biocon (biocon) | 357 - icici directcontent.icicidirect.com/mailimages/idirect_biocon_q2fy18.pdf ·...

October 27, 2017

ICICI Securities Ltd | Retail Equity Research

Result Update

Subdued numbers undone by biopharma…

Biocon reported flat YoY revenues at | 969 crore (I-direct estimate:

| 982 crore). Biopharmaceutical segment declined 13% YoY to | 350

crore (I-direct estimate: | 399 crore) while biologics segment

remained flat YoY at | 156 crore (I-direct estimate: | 154 crore)

EBITDA margins contracted 633 bps YoY to 18.8% (I-direct estimate:

20.7%) mainly due to lower gross margin performance (61% in

Q2FY18 vs. 62.9% in Q2FY17) and higher employee cost

Net profit declined 53% YoY to | 69 crore (I-direct estimate: | 81

crore) on account of a lower-than-expected operational performance,

higher depreciation and taxation

Small molecules segment likely to get boost from ANDA launches

Small molecules segment accounts for ~41% of FY17 turnover,

comprises APIs like statins, immunosuppressants, specialty APIs & also

includes generic formulations business. This vertical is seeing pricing

pressure in some products. 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 that include complex generics & injectables. We expect small

molecules segment to grow at 4% CAGR to | 1774 crore in FY17-20E.

Well poised to capitalise on global biosimilars opportunity

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

encompassing Rh-insulin, insulin analogs, monoclonal antibodies and

recombinant proteins. The company is mainly focusing on diabetology,

oncology and immunology. The company has invested heavily in this

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

far, progress 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 ~36% to | 1390 crore in FY17-20E.

Research services (Syngene) to maintain growth momentum

Biocon’s research arm Syngene contributes ~29% to its turnover.

Syngene is the contract research organisation (CRO) arm of Biocon with

proven capabilities. The company caters to 293 clients including eight out

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

growing at 20%+ rate 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.

Branded formulations growth space

The branded formulations business includes finished dosages business in

India and overseas including UAE. It constitutes 14% of FY17 turnover. It

comprises Indian domestic formulations. The company owns 80+ brands

encompassing therapies like diabetology, oncology, nephrology,

cardiology, immunotherapy, comprehensive care and bio-products.

Regulatory compliance to remain overhang in near term

Q2 numbers reflected a resurgence in research services post fire incident

in Q3FY17 and also recovery in branded business post GST turbulence.

On the flip side, small molecules segment continues to see structural

pricing pressure in the US. However, progress on the biologics regulatory

front will be the major near term catalyst. Uncertainty on that front

together with delay in launches for want of faster approval in emerging

markets is likely to act as near term overhang. We continue to value the

stock on SOTP basis. Accordingly, our target price is | 380/share.

Rating matrix

Rating : Hold

Target : | 380

Target Period : 12 months

Potential Upside : 6%

What’s Changed?

Target Unchanged

EPS FY18E Changed from | 7.6 to | 8.2

EPS FY19E Changed from | 13.6 to | 11.7

EPS FY20E Introduced at | 15.9

Rating Unchanged

Quarterly Performance

Q2FY18 Q2FY17 YoY (%) Q1FY18 QoQ (%)

Revenue 968.6 954.1 1.5 933.7 3.7

EBITDA 182.3 240.0 -24.0 192.1 -5.1

EBITDA (%) 18.8 25.2 -633 bps 20.6 -175 bps

Net Profit 68.8 146.7 -53.1 81.3 -15.4

Key Financials

(| Crore) FY17 FY18E FY19E FY20E

Revenues 3921.6 4191.2 5006.4 5998.2

EBITDA 851.2 960.3 1284.2 1596.0

Adj. Net Profit 508.7 489.2 701.2 954.7

Adj. EPS (|) 8.5 8.2 11.7 15.9

Valuation summary

FY17 FY18E FY19E FY20E

PE(x) 35.0 43.8 30.6 22.5

EV to EBITDA (x) 10.5 9.4 12.2 14.7

Price to book (x) 9.6 10.3 14.1 17.9

RoNW (%) 25.0 22.1 16.4 13.0

RoCE (%) 9.6 10.3 14.1 17.9

Stock data

Particular

Market Capitalisation

Debt (FY17)

