himani.singh@icicidir ect.com Nicholas Piramal (NICPIR) Lucrative ...

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FINANCIALS Exhibit 11: Revenue mix and growth assumptions FY06 FY07 FY08E FY09E Net sales 1582 2472 2665 2994 Revenue growth (%) 21 55 15 12 Exports: Total CMO 106 665 784 911 Business Mix (%) 7 27 29 30 Revenue growth (%) 636 43 16 PDS 16 146 176 194 Business Mix (%) 1 6 7 6 Revenue growth (%) 253 20 10 MMBB 183 227 230 239 Business Mix (%) 12 9 9 8 Revenue growth (%) 20 6 4 Domestic: India - Formulation sales 1043 1174 1282 1432 Business Mix (%) 66 47 48 48 Revenue growth (%) 12 11 12 Pathlabs 45 70 83 108 Business Mix (%) 3 3 3 4 Revenue growth (%) 55 30 30 Source: Company, ICICIdirect Research Top line to grow at a CAGR of 23% over FY06-09E We expect consolidated net sales to grow at a CAGR of over 23% over FY06-09E to Rs 2994 crore on the back of acquisition of Morpeth operations and increasing traction in CMO. CMO revenue is expected to grow at a CAGR of 105% over FY06-09E to Rs 911 crore in FY09E. Exhibit 12: Robust growth in net sales Sales (Rs crore) 3500 3000 2500 2000 1500 1000 500 0 FY '05 FY '06 FY '07 FY '08E FY09E Source: Company, ICICIdirect Research 8 | P age
Strong margin expansion likely in ensuing quarters NPIL is likely to witness strong margin expansion going forward on account of higher sourcing from Baddi plant in Himachal Pradesh, turnaround in Avecia operations and traction in CMO business from Indian assets. Its operating margin is likely to improve from 12.49% in FY06 to 17.66% in FY09E by 517 bps. NPIL sources 60-65% of domestic sales of high-value products from its Baddi plant and expects to save major excise duty. Exhibit 13: Margins to improve progressively OPM & NPM (%) 20% 18% 16% 14% 12% 10% 8% 6% 4% Source: Company, ICICIdirect Research FY '05 FY '06 FY '07 FY '08E FY09E OPM (%) NPM (% ) Consolidated net profits to grow at a CAGR of 42% over FY06-09E Margin expansion is likely to result in net profit growing at a CAGR of 42%. NPIL is not likely to undertake any major capex project. However, its regular capex of around Rs 100 crore per year will be financed through internal accruals. With lower depreciation and interest cost, the increase in margins at operating level is likely to boost net margin as well. Exhibit 14: Net profits to surge Net Profit (Rs crore) 400 350 300 250 200 150 100 50 0 FY '06 FY '07 FY '08E FY09E Source: Company, ICICIdirect Research 9 | P age
Page 1 and 2: August 27, 2007 | Pharmaceuticals I
Page 3 and 4: INVESTMENT RATIONALE Emerging as a
Page 5 and 6: Major player in domestic market Do
Page 7: In-licensing - an opportunity to gr
Page 11 and 12: VALUATION We believe a robust growt
Page 13 and 14: Profit and Loss Statement (Rs crore
Page 15: RATING RATIONALE ICICIDirect endeav

himani.singh@icicidir ect.com Nicholas Piramal (NICPIR) Lucrative ...

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