sapm final

Security Analysis

And

Portfolio Management

Report

On

Pharmaceutical Industry

Submitted By:

Kailas Dalvi (RollNo. 21)

Parin Chawda( RollNo. 33)

Shashan Singh Rathore(RollNo. 44)

MBA(IB)

2008-10

IIFT Kolkata

2

Table of Contents ECONOMIC ANALYSIS .............................................................................................................................. 4

INDIAN PERSPECTIVE .......................................................................................................................... 4

OUTPUT ............................................................................................................................................... 4

AGRICULTURE ..................................................................................................................................... 6

INDUSTRIAL ......................................................................................................................................... 6

INFRASTRUCTURE ............................................................................................................................... 7

SERVICES ............................................................................................................................................. 7

AGGREGATE DEMAND ........................................................................................................................ 8

MONETARY CONDITIONS .................................................................................................................... 9

INFLATION ......................................................................................................................................... 10

MACROECONOMIC OUTLOOK .......................................................................................................... 11

INDUSTRY ANALYSIS .............................................................................................................................. 12

GLOBAL INDUSTRY ............................................................................................................................ 13

INDIAN PHARMAEUTICAL INDUSTRY ................................................................................................ 14

PHARMACEUTICAL INDUTRY STRUCTURE .................................................................................... 16

SWOT ANALYSIS ............................................................................................................................ 16

GROWTH DRIVERS ........................................................................................................................ 18

PORTER’S FIVE FORCES MODEL .................................................................................................... 22

COMPANY ANALYSIS ............................................................................................................................. 23

CIPLA LTD .......................................................................................................................................... 23

SHAREHOLDING PATTERN ............................................................................................................. 23

INVESTMENT STRATEGY ................................................................................................................ 23

KEY RISKS ....................................................................................................................................... 24

ECONOMIC ACTIVITIES .................................................................................................................. 24

RECENT DEVELOPMENTS .............................................................................................................. 24

FINANCIAL ANALYSIS ..................................................................................................................... 25

SWOT ANALYSIS ............................................................................................................................ 26

GLENMARK PHARMACEUTICALS ...................................................................................................... 27


INVESTMENT RATIONALE:............................................................................................................. 27

KEY RISKS ....................................................................................................................................... 28

3




SWOT ANALYSIS ............................................................................................................................ 30

GLAXO SMITHKLINE PHARMA ........................................................................................................... 31


INVESTMENT RATIONALE .............................................................................................................. 31

KEY RISKS ....................................................................................................................................... 32




SWOT ANALYSIS ............................................................................................................................ 35

REFERENCES .......................................................................................................................................... 36

APPENDIX .............................................................................................................................................. 37

CIPLA LTD .......................................................................................................................................... 37

ESTIMATED B/L SHEET .................................................................................................................. 37

PRICE ESTIMATION ........................................................................................................................ 38

GLENMARK PHARMACEUTICALS ....................................................................................................... 40



GLAXO SMITHKLINE PHARMA ........................................................................................................... 43



4

ECONOMIC ANALYSIS

The current economic crisis that has been observed around the entire globe has affected the

emerging economies as well. India on the whole as per the economic indicators is not in

recession but is definitely facing a slowdown with the rate of growth of GDP would

definitely be affected. However the general consensus is that we have already bottomed out

and now the only way for the global economy would be up. The green shoots are already

visible with the major economies of Europe (Germany & France) reversing the trend of

declining GDP growth rate. Despite the developments the analysts believe that the global

economy is not yet out of the woods. The unemployment rate in the developed countries is

continuously on the ascent which is not a very good sign.

INDIAN PERSPECTIVE

The scene for India is not as ominous as the rest of the world due a variety of reasons the

most important being the relatively strong domestic demand & the burgeoning Indian middle

class. India's GDP growth in 2008-09 was one of the highest in the world and reflected the

resilience of the country's growth impulses to a severe external shock as well as the impact of

the policy response to contain the adverse effects of the global economic crisis on domestic

growth. Even in the recently concluded meeting of the 100 CEOS & the Finance Minister, the

outlook for the Indian economy has been bullish even though the growth rate for the current

fiscal quarter was expected to drop to 6%, the annual growth rate in GDP is expected to be at

an optimistic 9%.

OUTPUT

The phenomenal growth rate that the Indian economy has observed from 2003-08 of 8.8%

was not sustained in 2008-09.The GDP grew at 6.7% in 2008-09 due to the overall world

recession. The slowdown was majorly due to a sharp decline in the industrial sector & a

moderate downturn in the services & agriculture. From the table given below we can observe

that in the fourth quarter of 2008-09 only agriculture sector showed a reversal of trend on the

quarterly basis with a rise from -0.8% to 2.7%.

5

EXHIBIT 1

The above given exhibit shows the rate at which the Indian GDP has been growing & thus is

one of the emerging economies of the world.

EXHIBIT 2

6

AGRICULTURE

Even though the agriculture sector saw a bounce back in the last quarter of 2008-09 the

current monsoon conditions are threatening the overall recovery of the economy. Delayed as

well as inadequate southwest monsoon has put the kharif crops in jeopardy which accounts

for 57% of the total agricultural produce. The food management is a big issue facing the

country that needs to be tackled & which might act as a drag on the overall economic growth.

INDUSTRIAL

The industries showed a good growth in July 2008, but registered a sharp decline in the

second half of the year with negative growth in December 2008 & March 2009. The infusion

of liquidity in order to kick start the economy has its effect on the IIP with some of the

sectors showing a phenomenal growth. The electricity sector recorded an appreciable increase

whereas the mining & manufacturing related to food products has shown a decline.

EXHIBIT 3

7

INFRASTRUCTURE

The core infrastructure sector grew by a good 4.8% vis-a-vis the 3.5% growth shown in the

corresponding sectors for the previous year. The sectors which have shown a growth include

the cement, coal & electricity. This augurs well for India in the long run as the fiscal stimulus

would enable to complete the twin job of putting the economy back on the path of recovery

coupled with the development of the infrastructure in India which has been a laggard for a

long time.

