1602.1

1874.5

0

200

400

600

800

1000

1200

1400

1600

1800

2000


(| crore)

Contract Research


20.6% CAGR

16.6% CAGR


Exhibit 11: Net profit to grow at CAGR of 16% in FY17-20E

508.9

413.8

497.4

550.4

612.1

501.7

711.3

1015.5

14.4

20.5

16.1 16.3

15.6

12.1

14.5

17.5

0

200

400

600

800

1000

1200


(|

crore

)

4

6

8

10

12

14

16

18

20

22

(%

)

Net Profit Net Profit Margins (%)


Exhibit 12: Return ratios likely to improve on the back of better profitability…

11.9

10.4

6.5

9.610.2

13.9

11.7

17.112.6

13.7

12.5

7.8

10.5

9.6

12.3

15.4

6

10

14

18

22


(%

)

4

6

8

10

12

14

16

18

(%

)

RoCE (RHS) RoNW (LHS)


SWOT Analysis

Strengths – It is an early entrant in a more lucrative biotech space with

proven track records. The space has high entry barriers due to complexity

of the molecules and tougher trials requirement. Four dedicated centres

catering to the top global players.

Weakness - Its largest segment i.e. small molecules has been witnessing

constant pricing pressure and capacity constraints. Other emerging

segments such as biosimilars will take some time to scale up.

Opportunities – A huge opportunity beckons for biosimilars as globally

seven out of the top 10 drug brands are biologics. Some of them will lose

patent exclusivity in the next five to seven years. The price erosion in

biosimilars is much less than that of chemical compound based drugs.

Threats- (i) Backtracking by Mylan may increase the R&D cost sharply, (ii)

pricing pressure in branded formulations, (iii) increased scrutiny by

USFDA and other regulators worldwide.


Exhibit 13: Trends in quarterly performance

(| Crore) Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 YoY (%) QoQ(%)

Revenues 769.1 837.3 813.9 796.2 807.1 945.0 992.0 954.1 1044.4 931.1 933.7 968.6 1057.9 1.3 9.2

Raw Material Cost 317.6 337.5 293.9 326.3 303.1 322.6 400.2 353.8 374.7 348.4 365.8 377.6 423.8 13.1 12.2

% to revenues 41.3 40.3 36.1 41.0 37.6 34.1 40.3 37.1 35.9 37.4 39.2 39.0 40.1

Gross Profit 451.5 499.8 520.0 469.9 504.0 622.4 591.8 600.3 669.7 582.7 567.9 591.0 634.1 -5.3 7.3

Gross Profit Margin (%) 58.7 59.7 63.9 59.0 62.4 65.9 59.7 62.9 64.1 62.6 60.8 61.0 59.9 -418 bps -108 bps

Employee cost 136.0 136.6 148.3 143.1 152.2 166.5 178.5 180.4 194.2 193.9 213.3 225.5 235.3 21.2 4.3

% to revenues 17.7 16.3 18.2 18.0 18.9 17.6 18.0 18.9 18.6 20.8 22.8 23.3 22.2 365 bps -104 bps

R & D 46.9 56.0 50.0 57.4 67.9 100.0 51.4 65.0 85.0 65.0 58.2 53.9 52.9

% to revenues 6.1 6.7 6.1 7.2 8.4 10.6 5.2 6.8 8.1 7.0 6.2 5.6 5.0 -314 bps -56 bps

Other Expenditure 108.7 122.4 113.4 100.3 99.1 159.0 98.8 114.9 114.4 136.3 104.3 129.3 124.2 8.6 -3.9

% to revenues 14.1 14.6 13.9 12.6 12.3 16.8 10.0 12.0 11.0 14.6 11.2 13.3 11.7 79 bps -161 bps

Total Expenditure 609.2 652.5 605.6 627.1 622.3 748.1 728.9 714.1 768.3 743.6 741.6 786.3 836.2 8.8 6.3

% to revenues 79.2 77.9 74.4 78.8 77.1 79.2 73.5 74.8 73.6 79.9 79.4 81.2 79.0

EBIDTA 160.0 184.9 208.3 169.1 184.8 196.9 263.1 240.0 276.1 187.5 192.1 182.3 221.7 -19.7 21.6

EBITDA Margin (%) 20.8 22.1 25.6 21.2 22.9 20.8 26.5 25.2 26.4 20.1 20.6 18.8 21.0 -548 bps 214 bps