Cash (FY17)

EV

52 week H/L 439/268

Equity capital (|Crore)

Face value (|) | 5

| 300 crore

| 22602 crore

Amount

| 21441 crore

| 2205 crore

| 1044 crore

Price performance (%)

1M 3M 6M 1Y

Biocon -1.3 0.2 -7.2 11.6

Glenmark -5.2 -6.2 -33.6 -32.9

Torrent Pharma -0.8 -1.7 -10.1 -24.8

Aurobindo Pharma 6.5 18.1 12.4 -2.4

Research Analyst

Siddhant Khandekar

[email protected]

Mitesh Shah

[email protected]

Harshal Mehta

[email protected]

Biocon (Biocon) | 357


Variance analysis

Q2FY18 Q2FY18E Q2FY17 Q1FY18 YoY (%) QoQ (%) Comments

Revenue 968.6 982.2 954.1 933.7 1.5 3.7 In line with I-direct estimates. Branded formulations and research services

business performed better than estimates but weak small molecules performance

and production disruption in the biologics divison offset the gain

Raw Material cost 377.6 383.1 353.8 365.8 6.7 3.2

Employee cost 225.5 216.1 180.4 213.3 25.0 5.7 Increased mainly due to commissioning of Malaysian facility

R & D Expenditure 53.9 66.8 65.0 58.2 -17.1 -7.4

Other Expenditures 129.3 113.0 114.9 104.3 12.5 24.0 Includes | 6-7 crore of Syngene's other expenses, higher remediation cost due to

CAPA implementation and additional expenses due to commissioning of

Malaysian facility

Total Expenditure 786.3 778.9 714.1 741.6 10.1 6.0

EBITDA 182.3 203.3 240.0 192.1 -24.0 -5.1

EBITDA (%) 18.8 20.7 25.2 20.6 -633 bps -175 bps YoY contraction and miss vis-à-vis I-direct estimates was led by higher raw

material and employee expenditure

Interest 13.8 16.1 6.5 16.1 112.3 -14.3

Depreciation 93.6 98.8 68.3 98.8 37.0 -5.3 Increased YoY mainly due to commissioning of Malaysian facility

Other income 50.8 38.8 38.4 54.0 32.3 -5.9 Includes | 18 crore of forex gain to Syngene

EO 0.0 0.0 0.0 0.0 0.0 0.0

PBT 125.7 127.3 203.6 131.2 -38.3 -4.2

Tax 42.5 28.0 41.7 37.6 1.9 13.0

MI 20.3 18.6 19.8 16.4 2.5 23.8

PAT 68.8 80.7 146.7 81.3 -53.1 -15.4 YoY decline and miss vis-à-vis I-direct estimates mainly due to muted operational

performance and higher tax rate (33.8% in Q2FY18 vs 20.5% in Q2FY17)

Key Metrics

Biopharmaceuticals 349.5 369.6 403.4 355.2 -13.4 -1.6 Miss vis-à-vis I-direct estimates was mainly on the back of lower offtake of certain

products as a result of pricing pressure in the US generics space

Biologics 155.7 153.6 155.5 183.9 0.1 -15.3

Branded Formulations 175.9 137.0 136.6 130.4 28.8 34.9 YoY growth and beat vis-à-vis I-direct estimates mainly due to domestic channel

restocking post GST related disruption and strong UAE revenue growth

Contract Research 335.2 303.2 303.0 291.1 10.6 15.1 YoY growth and beat vis-à-vis I-direct estimates due to strong performance by

dedicated R&D centre and development & manufacturing segment

Licensing income 1.0 7.7 32.0 7.7 -96.9 -87.0

Source: Company, ICICIdirect.com Research

Change in estimates

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

Revenues 4,205.6 4,191.2 -0.3 5,373.9 5,006.4 -6.8 FY19E revenues negatively impacted mainly due to revised biologics revenue growth