EXHIBIT 4

SERVICES

The services sector also saw the effects of the global melt down as this is one sector which is

dependent to a large extent on the global scenario. It recorded a lower growth of 9.4% in

2008-09 compared to the 10.8% growth in 2007-08.The below given table shows the

performance of the services sector for the year 2008-09

8

EXHIBIT 5

AGGREGATE DEMAND

One of the bulwarks of the strong economic growth that Indian has witnessed in the past

decade has been the strong domestic demand. The comparative weakening of the aggregate

demand has acted as big impediment to the growth of the GDP. There was a significant

reduction in private consumption as well as a moderation in investment which had to be

compensated by an expansionary fiscal policy. In the last 2 quarters there was a deceleration

in the sales growth & PAT as well indicating a fall in the aggregate demand. The overall rise

in the Aggregate demand does depend to a large extent on the monsoons as the major demand

comes from the rural areas. A shortfall in rain would not augur well for the rural population

which would in turn hamper the growth in aggregate demand. The external demand is also

tantamount to the growth in the Aggregate demand which would need to increase so that the

growth in economy can be sustained.

9

EXHIBIT 6

MONETARY CONDITIONS

The expansionary policy that the RBI has adopted has ensured that there has been ample of

liquidity in the system. Also the fiscal stimulus that the government has given coupled with

the lowering of interest rates that have been observed of late has ensured that there no dearth

of liquidity in the market. In the recent review the interest rates have remained unchanged

due to the fear of looming inflation.

EXHIBIT 7

10

The above chart gives a track of the money supply that is present in the economy.

EXHIBIT 8

INFLATION

The Whole sale price index has declined sharply to 0.8 % in the end of March from the

acrophobic heights of 12.9% in August 2008.Currently inflation is not a major issue with the

inflation at negative levels due to high base effect. Some of the important reasons are the fall

in prices of crude as well as a general decline in the commodity prices coupled with a fall in

global demand. However the upward pressure on the prices in the future is pretty eminent due

to the delayed monsoons as well as the drought like conditions that are caused due to paucity

of rains.

Also there has been a change in the stance taken by RBI from September 2008 from

containing the aggregate demand to supporting demand expansion so that the growth is not

sacrificed. The main idea behind it is that the domestic liquidity remains strong & there is a

continuous credit flow to the various productive sectors of the economy.

11

EXHIBIT 9

MACROECONOMIC OUTLOOK

The macroeconomic outlook shown by the various global agencies indicates that there is

going to be recessionary pressures that would remain prevalent throughout 2009 even though

there are some indicators that are showing positive signs. The IMF has revised the growth

projection for India from 4.5% to 5.4% for the year 2009 even though the finance minister

remains optimistic of enjoying a 9% growth.

The various surveys that were done by Dun & Bradstreet, CII & NCAER indicate that there

would definitely be a change in the business sentiment with the gradual return to optimism

for the business. This business optimism is also seen through the huge rally that has been

observed on the BSE & NSE.

The survey conducted by professional forecasters for the RBI has the following findings.

GDP growth rate for 2009-10 at 6.5%.

Agriculture sector growth rate to 2.5% from an earlier predicted level of 3.0%.

Industrial sector growth rate to 4.8% from an earlier predicted level of 4.1%.

Services sector growth rate to 8.3% from an earlier predicted level of 7.5%.

Higher predicted growth rates for Industrial & Services sector in the 3rd

& 4th quarters

for 2009-10.

12

INDUSTRY ANALYSIS

“The Indian Pharmaceutical industry is a success story providing employment for millions &

ensuring that essential drugs at affordable prices are available to the vast population of this

subcontinent.” - Richard Gerster

The Indian pharmaceutical Industry has come a long way since its infant stages in 1960s. The

important events that have occurred in the life of the pharmaceutical industry can be depicted

as follows.

EXHIBIT 10

The days when Indian pharmaceutical industry was equivalent to making cheap generic drugs

is passé & a consolidation is happening in the current Indian market. The most watershed

events in the above shown timeline would be

Phase 2. Indian Patent Act 1970.

-Led to the growth of the generic drug segment as India had a process patent regime.

Phase 5. New Indian Patent law 2005.

-Led to the Indian Pharmaceutical majors to also look forward to invent drugs.

13

GLOBAL INDUSTRY

The Global industry needs to be taken a look at due to the fact that Indian Pharmaceutical

firms are having a considerable chunk of the pie on the global scene as well as the local

Indian market. In 2008, the global pharmaceutical market has grown at the slowest rate in this

decade and is expected to slow down further. The market reached USD773 billion at a growth

rate of 4.8% in 2008, which is the slowest growth rate of the decade. The two largest markets,

the US and Europe which contributed almost 73% of the global market in 2008, achieved

growth rates of 1.4% and 5.8% respectively. Going forward, the US market is expected to

stagnate or decline further over the next five years while the European market is expected to

grow at a sluggish pace with a CAGR of 2 - 5% for 2008 – 2013.

The following are the reasons for the same

Decrease R&D productivity.

Squeezing of profit margins due to the competing off patent Generic Drugs.

(Drugs worth USD 47 billion are getting off patent in the next three years)

Current global financial crisis.

Higher cost of developing new drugs.

Stricter regulatory requirements.

Fewer & smaller blockbuster drugs.

EXHIBIT 11

EXHIBIT 12

In order to address the above mentioned issues the pharmaceutical majors around the world

are looking forward to tackle the issue by

Cutting down costs through increased operational efficiency.

World Pharmaceutical Industry 2001 2002 2003 2004 2005 2006 2007 2008

Total World Market (in US $ Billions) 393 429 499 560 605 648 75 773

Growth over previous year 11.80% 9.20% 10.20% 7.90% 7.20% 6.80% 6.60% 4.80%

Year 2003 2004 2005 2006 2007

Blockbuster sales growth n/a 24% 14% 10% 9%

Market Share 33.10% 36.50% 38.70% 39.70% 39.70%

Pharma Maket growth % n/a 12% 8% 7% 9%

14

Looking forward to emerging markets for outsourcing.

Looking at strategic alliances & acquisitions, an inorganic form of growth.

Thus from the above exhibit it can be observed that the Blockbuster sales growth on a year on

year basis has been declining which is the main source of income for the big pharmaceutical

firms.

The big companies are looking forward to cost cutting measures on a large scale through

outsourcing to the Asian competitors.