Depreciation 56.3 58.5 59.0 61.0 63.9 64.8 66.1 68.3 70.3 72.5 98.8 93.6 97.4 38.5 4.1

Interest 4.8 0.0 4.4 2.9 1.5 16.6 5.7 6.5 8.8 5.0 16.1 13.8 14.7 67.0 6.5

OI 9.8 16.8 19.9 22.7 21.6 21.4 40.9 38.4 47.5 43.2 54.0 50.8 33.9 -28.6 -33.3

PBT 108.6 143.2 164.8 127.9 141.0 136.9 232.2 203.6 244.5 153.2 131.2 125.7 143.5 -41.3 14.2

Tax 11.2 21.9 37.6 28.2 21.8 59.1 55.2 41.7 54.4 10.3 37.6 42.5 36.1 -33.6 -15.1

Tax Rate (%) 10.3 15.3 22.8 22.1 15.5 43.2 23.8 20.5 22.2 6.7 28.7 33.8 25.2

PAT 97.5 121.3 127.2 99.7 119.2 77.8 177.0 161.9 190.1 142.9 93.6 83.2 107.4 -43.5 29.1

PAT Margin (%) 12.7 14.5 15.6 12.5 14.8 8.2 17.8 17.0 18.2 15.3 10.0 8.6 10.2

Exceptional Items (EI) 0.0 -95.2 0.0 107.8 0.0 -268.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net Profit before MI 97.5 216.4 127.2 -8.1 119.2 346.2 177.0 161.9 190.1 142.9 93.6 83.2 107.4 -43.5 29.1

Add/(less) MI 6.6 15.3 7.1 12.5 17.7 21.1 15.8 19.8 19.5 20.9 16.4 20.3 21.7

Net Profit after MI 90.9 201.2 120.1 -20.6 101.5 325.1 161.2 142.1 170.6 122.0 77.2 62.9 85.7 -49.8 36.2

Net Profit (excl.EI) 90.9 106.0 120.1 87.2 101.5 56.7 161.2 142.1 170.6 122.0 77.2 62.9 85.7 -49.8 36.2



Conference call Highlights

The company has entered into a collaborative agreement with

Sandoz for a global partnership to develop, manufacture and

commercialise a number of next generation biosimilars to

enhance patient access to complex bio-therapeutics in the area of

immunology and oncology

It has also received approval from ANVISA, the Brazilian

regulatory agency, for biosimilar Trastuzumab for the first time in

Brazil. Malaysia facility has also received GMP approval from

ANVISA for both Drug Substance and Drug Product

The company received Insulin Glargine approval in Russia

The European Medicines Agency (EMA) has accepted for review

of its partner Mylan's resubmitted Marketing Authorization

Applications (MAA) for proposed biosimilars of Trastuzumab and

Pegfilgrastim.

The company launched Krabeva, a biosimilar Bevacizumab in

India, for the treatment of patients with metastatic colorectal

cancer and other types of lung, kidney, cervical, ovarian and brain

cancers

Gross R&D expenses in Q3 were at | 94 crore for this quarter,

while net R&D expenses reflected in the P&L were | 53 crore. The

company has guided for | 400 crore of gross R&D for FY18 and

| 450 -| 500 crore for FY19

The company has launched generic Rosuvastatin Calcium tablets

(statin) in the US in Q2 and garnered ~10% market share.

Biocon’s partner has also launched this product on Day-1, in

Western Europe

Biologic’s sales witnessed production disruption during the

quarter due to facility modifications to comply with EMA, USFDA

regulations. The plant has resumed commercial production. The

company expects normalised growth from Q4. It expects robust

growth in FY19, largely driven by emerging market approvals

The company has commenced a pivotal Phase II/III clinical study

with Insulin Tregopil, a novel, fast-acting oral insulin candidate, in

people with Type 2 diabetes in India, post approval from the

Drugs Controller General of India (DCGI).