EBITDA 957.7 960.3 0.3 1,423.0 1,284.2 -9.8

EBITDA Margin (%) 22.8 22.9 14 bps 26.5 25.7 -83 bps FY19E EBITDA margins impacted mainly due to revised biologics revenue growth

Net Profit 458.3 489.2 6.8 815.9 701.2 -14.1

EPS (|) 7.6 8.2 6.8 13.6 11.7 -14.1

FY18E FY19E


Assumptions

Current

Growth (%) FY16 FY17 FY18E FY19E FY18E FY19E Comments

Biopharmaceuticals 1,729.0 2,153.7 2,182.8 2,569.3 2,236.6 2,943.5 Changed mainly due to lower biologics revenue growth expectation

Branded Formulations 440.0 548.6 598.4 707.7 559.5 676.7

Contract Research 1,060.0 1,166.5 1,294.6 1,553.5 1,286.1 1,572.4

Licensing income 108.0 144.2 68.7 120.0 75.4 120.0

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.

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 15.2% in FY17-20E

2485.3

2877.33089.8

3381.0

3921.64191.2

5006.4

5998.2

0.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0

7000.0

FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E

(| c

rore

)

Revenues



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 4% CAGR to | 1774 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

(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). 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 ~36% to

| 1390 crore in FY17-20E.

Exhibit 4: Recent progress on biosimilar front

Date Event

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

2153.7 2182.8

2569.3

3164.2

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

68.7

120.0 120.0

0

20

40

60

80

100

120

140

160


(| c

rore

)

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

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).

9.4% CAGR

13.7% CAGR


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

347.9

391.4430.0 440.0

548.6

598.4

707.7

813.9

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

20%+ rate. It 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.

Research services revenues (FY17)

Dedicated

R&D

services

(34%)

Discovery

services

(26%)

Development

& Mfg

services

(40%)

Exhibit 8: Contract research to grow at CAGR of 16% in FY17-20E

558.0

714.7

822.0

1060.0

1166.5

1294.6

1553.5

1833.1

0

200

400

600

800

1000

1200

1400

1600

1800

2000


(| crore)

Contract Research


12.1% CAGR

14.1% CAGR

20.2% CAGR

16.3% CAGR


Exhibit 9: Trends in overall R&D cost (ex-capitalised)

167.8

130.6

168.8

265.5 272.4261.2

327.9

395.4

6.8

4.5

5.5

7.9

6.9

6.2 6.5

6.6

3.0

4.5

6.0

7.5

9.0

0

100

200

300

400


(%

)

(| crore)

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


Exhibit 10: Trends in EBITDA margins

543.0

687.1 695.8635.8

851.2

960.3

1284.2

1596.0

21.8

23.9

22.5

18.8

21.7

22.9 25.7

26.6

18

20

22

24

26

28

0

400

800

1200

1600


(%

)

(| crore)

EBITDA EBITDA Margins (%)


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

508.9

413.8

497.4550.4

612.1

489.2

701.2

954.7

20.5

14.4

16.1 16.3

15.6

11.7

14.0

15.9

4

6

8

10

12

14

16

18

20

22

0

200

400

600

800

1000

1200


(%

)

(| crore)

Net Profit Net Profit Margins (%)



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

11.9

11.710.4

6.5

9.610.3

14.1

17.9

12.6

13.7

12.5

7.8

10.5

9.4

12.2

14.7

4

6

8

10

12

14

16

6

10

14

18

22


(%

)

(%

)RoCE (RHS) RoNW (LHS)


SWOT Analysis

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

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

of molecules and tougher trials requirement. Four dedicated centres cater

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 and (iii) increased scrutiny by

USFDA and other regulators worldwide.