COMPANY COST CUTTING MEASURES

Pfizer Closing 5 research facilities

Selling 3 manufacturing facilities

Reducing 10% of workforce

Outsourcing 30% of manufacturing to

Asia

GSK Pharmaceuticals Reducing cost through restructuring

target sales & marketing

Closed 28 plants since 2000

Novartis Cut spending by 2010

Reduction of 2500 jobs

EXHIBIT 13

From the point of view mergers & acquisitions the watershed moment that took the Indian

Pharmaceutical Industry by storm is the acquisition of Ranbaxy the largest Pharmaceutical

Company of India. The company was taken over by the 2nd

largest Japanese pharmaceutical

company Daiichi Sankyo which was more into innovative drug manufacturing. The rationale

behind the acquisition was given as follows

INDIAN PHARMAEUTICAL INDUSTRY

India is the world’s fourth largest producer of pharmaceuticals by volume & accounts for

around 8% of global production. In terms of value, production accounts for around 1.5% of

the world total. The Indian pharmaceutical industry directly employs around 500,000 people

and is highly fragmented. Despite accounting for 8% of global production in value terms it

captures only 1.5% indicating that India is more into generic drug & bulk drugs. In terms of

the GDP the pharmaceutical sector comprises around 7 % of the GDP growing at the rate of

12% - 14 % annually.

15

EXHIBIT 14

The outlook of bigger Pharmaceutical firms of looking at emerging markets for outsourcing

is a good sign for the Indian market as India is looked upon as a manufacturing hub for drugs.

At the same time due to the new Patent Law 2005 India pharmaceutical companies are

becoming targets for the foreign firms as sustaining profits is becoming tougher & a lot of

small companies are getting gobbled up. The Indian companies are now trying to move up the

value chain by developing new drugs so that they will be able to sustain the phenomenal

growth observed in the past few decades.

Some of the important features of the Industry are as follows

A knowledge based Industry.

Huge manufacturing potential for high quality drugs & formulations.

Developing cost effective technologies for various bulk drugs & intermediates.

Cost advantageous.

Highly fragmented industry.

Tremendous export potential in newer markets like Africa along with expanding the

share in the older European & American markets.

A growth driver for GDP with the sector poised to grow at 16% from 2007 to 2011.

Strong technical manpower.

Competencies in chemistry, process development & reverse engineering.

Indicator Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

Sales Growth Of Drugs And Pharmaceuticals Companies 11.68 16.04 22.94 19.47 10.72

Expenses Growth Of Drugs & Pharmaceuticals Companies 10.8 20.22 16.5 16.56 29.19

PBDIT Growth Of Drugs & Pharmaceuticals & Drugs Companies 1.04 25.87 45.27 14.85 -55.07

PAT Growth Of Drugs & Pharmaceuticals Companies -5.57 42.64 62.82 11.67 -95.01

Expenses To Sales Ratio Of Drugs & Pharmaceuticals Companies 94.47 97.9 92.62 90.36 105.51

Other Income To Total Income Ratio Of Drugs & Pharmaceuticals Companies 3.63 6.47 5.53 4.49 2.99

Extra Ordinary Income To Total Income Ratio Of Drugs & Pharmaceuticals Companies 0.7 0.15 0.22 0.96 5.04

Extra Ordinary Expenses To PDBIT Ratio Of Drugs & Pharmaceuticals Companies 0.26 0.13 0.18 0.82 2.79

PBDIT Margin Of Drugs & Pesticides Companies 19.13 20.09 24.15 23.46 9.65

PAT Margin Of Drugs & Pharmaceuticals Companies 10.04 11.95 16.24 15.35 0.7

16

PHARMACEUTICAL INDUTRY STRUCTURE

The various segments in which the Indian Pharmaceutical Industry can be divided into are as

follows.

EXHIBIT 15

It can be observed that the number of companies in manufacturing of Bulk drugs & Generic

drugs is the highest & the amount of fragmentation that is present in the sector.

EXHIBIT 16

SWOT ANALYSIS

The Indian Pharmaceutical industry despite its robust growth is under pressure to change

from the various external factors. The SWOT analysis of the Indian Pharmaceutical industry

highlights the strengths & the opportunities that the Indian Pharmaceutical Industry has at the

same time trying to weigh the possible threats & the weakness that can be exploited by the

competitors.

Company Size($ Billion) Market Share (%) Growth Rate (%)

Total Pharmaceutical Market 6.9 100% 9.90%

Cipla 0.36 5.30% 13.40%

Ranbaxy 0.34 5.00% 11.50%

GSK Pharmaceuticals 0.29 4.30% -1.20%

Piramal Healthcare 0.27 3.90% 11.70%

Zydus Cadila 0.24 3.60% 6.80%

Total of top 5 Companies 1.53 22.10% -

17

EXHIBIT 17

STRENGTHS

The above mentioned strengths have always held the Indian pharmaceutical Industry in a

good stead, the main being the cost advantage & the expertise that India has developed over

in the field of reverse Engineering.

WEAKNESS

The highly fragmented Indian Pharmaceutical Industry makes it a hugely competitive

industry. However that is beneficial from the point of view of producing quality drugs at a

lower price finally benefiting the final customer in the end. However it also acts as a

weakness as there is always a likelihood of it being gobbled up by the major Pharmaceutical

giants. Also the lack of product development acts as a weakness which is a major source of

revenue for any Pharmaceutical company.

18

OPPORTUNITIES

The opportunities that lay in store for the Indian pharmaceutical Industry on the whole are

immense due a lot of factors. The most important factor would be the coming off patent for a

lot of Blockbuster drugs which can then be sold as Generics. Also the recent financial crisis

has turned people towards the use of Generic drugs thus increasing their usage as well. Indian

is also entering into a lot of markets apart from the traditional markets of USA & Europe.

THREATS

The threats that are looming large are numerous, the takeover threat being immense. Even the

pharmaceutical MNCs are looking forward to India & China as a manufacturing hub with

more focus on Bulk Drugs & Generics to boost their growth. Also the threat from China is

huge not only from the point of view of taking away business but also the counterfeit drugs

that have been sold in the name of Indian manufacturers.

GROWTH DRIVERS

EXHIBIT 18

The above mentioned factors are some of the important growth drivers that will sustain the

growth of the Pharmaceutical Industry in the future.

19

PRODUCT PATENT REGIME/PRODUCT PATENT REGIME

After the new patent law of 2005 & the acquisition of Ranbaxy, the Indian pharmaceutical

firms are trying to move up the value chain by investing hugely in RND and trying to foray

into the innovative drug manufacturing market. The results can be observed from the number

of patents that were filed which shows an upward trend .Also the cost of doing RND in India

is lesser than the other countries & as a result a lot of major global pharmaceutical firms are

looking at India as a hub for doing low cost RND.

EXHIBIT 19

COST ADVANTAGE

As show earlier the level of fragmentation in the Indian pharmaceutical industry is huge

which makes the Indian proposition cost advantageous. There are nearly 8000 manufacturers

which enable the industry to drive down costs along the life cycle of the project. Compared to

USA & Europe the costs are lower by 65% & 50% respectively.