Biocon’s partner Mylan has submitted Complete Response Letter

(CRL) to USFDA for biosimilar Pegfilgrastim. The management

expects to get USFDA response in FY19

The management expects EU approval for Trastuzumab and

Pegfilgrastim in H2FY19

The company has guided for ~| 100 crore of maintenance capex.

Biocon is spending US$150-175 million in two years for

construction of an anti-body plant. This facility would be

commissioned in two years

The annual expense of the Malaysia plant is ~US$48 million

(~US$12 million quarterly) spread out in interest, depreciation

and other expenditure


Valuation

In Q3, the company secured its first biosimilar approval (Trastuzumab) in

the US, also the first by an Indian pharma company. Although

Trastuzumab approval does not imply immediate launch of the product in

the US, it endorses the development and manufacturing capabilities of

Biocon in the realm of biosimilars. The company has also announced its

second partnership in the biosimilar space with Sandoz for global

development of next generation biosimilars, which has again vindicated

its capability in the biologics (biosimilars). Progress on the biosimilars

regulatory front in the developed markets and launches in the developed

as well as emerging markets is likely to maintain investors optimism for

the company. We continue to value the stock on an SOTP basis.

Accordingly, we arrive at our target price of | 680 per share.

Exhibit 14: Contract research to grow at CAGR of 17% in FY17-20E

Particulers FY19E EPS (| cr) Multiple (x) Per share (| )

Biocon (ex Syngene) 9.6 30.0 288.1

Syngene

Targeted Market Cap 13600

Biocon's Holding 74.5%

Holding Company Discount 20.0%

Syngene valuation 8107

Per share valuation 135

NPV (BIosimilars) 258

SOTP valuation 680

Source: ICICIdirect.com Research


Exhibit 15: One year forward PE

0.0

100.0

200.0

300.0

400.0

7/2

8/2

01

1

1/2

8/2

01

2

7/2

8/2

01

2

1/2

8/2

01

3

7/2

8/2

01

3

1/2

8/2

01

4

7/2

8/2

01

4

1/2

8/2

01

5

7/2

8/2

01

5

1/2

8/2

01

6

7/2

8/2

01

6

1/2

8/2

01

7

7/2

8/2

01

7

(|)

Series1 32.2x 26.0x 15.6x 11.4x 7.3x

[

Exhibit 16: One year forward PE of company vs. CNX Pharma Index

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

50.00

7/28/201

1

1/28/201

2

7/28/201

2

1/28/201

3

7/28/201

3

1/28/201

4

7/28/201

4

1/28/201

5

7/28/201

5

1/28/201

6

7/28/201

6

1/28/201

7

7/28/201

7

(x)

Biocon CNX Pharma

56% Premium


Exhibit 17: Valuation

Revenues Growth EPS Growth P/E EV/EBITDA RoNW RoCE

(| crore) (%) (|) (%) (x) (X) (%) (%)

FY17 3922 16.0 8.5 61.6 59.1 42.3 10.5 9.6

FY18E 4159 6.0 8.4 -1.4 72.1 36.9 9.6 10.2

FY19E 4921 18.3 11.9 41.8 50.9 28.1 12.3 13.9

FY20E 5802 17.9 16.9 42.8 35.6 22.7 15.4 17.1



Recommendation history vs. Consensus

0.0

10.0

20.0

30.0

40.0

50.0

60.0

0

100

200

300

400

500

600

700

Jan-18Nov-17Sep-17Jun-17Apr-17Jan-17Nov-16Aug-16Jun-16Apr-16Jan-16Nov-15Aug-15Jun-15Apr-15Jan-15

(%

)(|)

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Reuters, Company, ICICIdirect.com Research

Key events

Date Event

Nov-12 Enters into an option agreement with Bristol-Myers Squibb (BMS) for Biocon's IN-105 (oral insulin product candidate)

Feb-13 Out-licenses three insulin analogue products to Mylan. Mylan will have the rights to develop and market Biocon's Glargine, Lispro and Aspart.

Nov-13 Receives marketing approval from Drugs Controller General of India to launch its biosimilar Trastuzumab (anti-cancer) in Indian market.