Exhibit 13: Trends in quarterly performance

(| Crore) Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 YoY (%) QoQ(%)

Revenues 757.6 769.1 837.3 813.9 796.2 807.1 945.0 992.0 954.1 1044.4 931.1 933.7 968.6 1.5 3.7

Raw Material Cost 309.8 317.6 337.5 293.9 326.3 303.1 322.6 400.2 353.8 374.7 348.4 365.8 377.6 6.7 3.2

% to revenues 40.9 41.3 40.3 36.1 41.0 37.6 34.1 40.3 37.1 35.9 37.4 39.2 39.0

Gross Profit 447.8 451.5 499.8 520.0 469.9 504.0 622.4 591.8 600.3 669.7 582.7 567.9 591.0 -1.5 4.1

Gross Profit Margin (%) 59.1 58.7 59.7 63.9 59.0 62.4 65.9 59.7 62.9 64.1 62.6 60.8 61.0 -190 bps 19 bps

Employee cost 135.4 136.0 136.6 148.3 143.1 152.2 166.5 178.5 180.4 194.2 193.9 213.3 225.5 25.0 5.7

% to revenues 17.9 17.7 16.3 18.2 18.0 18.9 17.6 18.0 18.9 18.6 20.8 22.8 23.3 437 bps 44 bps

R & D 35.0 46.9 56.0 50.0 57.4 67.9 100.0 51.4 65.0 85.0 65.0 58.2 53.9

% to revenues 4.6 6.1 6.7 6.1 7.2 8.4 10.6 5.2 6.8 8.1 7.0 6.2 5.6 -125 bps -67 bps

Other Expenditure 104.3 108.7 122.4 113.4 100.3 99.1 159.0 98.8 114.9 114.4 136.3 104.3 129.3 12.5 24.0

% to revenues 13.8 14.1 14.6 13.9 12.6 12.3 16.8 10.0 12.0 11.0 14.6 11.2 13.3 131 bps 218 bps

Total Expenditure 584.5 609.2 652.5 605.6 627.1 622.3 748.1 728.9 714.1 768.3 743.6 741.6 786.3 10.1 6.0

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

EBIDTA 173.1 160.0 184.9 208.3 169.1 184.8 196.9 263.1 240.0 276.1 187.5 192.1 182.3 -24.0 -5.1

EBITDA Margin (%) 22.9 20.8 22.1 25.6 21.2 22.9 20.8 26.5 25.2 26.4 20.1 20.6 18.8 -633 bps -175 bps

Depreciation 54.2 56.3 58.5 59.0 61.0 63.9 64.8 66.1 68.3 70.3 72.5 98.8 93.6 37.0 -5.3

Interest 5.0 4.8 0.0 4.4 2.9 1.5 16.6 5.7 6.5 8.8 5.0 16.1 13.8 112.3 -14.3

OI 15.0 9.8 16.8 19.9 22.7 21.6 21.4 40.9 38.4 47.5 43.2 54.0 50.8 32.3 -5.9

PBT 128.9 108.6 143.2 164.8 127.9 141.0 136.9 232.2 203.6 244.5 153.2 131.2 125.7 -38.3 -4.2

Tax 21.8 11.2 21.9 37.6 28.2 21.8 59.1 55.2 41.7 54.4 10.3 37.6 42.5 1.9 13.0

Tax Rate (%) 16.9 10.3 15.3 22.8 22.1 15.5 43.2 23.8 20.5 22.2 6.7 28.7 33.8

PAT 107.1 97.5 121.3 127.2 99.7 119.2 77.8 177.0 161.9 190.1 142.9 93.6 83.2 -48.6 -11.1

PAT Margin (%) 14.1 12.7 14.5 15.6 12.5 14.8 8.2 17.8 17.0 18.2 15.3 10.0 8.6

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

Net Profit before MI 107.1 97.5 216.4 127.2 -8.1 119.2 346.2 177.0 161.9 190.1 142.9 93.6 83.2 -48.6 -11.1