EXHIBIT 20

PATENTS 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Filed 12613 17466 24505 28940 35218

Examined 10709 14813 11,569 14119 11751

Granted 2469 1911 4320 7539 15261

20

Installation costs-The cost of setting up a plant in India is 30% lower than establishing an

FDA plant in USA.

EXHIBIT 21

The pool of trained chemists & pharmacists in India is 6 times larger than USA & are

available at 10% of cost.

EXHIBIT 22

21

ENTRY INTO NEW MARKETS

The Indian pharmaceutical Industry is consolidating its position in the already established

USA & European markets. However at the same time they are entering into other continents

like Africa & Latin America where there is a great demand for the generic drugs industry.

Also there is awareness about the safety of the generic drugs globally & also due to the

financial crisis the demand is on the rise which augurs well for the Indian industry.

EXHIBIT 23

22

PORTER’S FIVE FORCES MODEL

EXHIBIT 24

23

COMPANY ANALYSIS

CIPLA LTD

Cipla is a leading pharmaceutical company in India with a strong and profitable business

model. The company has a well-diversified portfolio, without any overdependence on a

particular segment. The company owns around 30 manufacturing plants. The manufacturing

facilities are approved by the major international regulatory agencies including the US FDA,

MHRA (UK) and WHO.

It conducts research for developing innovative drug delivery systems for both new and

existing drugs with major focus on new medical devices in the area of respiratory medicine

including an inhaler device for insulin.

SHAREHOLDING PATTERN

EXHIBIT 25

INVESTMENT STRATEGY

Low Risk global strategy-Cipla's strategy for its generics business is to enter into bulk

drug supply arrangements with companies well entrenched in the generic markets.

Cipla has entered into partnerships for 125 products with 8 companies in the US and a

strategic alliance to develop over 50 generic products for the generics major

Teva/Ivax. The company thus, intends to enter specialty segments with a low-risk

return approach ensuring relatively stable earnings flow

Anti-asthma and anti-HIV focus to augur well: Cipla enjoys a near dominant position

in the asthma segment (about 20% of sales). It is one of the few companies globally

having the required technology to manufacture CFC-free inhalers. With CFC inhalers

to be compulsorily phased out by 2010, this segment is expected to see growth in the

future

Debt to equity and coverage ratios is favorable to minority equity investors

GROUP PERCENTAGE

PROMOTER 39.38

FII 13.4

DII 18.41

PUBLIC 22.07

OTHERS 3.54

24

KEY RISKS

An unfavourable court ruling in an ongoing litigation between the Government of

India and Cipla regarding alleged overcharging of certain drugs could potentially

pressurise the Company’s bottom line

If the cost of raw material keep on increasing due to increased pressure on Chinese

companies to move to higher level drugs, companies margin will be hit drastically

ECONOMIC ACTIVITIES

The company is present in 3 major segments:

Bulk Drugs

OTC

Veterinary Drugs

Prescription Drugs

Technological services

The key competitors of the company are:

Dr. Reddy’s Labs

Lupin

Sun Pharma

Glaxosmithkline

RECENT DEVELOPMENTS

On 19th

August , 2009 the Delhi High court allowed it to see the generic version of

Bayer’s cancer drug.

During April 2009, the USFDA raised 9 deviations in the manufacturing process

during inspection of the company’s Bangalore unit. The company has stated that it

would submit it response to the Regulator within the stipulated time period. On the

Adcock Ingram-Cipla Medpro issue in South Africa, the company has stated that it

would support its partner (Cipla Medpro) in case of any hostile takeover by Adcock.

Cipla Medpro currently contributes around 7% of the company’s Total Exports and

there can be risks to this contribution in case of any hostile takeover by Adcock

25

July 2009: Recently ,the Delhi High Court allowed Cipla to manufacture and sell

generic version of patented lung cancer drug 'Erlotinid' invented by Swiss Pharma

company Hoffman La Roche Ltd

Aug 2009: It also lost Indian government order for Tami flu to Hetero

FINANCIAL ANALYSIS

EXHIBIT 26

The company’s debt to equity & leverage ratios are very favorable

Company has posted phenomenal sales growth over the period of last 3-4 years

EPS growth has been very low due to equity dilution during the period of 2006-07

Commenting on the road ahead the company, they are looking at 10% top line and

bottom-line growth in FY10, and Operating margins are seen at 23-25%

The net sales for the quarter ended march 09 grew by 14% to Rs. 1235 cr this was

mainly driven by strong performance in Domestic market and its Formulations

segment in exports. Others segment (Others include Technology Knowhow/fees and

other services) which grew by 225.1%

The company analysis was also done by the Value Benchmark Method. By this method the

value anchor or the value range was found out. We can see that by this method the stock price

comes out to be Rs 294 while the current market price is Rs 275. Thus we can conclude that

the stock is undervalued and its price will grow up in the future. Hence, it’s recommended to

stay invested in this stock for the short term.

Column1 Column2 Column3 Column4 Column5

Key Ratios 2005 2006 2007 2008

Sales (in Crore) 2401.17 3103.81 3657.95 4295.24

Net Profit (in Crore) 409.61 607.64 668.03 701.43

EBIT Margin 21.75% 23.24% 22.28% 19.79%

EBITDA Margin 24.04% 25.82% 25.10% 22.83%

Net Profit Margin 17.06% 19.58% 18.26% 16.33%

ROCE 2908.00% 2964.00% 25.33% 20.00%

Sales Growth (YOY) 16.81% 29.26% 17.85% 17.42%

EPS Growth (YOY) -74.10% 48.32% -57.60% 5.01%

Retention Ratio 70.70% 70.80% 72.70% 74.00%

OCF* Growth -22.72% 39.42% 19.12% 13.17%

Debt Equity 12.00% 24.00% 4.00% 15.00%

Interest Coverage 68.26% 55.74% 116.10% 72.47%

Current Ratio 1.84% 1.69% 272.00% 1.98%

26

SWOT ANALYSIS

EXHIBIT 27

Strengths:

Cipla has a voluminous product

portfolio containing more than 200

brands some of which are the leading

brands in their respective category

The company has excellent process

R&D skills which are considered to be

one of the best in the country

The Company has excellent distribution

network

Weaknesses:

It is not present in CRAMS and Bio

Pharmaceutical segment which are the

best projected segment in the industry

Opportunities:

Lifestyle diseases, Rising Life

Expectancy, Rising Disposable Income

and innovation are major drivers of

pharmaceutical industry. With

increased shift in this segment,

domestic market is set to grow. This is

an opportunity for company like Cipla

which is already a leader in domestic

market

Threats:

China's recent move to cut

incentives on exports may add

to the cost of imports. These

factors will impact the

Company's overall margins. An

alternative resource for import

of raw material is not so

feasible. If stringent action is

taken by Chinese government

then it can hurt margins of the

company

Recent acquisitions attempt of

its subsidiary Cipla Medpro by

Adcock-Ingram. This

subsidiary accounts for 8% of

companies export

27

GLENMARK PHARMACEUTICALS

Glenmark Pharmaceuticals Started as an Family Business in 1977 with focus on marketing

and manufacturing of formulations. In 2008 the company was divided into two units

Glenmark Pharmaceuticals Ltd. (GPL) and Glenmark Generics Ltd (GGL) to keep sharp

focus on both the segments. Since 2000 company has been into Research of NCE, NBE and

drug discovery system and has grown among best in India.