Jan-14 Biocon launches its biosimilar CanMab in Indian market

Sep-14 Biocon Research buys back the 7.69% stake held by GE Equity International Mauritius valuing Syngene at | 2800 crore.

Jan-15 Silver Leaf Oak acquires 10% stake in Syngene International, Biocon's Research Services Subsidiary at a valuation of | 3800 crore

Jul-15 Syngene IPO starts from July 27, 2015 at a price range of | 240-250

Oct-15 Acquired API unit of Acacia Life Sciences Private Limited at Vizag

Jun-16 Biocon and Mylan to Present Phase 3 Trastuzumab Biosimilar Data at the American Society of Clinical Oncology (ASCO) Annual Meeting

Jul-16 Biocon's Insulin Glargine launched in Japan

Jul-16 European Medicines Agency accepts Biocon-Mylan proposed biosimilar Pegfilgrastim (gNeulasta) for review

Aug-16 European Medicines Agency accepts Biocon-Mylan proposed biosimilar Trastuzumab (gHerceptin) for review

Jan-17 USFDA accepts Biocon’s biologics licence application for its biosimilar oncology drug Trastuzumab

Jul-17 USFDA Oncologic Drugs Advisory Committee (ODAC) recommends approval of Biocon/Mylan’s proposed biosimilar Trastuzumab, a biologically similar version of

Roche's breast-cancer drug Herceptin

Dec-17 USFDA approval for Ogivri, a biosimilar Trastuzumab co-developed by Biocon and Mylan

Jan-18 Collaborates with Sandoz for a global partnership to develop, manufacture and commercialize a number of next generation biosimilars


Top 10 Shareholders Shareholding Pattern

Rank Investor Name Latest Filing Date % O/S Position Position Change

1 Shaw (Kiran Mazumdar) 31-Dec-17 39.6 237.9m 0.0

2 Glentec International 31-Dec-17 19.8 118.6m 0.0

3 OppenheimerFunds, Inc. 31-Dec-17 3.7 22.2m 1.7

4 Biocon India Ltd Employee Welfare Trust 3-Jan-18 1.5 9.2m -0.1

5 Franklin Templeton Asset Management (India) Pvt. Ltd. 30-Sep-17 1.5 8.9m 2.4

6 Jupiter Asset Management Ltd. 31-Dec-17 1.4 8.4m -2.5

7 Templeton Asset Management Ltd. 31-Dec-17 1.1 6.7m -0.6

8 Chandavarkar (Arun Suresh) 31-Dec-17 1.1 6.6m 0.0

9 The Vanguard Group, Inc. 31-Dec-17 0.8 4.6m 0.0

10 Dimensional Fund Advisors, L.P. 31-Dec-17 0.8 4.5m 0.0

(in %) Dec-16 Mar-17 Jun-17 Sep-17 Dec-17

Promoter 60.7 60.7 60.7 60.7 60.7

Public 39.3 39.3 39.3 39.3 39.3

Source: Reuters, ICICIdirect.com Research

Recent Activity

Investor Name Value ($ mn) Shares Investor Name Value ($ mn) Shares

Franklin Templeton Asset Management (India) Pvt. Ltd. 12.43 2.44 Jupiter Asset Management Ltd. -20.95 -2.49

OppenheimerFunds, Inc. 14.24 1.69 ICICI Prudential Asset Management Co. Ltd. -16.76 -1.99

Bellevue Asset Management AG 6.17 0.92 Templeton Asset Management Ltd. -5.26 -0.62

Aberdeen Asset Management (Asia) Ltd. 3.08 0.46 India Infoline Asset Management Company Limited -1.58 -0.30

Canara Robeco Asset Management Company Ltd. 1.68 0.20 Kotak Mahindra Asset Management Company Ltd. -1.83 -0.22

BUYS SELLS

Source: Reuters, ICICIdirect.com Research


.