Add/(less) MI 5.0 6.6 15.3 7.1 12.5 17.7 21.1 15.8 19.8 19.5 20.9 16.4 20.3

Net Profit after MI 102.1 90.9 201.2 120.1 -20.6 101.5 325.1 161.2 142.1 170.6 122.0 77.2 62.9 -55.7 -18.5

Net Profit (excl.EI) 102.1 90.9 106.0 120.1 87.2 101.5 56.7 161.2 142.1 170.6 122.0 77.2 62.9 -55.7 -18.5



Conference call Highlights

Small molecules segment was negatively impacted by lower

offtake of certain products as a result of pricing pressure faced by

some of the clients

The company has launched generic Rosuvastatin Calcium tablets

in the US during the quarter and is witnessing increased pricing

pressure in the US

Biologics sales saw production disruption during the quarter due

to facility modifications to comply with EMA, USFDA regulations.

H2FY18 biologics performance is dependent on regulatory

approvals of key molecules and tender participation in emerging

markets (EMs)

The Bengaluru drug product facility will require EMA audit post

updating dossiers with modified facility data. However, USFDA is

not expected to revisit the facility post CAPA implementation

Biocon’s partner Mylan has made a regulatory submission for

Insulin Glargine under the 505 (b) (2) pathway with the USFDA

during the quarter. Separately, the company has also made new

regulatory submissions for Insulin Glargine in some emerging

markets during the quarter

The USFDA has further extended the target action date (TAD) for

the biosimilar Trastuzumab application to December 3, 2017 to

review some of the clarification information submitted to them as

a part of the application review process

USFDA has issued a complete response letter (CRL) for biosimilar

Pegfilgrastim jointly developed by Biocon and Mylan. The

application for Pegfilgrastim will be resubmitted after it has been

updated with data from ongoing facility requalification activities

The branded formulations business saw channel restocking post

GST related disruption and strong UAE growth during the quarter

and is expected to normalise, going ahead

The company also expects margins to improve in Q3FY18 due to

discontinuance of one-time costs related to remediation measures

undertaken by the company

Annual capex includes | 150 crore capitalised R&D and | 100

crore of maintenance capex. The $200 million will be invested in a

period of three to four years to construct an antibody

manufacturing facility in Bengaluru

The management expects FY19 to be crucial for higher biologics

sales subject to regulatory clearances & higher EM sales traction


Valuation

Q2 numbers reflected a resurgence in research services post fire incident

in Q3FY17 and also recovery in branded business post GST turbulence.

On the flip side, the small molecules segment continues to witness

structural pricing pressure in the US. However, progress on the biologics

regulatory front will be the major near term catalyst. Uncertainty on that

front together with delay in launches for want of faster approval in

emerging markets is likely to act as near term overhang. We continue to

value the stock on an SOTP basis. Accordingly, we arrive at a target price

is | 380 per share.

Exhibit 14: Valuation

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

Biocon (ex Syngene) 10.1 24.0 241.8

Syngene

Targeted Market Cap 11600

Biocon's Holding 74.5%

Holding Company Discount 20.0%

Syngene valuation 6915

Per share valuation 115

NPV (Trastuzumab) 23

SOTP valuation 380[

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 36.3 25.9 10.5 9.6

FY18E 4191 6.9 8.2 -3.8 45.4 22.9 9.4 10.3

FY19E 5006 19.4 11.7 43.3 31.7 17.0 12.2 14.1

FY20E 5998 19.8 15.9 36.1 23.3 13.5 14.7 17.9


Recommendation history vs. Consensus

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

0

50

100

150

200

250

300

350

400

450

Oct-17Aug-17Jun-17Mar-17Jan-17Oct-16Aug-16May-16Mar-16Jan-16Oct-15

(%

)(|)

Price Idirect target Consensus Target Mean % Consensus with SELL

Source: Reuters, Company, ICICIdirect.com Research

Key events

Date Event

Jan-11 Novel oral insulin IN-105 fails to meet its primary end point of lowering HbA1c levels compared to available drugs in the market (placebo)