EXHIBIT 28

INVESTMENT RATIONALE:

Innovation, research and aggressiveness are the words that better describe Glenmark.

It has been reorganized into GPL and GGL. This will help in keep sharp focus on both

the sectors.

Company’s sound strategy of developing molecules and out licensing next phase

leads to lowering of the involved risk in research and also an inflow of revenue due to

milestones payments and royalties.

Company has growth with a CAGR of 39% over past four years. It started its NCE

research in 2000 and now is the best in it in India.

Company’s majority revenue in specialty segment is generated domestically along

with emerging economies while in generics it’s US from which major revenues are

generated. Specialty and Generics contribute 60:40 to overall revenues.

GROUP PERCENTAGE

PROMOTER 52.09

FII 28.24

DII 3.36

PUBLIC 14.93

OTHERS 1.38

28

In near term company had a bad relationship with investors due to non-transparency

of its guidance for FY’09 and no guidance for FY’10. Coupled with few bad news for

its NCE and hence its stock has been underperforming market in short term.

KEY RISKS

Bad global and economic conditions could hurt its revenue since lesser companies

would in position to in- license NCE, also due to it margins may decline.

Any negative news on NCE, like recent hiccups with research partners could hurt its

potential in pipeline.

Rupee appreciation can lead to significant MTM losses if sound hedging policy id not

adapted.

Its aggressive efforts to build front end markets through acquisitions could hurt him if

not executed properly.

ECONOMIC ACTIVITIES


Specialty

Generics

NCE Research and collaboration


Lupin

Torrent Pharma

Dr. Reddy’s Lab

RECENT DEVELOPMENTS

April 2009: Company has announced that the results of fourth quarter along with

results of FY’09 will be published in June.

April 2008: company has said this FY they will be less aggressive and hence less

CAPEX will be done along with focus to attain operational efficiency.

29

Dec 2008: GRC8200 molecule under research with Merck, Germany was halted. This

was second blow to R&D after GRC6211 molecule's research with Eli Lilly was

stopped in advanced stage.

FINANCIAL ANALYSIS

EXHIBIT 29

For fiscal year ending FY08 company’s sales stood at Rs 2009.2 cr, an 60% increase

YoY and its net profit at Rs 632.1 cr, an increase of 100% YoY.

Over the years Company have been constantly increasing EBIT Margin, thus

improving upon its operational efficiency.

Company has posted phenomenal sales and EPS growth every year over the last 3-4

years.

The profitability ratios of the company have been increasing year on year due to huge

revenues from high margin business such as specialty.

The Debt-Equity ratio of company has been getting better and better and is impressive

compared to industry average and keeping in light the amount of money it invests into

its R&D activities.

Despite low D/E company has below industry average current ratio due to heavy

locked in amount in perusing R&D.

The value benchmark method leads to a stock price valuation of stock at Rs 211, while

current stock price is Rs. 225. The stock is over valued so we feel that the investor should

hold for sometime before investing in the stock.


Key Ratios 2005 2006 2007 2008

Sales (in Crore) 538.13 620.83 838.76 1408.71


EBIT Margin 19.50% 17.20% 27.22% 36.17%

EBITDA Margin 22.28% 20.01% 30.01% 38.26%


ROCE 12.80% 8.34% 13.26% 32.65%

Sales Growth (YOY) 41.09% 15.37% 35.10% 67.95%

EPS Growth (YOY) -24.65% 75.00% 80.33% 46.75%

Retention Ratio 83.83% 83.55% 91.13% 94.81%

OCF* Growth -61.30% -414.83% -63.38% -2475.93%

Debt Equity 1.52% 2.28% 2.02% 52.00%


Current Ratio 4.24% 1.82% 1.18% 1.83%

30

SWOT ANALYSIS

EXHIBIT 30

Strengths

Combination of good presence in high

margins and high volume businesses.

Three quarters of revenue being

generated from India and US which has

immense potential going further in

respective sectors of specialty and

generics. Also its ROW presence is

growing impressively.

Tremendous growth in all the sectors of

its presence in last 3-4 years (in FY’08

generics had growth of 108%).

Strong portfolio of molecules in pipeline

whose future seems promising taking

past performance of company in view

Weaknesses

Inability of it’s to maintain

sound relationship with

partners in research especially

in molecules in phase-III.

Inability to keep good

relationship and trust with its

investors due to poor

transparency policy.

Comparatively low presence in

emerging markets, except

India, compared to its peers

could be a competitive

disadvantage in poor economic

conditions.

Opportunities

Need of big global firms for new

potential new drugs for getting their

share of higher margins – potential

customers of its NCE.

Rising healthcare expenditure and rising

income levels will stimulate demand of

branded formulations in emerging

economies.

Threats

Growing competition and pricing pressure in

generics could put pressure on its margins.

Failure of its molecules in pipeline will put

immense pressure on its earning since

revenues from R&D achievement contribute

about 25% to GPL.

31

GLAXO SMITHKLINE PHARMA

In 1924 the company was formed under name of H.J.Foster & co as an fully owned

subsidiary of above named company of UK which was in 1950 renamed to present name,

GlaxoSmithKline is the largest Pharma MNC subsidiary in India which is the largest vaccines

player in India and among top5 domestic player having more than 90% of revenue being

generated domestically.


EXHIBIT 31

INVESTMENT RATIONALE

Having reputed itself as the safest company in sector to bet upon GlaxoSmithKline is

the biggest MNC operating in India having strong presence in Branded Formulations

and Generic Formulations.