Financial summary

Profit and loss statement | Crore

Year-end March FY17 FY18E FY19E FY20E

Total Operating Income 3921.6 4158.7 4921.5 5801.9

Growth (%) 16.0 6.0 18.3 17.9

Raw Material Expenses 1477.1 1587.3 1825.9 2152.5

Employee Expenses 747.0 894.3 969.5 1084.9

R&D Expenditure 272.4 219.7 262.4 310.4

Other Expenditures 573.9 483.6 590.6 696.2

Total Operating Expenditure 3070.4 3184.9 3648.4 4244.1

Operating Profit (EBITDA) 851.2 973.8 1273.1 1557.8

Growth (%) 33.9 14.4 30.7 22.4

Depreciation 277.2 387.2 420.7 441.7

Interest 26.0 59.3 41.9 24.5

Other Income 157.1 180.2 195.3 230.2

PBT before Exceptional Items 705.1 707.5 1005.8 1321.8

Less: Exceptional Items -128.3 0.0 0.0 0.0

Total Tax 161.6 150.8 221.3 290.8

PAT before MI 671.8 556.7 784.5 1031.0

Minority Interest 76.0 77.4 98.1 114.7

Adjusted PAT 508.7 501.7 711.3 1015.5

Growth (%) 61.6 -1.4 41.8 42.8

EPS (Adjusted) 8.5 8.4 11.9 16.9


Cash flow statement | Crore


Profit/(Loss) after taxation 612.1 501.7 711.3 1015.5

Add: Depreciation & Amortization 277.2 387.2 420.7 441.7

Net Increase in Current Assets -380.8 -13.4 -283.5 -329.4

Net Increase in Current Liabilities 310.4 27.8 174.4 195.7

Other Operating Activities 26.0 59.3 41.9 24.5

CF from operating activities 844.9 962.6 1064.8 1347.9

(Increase)/Decrease in Investments -394.0 0.0 0.0 0.0

(Purchase)/Sale of Fixed Assets -632.2 -700.0 -700.0 -700.0

Increase/ (Decrease) in Minority Interest 110.3 -8.8 7.2 0.0

Other Investing Activities -65.2 0.3 1.3 -2.7

CF from investing activities -981.1 -708.5 -691.5 -702.7

Proceeds from issues of Equity Shares 0.0 0.0 0.0 0.0

Inc/(dec) in loan funds -261.9 -500.0 -500.0 -500.0

(Payment) of Dividend and Dividend Tax -70.2 -125.4 -149.4 -213.2

Interest Paid -26.0 -59.3 -41.9 -24.5

Other Financing Activities 0.0 0.0 0.0 0.0

CF from financing activities -358.1 -684.7 -691.3 -737.8

Net Cash flow -494.3 -430.6 -317.9 -92.5

Opening Cash 1538.6 1044.3 613.7 295.7

Closing Cash 1044.3 613.7 295.7 203.2

Free Cash Flow 212.7 262.6 364.8 647.9


Balance sheet | Crore


Liabilities

Equity Capital 100.0 300.0 300.0 300.0

Reserve and Surplus 4737.7 4914.0 5475.9 6278.1

Total Shareholders funds 4837.7 5214.0 5775.9 6578.1

Total Debt 2205.4 1705.4 1205.4 705.4

Deferred Tax Liability (Net) -190.6 -186.2 -189.8 -189.8

Minority Interest 376.1 367.3 374.6 374.6

Other NCL & LT Provisions 393.9 384.7 392.3 392.3

Source of Funds 7622.5 7485.3 7558.4 7860.6

Assets

Gross Block - Fixed Assets 5409.7 5709.7 6009.7 6309.7

Accumulated Depreciation 1811.0 2198.2 2618.9 3060.6

Net Block 3598.7 3511.5 3390.8 3249.1

Capital WIP 839.2 1239.2 1639.2 2039.2

Total Fixed Assets 4437.9 4750.7 5030.0 5288.3

Goodwill on Consolidation 26.4 26.4 26.4 26.4

Investments 1382.7 1382.7 1382.7 1382.7

Inventory 635.3 644.1 749.0 882.9

Debtors 883.2 895.4 1070.0 1261.4

Cash 1044.3 613.7 295.7 203.2

Other Current Assets 419.9 412.3 416.4 420.4

Total Current Assets 2982.7 2565.5 2531.0 2767.9

Creditors 739.7 749.9 887.5 1046.2

Provisions 46.8 77.0 107.1 137.3

Other Current Liabilities 698.2 685.6 692.3 699.1

Total Current Liabilities 1484.7 1512.5 1686.9 1882.6

Net Current Assets 1498.0 1053.0 844.1 885.3

Other Non Current assets 277.5 272.5 275.2 277.9

Application of Funds 7622.5 7485.3 7558.4 7860.6


Key ratios


Per share data (|)