Mar-12 Biocon and Pfizer conclude their alliance to commercialise Biocon's biosimilar versions of insulin and insulin analogue products worldwide

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


Top 10 Shareholders Shareholding Pattern

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

1 Shaw (Kiran Mazumdar) 30-Sep-17 39.6 237.9m 0.0

2 Glentec International 30-Sep-17 19.8 118.6m 0.0

3 OppenheimerFunds, Inc. 31-Aug-17 3.4 20.5m -0.1

4 Templeton Asset Management Ltd. 30-Sep-17 1.9 11.4m -0.8

5 Jupiter Asset Management Ltd. 30-Jun-17 1.8 10.6m 0.4

6 Biocon India Ltd Employee Welfare Trust 10-Oct-17 1.6 9.8m -0.2

7 Chandavarkar (Arun Suresh) 30-Sep-17 1.1 6.6m 0.0

8 Franklin Templeton Asset Management (India) Pvt. Ltd. 30-Jun-17 1.1 6.5m 0.0

9 ICICI Prudential Asset Management Co. Ltd. 30-Sep-17 1.0 6.0m 0.0

10 Dimensional Fund Advisors, L.P. 31-Aug-17 0.9 5.5m 0.0

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

Goldman Sachs Asset Management International 11.51 2.18 Robeco Institutional Asset Management B.V. -15.88 -3.10

Jupiter Asset Management Ltd. 1.98 0.39 Waddell & Reed Investment Management Company -11.07 -2.16

Goldman Sachs Asset Management (Singapore) Pte. Ltd. 1.20 0.23 Driehaus Capital Management, LLC -5.93 -1.21

HDFC Asset Management Co., Ltd. 0.70 0.14 Templeton Asset Management Ltd. -4.09 -0.80

Augustine (Arthur) 0.74 0.13 Kotak Mahindra Asset Management Company Ltd. -3.22 -0.63