Company generates more than 90% of its revenues from domestic operations with

very few percent from exports to small nations and few percent from fine chemicals

business which have been now sold off.

Company holds leadership position in many segments in which it operates

domestically such as Dermatology, anti-parasitic, vitamins and minerals.

It is one of the biggest vaccines players in Indian market with Vaccines for Hepatitis-

A, Hepatitis-B, Influenza, Chickenpox etc. In near future it plans to come with

vaccines for cervical cancer for which clinical trials are over.

GROUP PERCENTAGE

PROMOTER 50.67

FII 14.77

DII 17.41

PUBLIC 16.81

OTHERS 0.34

32

It has maintained its decent growth momentum by way of new product launches

regularly. It wants to focus on specialty, CVS, CNS, oncology, Neuropsychiatry and

Diabetology in near term since they have huge margins and fast growth.

On RnD front anti-infective, cardiovascular segments are focus along with try to

develop an anti counterfeit process for coating.

KEY RISKS

Procuring API from china for some of its products could still be an issue with

company as was in last FY.

Continuity of poor contribution from Biddle Sawyer, it subsidiary could increase its

top-line while depleting bottom-line.

Price Control and unfavorable legislation in domestic market could hamper

company’s growth and potential in drastic way

Low R&D Expenditure could hurt company in coming years

ECONOMIC ACTIVITIES


Generic Formulations

Branded Formulations

Vaccines


Lupin Labs

Pfizer

IPCA Labs

RECENT DEVELOPMENTS

Aug 09: Glaxo SmithKline Pharmaceutical announced the launch of its patented

medicine promecta, used in treatment of depleted platelet count by the end of fourth

quarter this year.

Apr 09: Glenmark’s molecule for neuropathic pain, osteoarthritis - GRC 10693,

successfully completes Phase I trials

33

Feb 09: Glenmark receives approval from the U.S. FDA for Lithium Carbonate

Capsules

Dec 08: SCRIP, the leading pharmaceutical magazine in the world Crowns Glenmark

as the "Best Pharma Company in the World - SME" and the "Best Company in

Emerging Markets" at the SCRIP Awards 2008 in London

FINANCIAL ANALYSIS

EXHIBIT 32

EPS growth posted by company is in tune with industry average which is a bit

depressing after having such a high margins, the attributable reason being a lower

sales growth YoY.

Company falls on lower side when it comes to Retention Ratio and hence shows a

reason for its slow growth in sales and its CAPEX needs are lower attributable from

lower retention ratio since debt for company is almost nil.

Over the considered years company has constantly maintained EBIT Margins and Net

Profit Margins at a level which is among the best in industry. The impressive thing

being maintaining these figures despite such a huge turnover and regularly depressing

margins.

Having established itself as the safest company to invest, it still maintains an ROCE

an level which is much higher than industry average and better than most of its peers

in segments in which it operates

Asset Turnover Ratio of Company is very impressive and this is why the CAPEX

needs for company is very low and hence lower retention ratio. There has been


Key Ratios 2005 2006 2007 2008

Sales (in Crore) 1490.89 1593.86 1710.82 1761.39


EBIT Margin 32.68% 42.29% 43.28% 42.48%

EBITDA Margin 33.85% 43.28% 44.20% 43.40%


ROCE 29.45% 31.05% 32.85% 28.83%

Sales Growth (YOY) 23.26% 6.91% 7.34% 2.96%

EPS Growth (YOY) 24.77% 18.67% 18.09% 9.70%

Retention Ratio 28.86% 46.13% 45.11% 33.64%

OCF* Growth 29.68% 52.46% -31.43% 24.35%

Debt Equity 0.00% 0.01% 0.00% 0.00%


Current Ratio 1.01% 0.94% 0.96% 0.96%

34

marginal drop in the figures over the years but at present this drop doesn't hold much

significance.

By the Value Benchmark method the price calculated is coming out to be Rs. 1491

while the current market price is around Rs. 1454. Thus we can conclude that the stock’s

intrinsic value is higher and it’s undervalued and investors should invest in this stock.

35

SWOT ANALYSIS

EXHIBIT 33

STRENGTHS

Leadership position in many high volume

high margin segments (branded and

generics) in domestic markets.

More than 90% of company’s revenue

being generated domestically which is

outperforming sectors growth globally and

is going to do so for coming years.

Strong portfolio of vaccines and still

growing which have their evergreen growth

in terms of revenue.

Very impressive figures in most cases when

it comes to financial outlook, one of the

best in industry.

Strong cash position, No leverage risk and

hence an assured investor and so a low

return demand.

WEAKNESSES

Issues with procurement of API highlights

optimization issues in supply chain.

A slow sales growth of 3%-4% despite

domestic industry growth of around 12%

and the major sectors in which it operates

growing more than domestic industry

average.

Low R&D expenditure, to the tune of

.74% of revenue could mean lost

opportunity for new product launches and

non utilization of its domestic market

position in optimal manner.

OPPORTUNITIES

Its foray into CNS, CVS, Oncology, and

Diabetology in domestic market can turn

out to be a boon for company since they are

fast growing segment with some of them

having growth of 30%.

Global arms likely decision to make this

subsidiary a manufacturing hub for its

products could mean more revenue for

firm.

Its recent acquisition outlook in generic

space could lead it to achieve inorganic

growth in near term.

THREATS

Price controls and non-favorable

regulations could hurt company's fortunes

badly.

Continued issues with its supply chain

could hurt its operational efficiency and

hence margins.

In its pursuit for achieving inorganic

growth in few segments of its operation

e.g. Generics if not executed properly

could mean issues with management and

could question future sustainability and

profitability for company keeping in mind

its lower sales growth.