Reported EPS 10.2 8.4 11.9 16.9

BV per share 80.6 86.9 96.3 109.6

Dividend per share 1.2 2.1 2.5 3.6

Cash Per Share 17.4 10.2 4.9 3.4

Operating Ratios (%)

Gross Margin 62.3 61.8 62.9 62.9

EBITDA margin 21.7 23.4 25.9 26.8

EBIT Margin 14.6 14.1 17.3 19.2

PAT Margin 13.0 12.1 14.5 17.5

Inventory days 59.1 56.5 55.5 55.5

Debtor days 82.2 78.6 79.4 79.4

Creditor days 68.8 65.8 65.8 65.8

Asset Turnover 0.5 0.6 0.7 0.7

EBITDA Conversion Ration 99.3 98.9 83.6 86.5

Return Ratios (%)

RoE 10.5 9.6 12.3 15.4

RoCE 9.6 10.2 13.9 17.1

RoIC 13.1 13.7 19.9 26.1

Valuation Ratios (x)

P/E 59.1 72.1 50.9 35.6

EV / EBITDA 42.3 36.9 28.1 22.7

EV / Net Sales 9.2 8.6 7.3 6.1

Market Cap / Sales 9.2 8.7 7.4 6.2

Price to Book Value 7.5 6.9 6.3 5.5

Solvency Ratios

Debt / EBITDA 2.6 1.8 0.9 0.5

Debt / Equity 0.5 0.3 0.2 0.1

Current Ratio 1.3 1.3 1.3 1.4

Quick Ratio 0.9 0.9 0.9 0.9



ICICIdirect.com coverage universe (Healthcare)

Company I-Direct CMP TP Rating M Cap

Code (|) (|) (| Cr) FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E

Ajanta Pharma AJAPHA 1472 1,300 Hold 12953.1 57.4 53.2 64.2 75.3 25.7 27.7 22.9 19.5 42.3 32.8 31.0 29.9 33.7 25.3 24.9 23.9

Alembic Pharma ALEMPHA 556 530 Hold 10473.9 21.2 21.0 24.8 28.9 26.2 26.4 22.4 19.2 25.3 19.3 20.4 21.1 21.0 18.0 18.2 18.2

Apollo Hospitals APOHOS 1132 1,060 Hold 15749.0 15.9 13.4 24.2 34.4 71.3 84.2 46.7 32.9 6.1 7.5 9.9 12.1 6.0 4.9 8.2 10.7

Aurobindo Pharma AURPHA 644 810 Hold 37710.3 38.8 43.1 41.2 44.8 16.6 14.9 15.6 14.4 24.4 22.9 19.8 19.3 24.2 21.5 17.2 16.0

Biocon BIOCON 603 680 Buy 36180.0 8.5 8.4 11.9 16.9 71.1 72.1 50.9 35.6 9.6 10.2 13.9 17.1 10.5 9.6 12.3 15.4

Cadila Healthcare CADHEA 422 470 Hold 43237.8 14.5 16.4 21.6 25.7 29.1 25.8 19.6 16.4 13.1 17.4 19.5 20.8 21.4 20.4 22.4 22.2

Cipla CIPLA 623 650 Hold 50135.1 12.5 22.1 27.2 32.6 49.7 28.2 22.9 19.1 7.7 13.2 14.6 16.1 8.0 12.7 13.9 14.7

Divi's Lab DIVLAB 1095 1,090 Hold 29055.5 39.9 35.4 43.2 49.5 27.4 31.0 25.3 22.1 25.3 20.4 22.1 22.1 19.8 15.7 16.9 16.8

Dr Reddy's Labs DRREDD 2402 2,520 Hold 39832.9 78.0 61.4 93.4 138.5 30.8 39.1 25.7 17.3 7.3 7.0 9.4 11.9 10.5 7.8 10.7 14.0