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 4191.2 5006.4 5998.2

Growth (%) 16.0 6.9 19.4 19.8

Raw Material Expenses 1477.1 1576.9 1807.3 2165.3

Employee Expenses 747.0 897.3 986.3 1121.7

R&D Expenditure 272.4 261.2 327.9 395.4

Other Expenditures 573.9 495.6 600.8 719.8

Total Operating Expenditure 3070.4 3231.0 3722.2 4402.2

Operating Profit (EBITDA) 851.2 960.3 1284.2 1596.0

Growth (%) 33.9 12.8 33.7 24.3

Depreciation 277.2 379.6 420.7 441.7

Interest 26.0 57.5 40.6 23.8

Other Income 157.1 191.2 198.0 237.2

PBT before Exceptional Items 705.1 714.3 1020.9 1367.8

Less: Exceptional Items -128.3 0.0 0.0 0.0

Total Tax 161.6 157.5 224.6 300.9

PAT before MI 671.8 556.8 796.3 1066.9

Minority Interest 76.0 77.6 95.1 112.2

Adjusted PAT 508.7 489.2 701.2 954.7

Growth (%) 61.6 -3.8 43.3 36.1

EPS (Adjusted) 8.5 8.2 11.7 15.9


Cash flow statement | Crore


Profit/(Loss) after taxation 612.1 489.2 701.2 954.7

Add: Depreciation & Amortization 277.2 379.6 420.7 441.7

Net Increase in Current Assets -380.8 -41.7 -279.9 -369.0

Net Increase in Current Liabilities 310.4 41.0 184.7 217.0

Other Operating Activities 26.0 57.5 40.6 23.8

CF from operating activities 844.9 925.6 1067.3 1268.1

(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 0.6 1.5 -2.4

CF from investing activities -981.1 -708.2 -691.2 -702.4

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 -122.3 -147.2 -200.5

Interest Paid -26.0 -57.5 -40.6 -23.8

Other Financing Activities 0.0 0.0 0.0 0.0

CF from financing activities -358.1 -679.8 -687.9 -724.3

Net Cash flow -494.3 -462.3 -311.8 -158.6

Opening Cash 1538.6 1044.3 582.0 270.2

Closing Cash 1044.3 582.0 270.2 111.6

Free Cash Flow 212.7 225.6 367.3 568.1


Balance sheet | Crore


Liabilities

Equity Capital 100.0 300.0 300.0 300.0

Reserve and Surplus 4737.7 4904.6 5458.6 6212.8

Total Shareholders funds 4837.7 5204.6 5758.6 6512.8

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 7475.9 7541.0 7795.3

Assets

Gross Block - Fixed Assets 5409.7 5709.7 6009.7 6309.7

Accumulated Depreciation 1811.0 2190.6 2611.3 3053.0

Net Block 3598.7 3519.1 3398.4 3256.7

Capital WIP 839.2 1239.2 1639.2 2039.2

Total Fixed Assets 4437.9 4758.3 5037.6 5295.9

Goodwill on Consolidation 26.4 26.4 26.4 26.4

Investments 1382.7 1382.7 1382.7 1382.7

Inventory 635.3 656.1 759.5 910.0

Debtors 883.2 912.1 1085.0 1300.0

Cash 1044.3 582.0 270.2 111.6

Other Current Assets 419.9 411.8 415.4 419.0

Total Current Assets 2982.7 2562.0 2530.2 2740.6

Creditors 739.7 763.9 912.5 1093.3

Provisions 46.8 77.0 107.1 137.3

Other Current Liabilities 698.2 684.8 690.7 696.8

Total Current Liabilities 1484.7 1525.7 1710.4 1927.3

Net Current Assets 1498.0 1036.4 819.8 813.3

Other Non Current assets 277.5 272.2 274.5 276.9

Application of Funds 7622.5 7475.9 7541.0 7795.3


Key ratios


Per share data (|)

Reported EPS 10.2 8.2 11.7 15.9

BV per share 80.6 86.7 96.0 108.5

Dividend per share 1.2 2.0 2.5 3.3

Cash Per Share 17.4 9.7 4.5 1.9

Operating Ratios (%)

Gross Margin 62.3 62.4 63.9 63.9

EBITDA margin 21.7 22.9 25.7 26.6

EBIT Margin 14.6 13.9 17.2 19.2

PAT Margin 13.0 11.7 14.0 15.9

Inventory days 59.1 57.1 55.4 55.4

Debtor days 82.2 79.4 79.1 79.1

Creditor days 68.8 66.5 66.5 66.5

Asset Turnover 0.5 0.6 0.7 0.8

EBITDA Conversion Ration 99.3 96.4 83.1 79.5

Return Ratios (%)

RoE 10.5 9.4 12.2 14.7

RoCE 9.6 10.3 14.1 17.9

RoIC 13.1 13.5 20.2 26.9

Valuation Ratios (x)

P/E 35.0 43.8 30.6 22.5

EV / EBITDA 25.0 22.1 16.4 13.0

EV / Net Sales 5.4 5.1 4.2 3.5

Market Cap / Sales 5.5 5.1 4.3 3.6

Price to Book Value 4.4 4.1 3.7 3.3

Solvency Ratios

Debt / EBITDA 2.6 1.8 0.9 0.4

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) FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E

Ajanta Pharma AJAPHA 1195 1,420 Buy 10521.3 47.0 57.4 51.8 67.1 25.4 20.8 23.1 17.8 46.0 42.3 30.5 31.5 36.7 33.7 24.5 25.3

Alembic Pharma ALEMPHA 501 570 Hold 9450.3 38.2 21.2 19.7 28.8 13.1 23.7 25.5 17.4 52.2 25.3 19.2 23.9 45.1 21.0 16.9 20.8

Apollo Hospitals APOHOS 1032 1,180 Hold 14357.7 13.2 15.9 6.9 19.5 78.2 65.0 150.2 53.0 6.6 6.0 5.8 8.9 5.3 6.0 2.5 6.7