36

REFERENCES

E & Y Pharmaceutical Industry Report 2008

Newspaper Articles

Annual Report of Companies

www.moneycontrol.com

http://www.moneycontrol.com/

37

APPENDIX

CIPLA LTD

ESTIMATED B/L SHEET

Particulars Mar 2009 Mar 2010

No of Months 12 12

Gross Sales 50216.4

Less :Inter divisional transfers 0

Less: Sales Returns 0

Less: Excise 610.40

Net Sales 49606

Other Income 3661.7

Total Income 53267.7 64185.14

EXPENDITURE :

Increase/Decrease in Stock -1135.50

Raw Materials Consumed 24609.50

Power & Fuel Cost 917.10

Employee Cost 2428.60

Other Manufacturing Expenses 5998.40

General and Administration Expenses 2453.60

Selling and Distribution Expenses 3755.90

Miscellaneous Expenses 3186.80

Less: Pre-operative Expenses Capitalised 0

Total Expenditure 42214.4 53230.0

Operating Profit 11053.30 10955.1

Interest 522.3 1129.9

PBDT 10531.00 12085.0

Depreciation 1517.9 1839.4

Profit Before Taxation & Exceptional Items 9013.10 10245.7

Exceptional Income / Expenses 0 0

Profit Before Tax 9013.10 10245.7

Provision for Tax 1245 1174.27

Profits After Tax 7768.1 9071.4

Appropriations 12867.10

Equity Dividend % 100.00

Earnings Per Share 9.99

Book Value 55.86

38

PRICE ESTIMATION

Particulars Mar 2009 Mar 2008 Mar 2007 CAGR

No of Months 12 12 12

Gross Sales 50216.4 40885.6 35331.7

Less :Inter divisional transfers 0 0 0

Less: Sales Returns 0 0 0

Less: Excise 610.40 906.60 949.30

Net Sales 49606 39979 34382.4

Other Income 3661.7 3403.1 2305.5

Total Income 53267.7 43382.1 36687.9 0.20

EXPENDITURE :

Increase/Decrease in Stock -1135.50 -413.70 307.30

Raw Materials Consumed 24609.50 21013.30 16948.50

Power & Fuel Cost 917.10 969.00 867.10

Employee Cost 2428.60 2279.10 1620.50

Other Manufacturing Expenses 5998.40 3568.00 2998.70

General and Administration Expenses 2453.60 2430.50 1750.00

Selling and Distribution Expenses 3755.90 2846.30 2260.80

Miscellaneous Expenses 3186.80 818.70 709.90

Less: Pre-operative Expenses Capitalised 0 0 0

Total Expenditure 42214.4 33511.2 27462.8 0.83

Operating Profit 11053.30 9870.90 9225.10

Interest 522.3 180.5 111.6 1.16

PBDT 10531.00 9690.40 9113.50

Depreciation 1517.9 1306.8 1033.7 0.21

Profit Before Taxation & Exceptional Items 9013.10 8383.60 8079.80

Exceptional Income / Expenses 0 0 0

Profit Before Tax 9013.10 8383.60 8079.80

Provision for Tax 1245 1369.3 1399.5 -0.06

Profits After Tax 7768.1 7014.3 6680.3

Appropriations 12867.10 10917.80 9722.30

Equity Dividend % 100.00 100.00 100.00

Earnings Per Share 9.99 9.02 8.59

Book Value 55.86 48.20 41.52

Earning Per Share (Rs) 9.99 9.02 8.59

Equity Dividend (%) 100 100 100

Book Value (Rs) 55.86 48.2 41.52

Dividend Payout Ratio 20.2 22.2 23.3 -0.07

Average Dividend Payout

18.81

Net Profit Margin 0.16 0.18 0.19 Asset Turnover 0.95 0.94 1.05

39

Leverge 1.22 1.15 1.04 Return on Equity (%) 18.07 19.10 21.21 Book Value Per Share 56.00 48.00 41.52 Earnings Per Share 9.99 9.02 8.59

Dividend Payout Ratio 0.2 0.22 0.23 Dividend Per Share 2 2 2 CAGR (Sales) % 0.40

CAGR (EPS) % 0.16 CAGR (DPS) % 0.00 Average Retention Rate 0.78 Average Return on Equity 19.46 Sustainable Growth Rate 15.25 Beta (Historical Data Estimate) 0.8 Price (Beginning) 220 236 258

Price (Ending) 219.75 219.75 235.7 P/E (Prospective) 22.02 26.16 30.03 P/BV (Retrospective) 0.01 0.01 0.01 Estimated EPS (As per

calculations) 12.25

Market Return (Data Compiled) % 22 Average of past 3 years

Risk Free Rate 8 Cost of Equity 19.2 Growth Rate of Dividends 0 P/E 24.00 Price 294.094445

40

GLENMARK PHARMACEUTICALS

ESTIMATED B/L SHEET

Particulars 2008 2009

No of Months 12 12

Income Sales Turnover 1413.32

Excise Duty 33.49 Net Sales 1379.83 Other Income 1.4 Stock Adjustments 30.2 Total Income 1411.43 2204.867

Expenditure Raw Materials 467.47

Power & Fuel Cost 17.02 Employee Cost 108.91 Other Manufacturing

Expenses 20.52 Selling and Admin Expenses 252.8 Miscellaneous Expenses 40.44 Preoperative Exp Capitalised 0 Total Expenses 907.16 1664.388


Interest 43.64 69.01276

PBDT 460.63 609.4918


Other Written Off 0 Profit Before Tax 431.19 571.2854

Extra-ordinary items 0 PBT (Post Extra-ord Items) 431.19 571.2854

Tax 42.16 64.52301

Reported Net Profit 389.02 506.7624

Total Value Addition 439.68 Preference Dividend 0 Equity Dividend 17.15 Corporate Dividend Tax 2.92 Per share data (annualised)

Shares in issue (lakhs) 2487.26 Earning Per Share (Rs) 15.64

Equity Dividend (%) 70 Book Value (Rs) 41.34

41

PRICE ESTIMATION

Particulars Mar '06 Mar '07 Mar '08 CAGR


Income Sales Turnover 620.83 838.75 1413.32

Excise Duty 55.5 28.96 33.49 Net Sales 565.33 809.79 1379.83 Other Income 14.38 18.24 1.4 Stock Adjustments -1.33 50.8 30.2 Total Income 578.38 878.83 1411.43 0.56

Expenditure Raw Materials 200.45 309.56 467.47

Power & Fuel Cost 8.66 15.17 17.02 Employee Cost 60.11 78.21 108.91 Other Manufacturing Expenses 18.26 16.86 20.52 Selling and Admin Expenses 147.61 187.58 252.8 Miscellaneous Expenses 23.07 37.81 40.44 Preoperative Exp Capitalised 0 0 0 Total Expenses 458.16 645.19 907.16 0.75

Operating Profit 105.84 215.4 502.87 PBDIT 120.22 233.64 504.27 Interest 17.45 39.36 43.64 0.58

PBDT 102.77 194.28 460.63 Depreciation 17.48 23.46 29.44 0.30

Other Written Off 0 0 0 Profit Before Tax 85.29 170.82 431.19 Extra-ordinary items 0 -2.04 0 PBT (Post Extra-ord Items) 85.29 168.78 431.19 Tax 18 33.97 42.16 0.53

