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Notes Jubilant Life Sciences Confluence: Pharma; Pre-conference note Emkay Research 16 November 2011 40
November 16, 2011 Reco Accumulate CMP Rs505 Previous Reco Accumulate Target Price Rs554 EPS change FY12E/13E (%) NA Target Price change (%) 10 Nifty 5,069 Sensex 16,883 Price Performance (%) 1M 3M 6M 12M Absolute 5 6 14 9 Rel. to Nifty 7 6 23 32 Source: Bloomberg Relative Price Chart 550 510 470 430 390 Rs 350 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Source: Bloomberg Sun Pharma (LHS) Rel to Nifty (RHS) Stock Details Sector Pharmaceuticals Bloomberg SUNP@IN Equity Capital (Rs mn) 1030 Face Value(Rs) 1 No of shares o/s (mn) 1030 52 Week H/L 538/392 Market Cap (Rs bn/USD mn) % 40 30 20 10 0 -10 520/10,261 Daily Avg Volume (No of sh) 1067005 Daily Avg Turnover (US$mn) 10.2 Shareholding Pattern (%) Sep-11 Jun-11 Mar-11 Promoters 63.7 63.7 63.7 FII/NRI 19.1 18.6 18.5 Institutions 6.5 7.2 7.1 Private Corp 5.1 5.1 5.1 Public 5.6 5.5 5.6 Source: Capitaline Deepak Malik Deepak.malik@emkayglobal.com +91 22 6612 1257 Ashish Thavkar ashish.thavkar@emkayglobal.com +91 22 6612 1254 Bhavita Nagrani bhavita.nagrani@emkayglobal.com +91 22 6624 2486 Sun Pharma Taro spearheads the growth � Domestic formulation to grow at 17% CAGR on back of new launches in FY12 & leadership in chronic therapies (psychiatrists, neuro, cardio, ophtho and ortho) � US business to show robust growth of CAGR of 30.5%, on the back of Para IV opportunities like Taxotere, Consolidation of Taro and launch of recently approved 15 ANDAs in H1FY12 � Going forward - Management has maintained its guidance of 28-30% growth in top-line for FY12 � With strong traction from Taro and a stable domestic business – we maintain Accumulate rating with a target price of Rs554 Domestic business – Focus on Chronic Therapies Domestic formulation (contributes ~40%) is expected to grow at 18% CAGR (FY11- FY13) on back of new sustained product launches and leadership in chronic therapy. Under the Sun-MSD JV - Sitagliptin Sitagliptin + Metformin combination have been launched. The company also launched a dry powder inhaler for the asthma patients North America - Revenues from Taxotere and Growth in Taro are the Key Drivers � Sun Pharma launched Taxotere generics during the current year. We expect sales of ~ $40m for full year for SUNP. (Assuming current generic market size of $200m with 4 generic players) Large part of US generics growth is dependent upon the revenue from this product. � Integration of Taro’s US business would add a well-established portfolio of dermatology and pediatric products to Sun’s portfolio which do not overlap with Sun’s core portfolio. Any developments for Taro will add additional upside to our projections. � Further, if there is a USFDA clearance to Caraco (Warning letter given in 2008) there will be further upside in our projections. Historically Sun has been able to resolve the warning letters issued to its Cranbury facility and Taro’s Canadian facility. These instances vindicates sooner clearance of Caraco facility as well. � Sun has 388 ANDA filings (including 12 ANDAs filed in H1FY12; also includes Cardizem CD 360mg strength where Sun is the only player in US$75mn market) till date with 150 ANDAs pending for approval, highest number of filings by an Indian pharma company. Management has guided for 25 ANDA filings during FY12 Valuation We expect Sun Pharma to report 28% growth in revenues in FY12E and 24% growth in FY13E. EBIDTA margins are expected to decrease from 34.8% in FY11 to 34.5% in FY12E and 37.4% in FY13E. Earnings will grow by 27% CAGR over FY11-13E. We revise our target price to Rs554 (22x FY13E core earnings of Rs23). At CMP, the stock trades at 23x FY12E and 18x FY13E EPS. Maintain Accumulate. Financials Rs mn YE- Net EBITDA EPS EPS RoE EV/ Mar Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BV FY10 40,103 13,662 34.1 12,590 12.2 (30.7) 18.1 41.5 37.9 6.7 FY11 57,214 19,890 34.8 18,386 17.8 46.0 22.2 28.4 25.3 5.5 FY12E 73,135 25,204 34.5 22,365 21.6 21.6 22.6 23.3 19.9 4.6 FY13E 90,360 33,836 37.4 29,533 28.5 32.0 24.8 17.7 14.6 3.8 Emkay Global Financial Services Ltd 41 Company Update
Page 1 and 2: where great minds meet PHARMA CONFL
Page 3 and 4: November 16, 2011 Reco Not Rated CM
Page 5 and 6: Detailed Revenue Break-Up Ajanta Ph
Page 7 and 8: Notes Ajanta Pharma Confluence: Pha
Page 11 and 12: Financials Income Statement Balance
Page 13 and 14: November 17, 2011 Reco Hold CMP Rs1
Page 15 and 16: Dr. Reddy’s - Domestic Metrics Dr
Page 21 and 22: Financials Elder Pharma Confluence:
Page 23 and 24: November 16, 2011 Reco Buy CMP Rs 3
Page 25 and 26: Glenmark Pharma - Domestic Metrics
Page 29 and 30: November 17, 2011 Reco Buy CMP Rs25
Page 31 and 32: Ipca Labs - Domestic Metrics Ipca L
Page 35 and 36: November 16, 2011 Reco Buy CMP Rs21
Page 37 and 38: Financial Snapshot Jubilant Life Sc
Page 39: Notes Jubilant Life Sciences Conflu
Page 43 and 44: Sun Pharma - Domestic Metrics Sun P
Page 45 and 46: Para-IV Opportunities Product Gener
Page 47 and 48: Notes Sun Pharma Confluence: Pharma
Page 51 and 52: Financials Vivimed Labs Confluence:
Page 53 and 54: Emkay Rating Distribution Confluenc

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