Aurobindo Pharma AURPHA 769 745 Hold 45054.4 33.9 38.8 46.1 40.6 22.7 19.8 16.7 18.9 23.1 24.4 25.2 19.3 27.2 24.2 22.7 16.8

Biocon BIOCON 357 380 Hold 21441.0 5.2 8.5 8.2 11.7 68.1 42.2 43.8 30.6 6.5 9.6 10.3 14.1 7.8 10.5 9.4 12.2

Cadila Healthcare CADHEA 491 440 Hold 50265.8 15.0 14.5 19.4 22.8 32.8 33.8 25.3 21.6 24.9 13.1 17.3 19.8 34.4 21.4 23.5 22.9

Cipla CIPLA 626 525 Hold 50377.3 18.5 12.5 21.6 26.1 33.8 49.9 28.9 24.0 11.8 7.7 12.6 14.2 12.9 8.0 12.5 13.4

Divi's Lab DIVLAB 877 665 Hold 23280.3 41.5 39.3 34.9 41.5 21.1 22.3 25.1 21.1 31.0 25.0 20.4 21.4 25.7 19.5 15.5 16.3

Dr Reddy's Labs DRREDD 2403 2,400 Hold 39831.5 125.0 78.0 76.9 113.1 19.2 30.8 31.2 21.2 15.3 7.3 7.8 10.5 17.0 10.5 9.6 12.6

Glenmark Pharma GLEPHA 613 730 Hold 17296.9 26.4 42.2 38.7 38.0 23.2 14.5 15.8 16.1 15.7 19.5 15.3 15.2 20.5 26.5 19.8 16.4

Indoco Remedies INDREM 270 180 Hold 2490.4 9.4 8.4 5.4 12.2 28.8 32.3 50.0 22.1 12.9 8.4 6.0 12.1 14.8 12.0 7.3 14.6

Ipca Laboratories IPCLAB 531 410 Hold 6701.0 7.4 15.4 12.4 25.5 71.9 34.4 42.8 20.8 4.5 8.7 6.9 12.5 4.1 7.9 6.1 11.3

Jubilant Life JUBLIF 644 845 Buy 10249.7 24.6 36.1 47.7 59.3 26.2 17.8 13.5 10.9 11.8 13.8 16.0 18.0 13.2 16.8 18.4 18.8

Lupin LUPIN 1007 1,070 Hold 45514.0 50.4 56.6 40.4 52.6 20.0 17.8 24.9 19.2 17.8 16.6 12.2 15.3 20.3 18.9 12.2 14.0

Natco Pharma NATPHA 965 1,065 Buy 16820.7 9.0 27.0 26.4 15.8 106.7 35.8 36.6 60.9 16.0 33.0 28.1 16.0 12.2 28.8 23.2 12.6

Sun Pharma SUNPHA 555 445 Hold 133182.2 23.4 29.0 14.5 20.0 23.7 19.1 38.3 27.8 18.6 19.8 9.7 12.3 18.0 19.0 9.0 11.2

Syngene Int. SYNINT 501 580 Buy 10029.0 12.0 14.4 16.0 20.4 42.6 35.7 32.2 25.1 15.3 16.8 18.6 20.9 23.5 20.3 18.8 19.5

Torrent Pharma TORPHA 1254 1,260 Hold 21227.4 110.9 55.2 48.9 66.2 11.3 22.7 25.6 19.0 46.5 18.9 17.8 20.8 53.7 21.5 16.7 19.3

Unichem Lab UNILAB 307 235 Hold 2787.1 12.3 12.0 12.5 19.4 24.9 25.6 24.5 15.8 13.8 11.8 11.0 15.6 11.7 10.2 9.8 13.4

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, Siddhant Khandekar (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 Siddhant Khandekar (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 Siddhant Khandekar (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 Siddhant Khandekar (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.

biocon (biocon) | 357 - icici directcontent.icicidirect.com/mailimages/idirect_biocon_q2fy18.pdf ·...

Documents