Reported Net Profit 67.3 134.8 389.02 Total Value Addition 257.7 335.63 439.68 Preference Dividend 1.4 0.69 0 Equity Dividend 8.31 9.58 17.15 Corporate Dividend Tax 1.36 1.44 2.92 Per share data (annualised)

Shares in issue (lakhs) 1187.21 1200.58 2487.26 Earning Per Share (Rs) 5.55 11.17 15.64 Equity Dividend (%) 35 40 70 Book Value (Rs) 25.16 37.5 41.34

Total Assets 1046.79 1357.66 1552.79 Equity 318.75 450.16 1028.25

Net Profit Margin 0.11 0.16 0.28

42

Asset Turnover 0.59 0.62 0.91 Leverge 3.28 3.02 1.51 Return on Equity (%) 0.21 0.30 0.38 Book Value Per Share 25.16 37.5 41.34 Earnings Per Share 5.55 11.17 15.64 Dividend Payout Ratio 0.12 0.07 0.04 Average Dividend Payout

7.95

Dividend Per Share 0.70 0.80 0.70 Retention Rate 0.88 0.93 0.96 Sustainable Growth Rate 0.19 0.28 0.36 CAGR (Sales) % 0.51

CAGR (EPS) % 0.68 CAGR (DIVIDENDS) 0 Average Retention Rate 0.08 Average Return on Equity 0.30 Sustainable Growth Rate

Beta (Historical Data Estimate) 0.8 Price (Beginning) on NSE 148.7 157.53 305.63

Price (Ending) on NSE 161.75 307.48 489 Price (Average) 155.23 232.51 397.32 P/E (Prospective) 27.97 20.82 25.40 P/BV (Retrospective) 6.17 6.20 9.61 Estimated EPS (As per calculations) 10.72

Market Return (Data Compiled) % 16.50 Risk Free Rate 8.00 Cost of Equity 14.8 Growth Rate of Dividends 0.00 P/E 19.75 Price 211.807854

43

GLAXO SMITHKLINE PHARMA

ESTIMATED B/L SHEET

Particulars Dec 2008 Dec-09

No of Months 12

Gross Sales 17014.72

Less :Inter divisional transfers 0

Less: Sales Returns 0

Less: Excise 1586.94

Net Sales 15427.79

Other Income 954.8

Total Income 16382.59 19434.605

EXPENDITURE : Increase/Decrease in Stock -460.49

Raw Materials Consumed 4706.85

Power & Fuel Cost 442.42

Employee Cost 1664.53

Other Manufacturing Expenses 3848.06

General and Administration Expenses 835.90

Selling and Distribution Expenses 1942.95

Miscellaneous Expenses 72.35

Less: Pre-operative Expenses Capitalised 0

Total Expenditure 13052.57 16224.135


Interest 69.66 97.83

PBDT 3260.36 3308.30


Profit Before Taxation & Exceptional Items 2840.86 2892.54

Exceptional Income / Expenses 0

Profit Before Tax 2840.86 2892.54

Provision for Tax 957.54 1174.6206

Profits After Tax 1883.32 1717.92

Appropriations 1883.32

Equity Dividend % 150.00

Equity Dividend 209.57

Earnings Per Share 44.78

Book Value 180.92

Shares in issue (lakhs) 873.23

44

PRICE ESTIMATION

Particulars Dec 2008 Dec 2007 Dec 2006 CAGR


Gross Sales 17014.72 13955.05 12142.53

Less :Inter divisional transfers 0 0 0

Less: Sales Returns 0 0 0

Less: Excise 1586.94 1176.77 1023.17

Net Sales 15427.79 12778.28 11119.36

Other Income 954.8 688.6 521.8

Total Income 16382.59 13466.88 11641.16 0.19

EXPENDITURE : Increase/Decrease in Stock -460.49 -229.31 -24.21

Raw Materials Consumed 4706.85 3476.56 2750.54

Power & Fuel Cost 442.42 304.37 299.30

Employee Cost 1664.53 1499.90 1286.39

Other Manufacturing Expenses 3848.06 3114.42 1673.89

General and Administration Expenses 835.90 682.09 1785.01

Selling and Distribution Expenses 1942.95 1647.26 1480.94

Miscellaneous Expenses 72.35 39.34 21.24

Less: Pre-operative Expenses Capitalised 0 0 0

Total Expenditure 13052.57 10534.63 9273.1 0.83

Operating Profit 3330.02 2932.25 2368.06

Interest 69.66 46.11 35.32 0.40

PBDT 3260.36 2886.14 2332.74

Depreciation 419.5 434.94 427.09 -0.01

Profit Before Taxation & Exceptional Items 2840.86 2451.20 1905.65

Exceptional Income / Expenses 0 0 0

Profit Before Tax 2840.86 2451.20 1905.65

Provision for Tax 957.54 824.45 636.32 0.23

Profits After Tax 1883.32 1626.75 1269.33

Appropriations 1883.32 1626.75 1269.33

Equity Dividend % 150.00 120.00 100.00

Equity Dividend 209.57 237.17 262.58

Earnings Per Share 44.78 38.68 30.18

Book Value 180.92 153.69 129.05

Shares in issue (lakhs) 873.23 847.03 847.03

Total Assets 7608.79 6463.5 5427.19 Shareholder's Funds 7608.79 6463.5 5427.19

Net Profit Margin 0.12 0.13 0.11 Asset Turnover 2.24 2.16 2.24 Leverge 1 1 1

45

Return on Equity (%) 0.27 0.27 0.26 Book Value Per Share 20.72 18.14 15.24 Earnings Per Share 215.67 192.05 149.86 Dividend Payout Ratio 0.11 0.15 0.21 Average Dividend payout

1.55

Dividend 15.00 12.00 7.00 Retention Ratio 0.85

CAGR (Sales) % 1.78 CAGR (EPS) % 0.76 CAGR (DPS) % 4.64 Average Retention Rate 0.85 Average Return on Equity 0.27 Sustainable Growth Rate 0.23 Beta (Historical Data Estimate) 1.19 Price (Beginning) 1135.35 1162.95 1121.75

Price (Ending) 1150 1130 1168.9 Price (Average) 1142.675 1146.475 1145.325 P/E (Prospective) 5.30 5.97 7.64 P/BV (Retrospective) 55.15 63.19 75.17 Estimated EPS (As per

calculations) 83.36 Market Return (Data Compiled) % 16.50 Risk Free Rate 8.00 Cost of Equity 18.12 Growth Rate of Dividends 46.39 P/E 17.89 Price 1491.39

sapm final

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