Glenmark Pharma GLEPHA 631 670 Hold 17799.2 42.2 36.8 36.9 42.2 14.9 17.2 17.1 14.9 19.5 16.7 16.0 16.9 26.5 19.0 16.1 15.7

Indoco Remedies INDREM 293 250 Hold 2701.8 8.4 4.8 12.3 15.1 35.1 61.0 23.9 19.5 8.7 5.7 11.2 13.3 11.8 6.5 14.6 15.7

Ipca Laboratories IPCLAB 574 560 Hold 7237.2 15.4 18.3 33.2 37.5 37.2 31.4 17.3 15.3 8.7 8.9 15.2 15.9 7.9 8.7 14.0 14.0

Jubilant Life JUBLIF 920 1,090 Buy 14653.9 36.1 46.9 68.0 85.3 25.5 19.6 13.5 10.8 13.8 14.7 18.4 20.4 16.8 18.1 21.0 21.0

Lupin LUPIN 946 890 Hold 42742.0 56.7 34.9 38.5 47.5 16.7 27.1 24.6 19.9 16.6 10.9 12.0 14.5 19.0 10.6 10.7 11.9

Narayana Hrudalaya NARHRU 288 360 Buy 5885.6 4.1 4.3 6.7 10.0 69.7 66.2 43.2 28.9 12.5 11.9 14.4 18.7 8.8 8.5 11.5 14.6

Natco Pharma NATPHA 992 1,190 Buy 18304.6 27.9 30.4 52.9 38.7 35.6 32.7 18.7 25.7 33.6 31.5 43.5 27.5 29.5 26.8 34.8 21.3

Sun Pharma SUNPHA 583 485 Hold 139900.2 29.0 14.7 18.2 22.2 20.1 39.7 32.0 26.2 20.3 10.7 12.2 13.5 19.0 9.1 10.3 11.4

Syngene Int. SYNINT 615 680 Buy 12561.0 14.4 13.6 19.0 22.7 42.8 42.8 32.3 27.0 16.8 16.2 20.3 21.7 20.3 16.4 18.8 18.5

Torrent Pharma TORPHA 1384 1,371 Hold 23419.3 55.2 47.8 66.8 79.9 25.1 29.0 20.7 17.3 18.9 19.0 21.0 22.6 21.5 16.3 19.5 19.8

RoE (%)EPS (|) PE(x) RoCE (%)



RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them

as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional

target price is defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;

Buy: >10%/15% for large caps/midcaps, respectively;

Hold: Up to +/-10%;

Sell: -10% or more;

Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]


ANALYST CERTIFICATION

We /I, Error! Reference source not found. CA-INTER, Mitesh Shah MS (Finance) Harshal Mehta MTech (Biotechnology) Research Analysts, authors and the names subscribed to this report, hereby certify

that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or

indirectly related to the specific recommendation(s) or view(s) in this report.

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities

Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has

its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which

are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking

and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts

and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. 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 of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current.

Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended

temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this

company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This

report and information herein is solely for informational purpose and shall 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. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their

receiving this report. 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. The recipient should independently evaluate

the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any

loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the

risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to

change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment

in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in

respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned

in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any

compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts

and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Error! Reference source not found. CA-INTER, Mitesh Shah MS (Finance) Harshal Mehta MTech (Biotechnology) Research Analysts of this report have not received any compensation

from the companies mentioned in the report in the preceding twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month

preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject

company/companies mentioned in this report.

It is confirmed that Error! Reference source not found. CA-INTER, Mitesh Shah MS (Finance) Harshal Mehta MTech (Biotechnology) Research Analysts do not serve as an officer, director or employee of the

companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

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 ICICI Securities and affiliates 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.

report and information herein is solely for informational purpose and shall 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. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their

receiving this report. 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. The recipient should independently evaluate

the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any

loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the

risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to

change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment

in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in

respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned

in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation

or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any

material conflict of interest at the time of publication of this report.

It is confirmed that Error! Reference source not found. CA-INTER Mitesh Shah MS (Finance), Harshal Mehta MTech (Biotechnology) Research Analysts of this report have not received any compensation

from the companies mentioned in the report in the preceding twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.