Preparation of Final Report FOR PRINT

A STUDY ON FUNDAMENTAL ANALYSIS OF SELECTED
PHARMACEUTICAL COMPANY STOCKS AT MENTES CAPITAL,
BANGALORE
Dissertation Report submitted in partial fulfilment of requirements for the
award of the degree of
MASTER OF BUSINESS ADMINISTRATION
OF
BANGALORE UNIVERSITY
Submitted By
KUSHAL KUMAR
(REG: 14P6CMD060)
Under the guidance of
Mrs. Divya U
Assistant Professor
COMMUNITYINSTITUTE OF MANAGEMENT STUDIES
BANGALORE UNIVERSITY
2014-2016

FUNDAMENTAL ANALYSIS
C I M S B-SCHOOL, BANGALORE P a g e | 1
Executive Summary
Investment decision is a part of our life. Everyone takes such kind of decision at
different context. Investment decisions in equity market are to be made in a
systematic manner fundamental analysis. This study aims to analyse the
fundamental analysis of Pharmaceutical companies in India with a sample size
of three selected companies based on market capitalisation for a period of five
years from 2010-11 to 2014-15. The objectives of the study to conduct
Fundamental analysis for Pharma companies and the Porters five forces analysis
for the Pharma industry. The Economic, Industry and company analysis have
been done to achieve the objectives of the study. From the Economic analysis, it
is found that Gross Domestic Product, Interest rates and Inflation has a positive
growth rate during the period. The industry analysis found that Indian pharma
sector is the 3rd largest sector with the total market size of US$ 20 billion
during the year 2015. This sector is expected to grow 15% CAGR basis by
2020.

Chapter 1
1. Introduction to the topic
Financial management refers to the systematic and productive use of funds in such a
manner as to attain the objectives of the organization. According to Guttmann and
Douglas, financial management means, “the activity concerned with the raising,
planning, administering and controlling of funds used in the business.” It involves the
procurement and utilisation of funds in the proper manner.
Financial management is one of the prime areas of business. Therefore, its objectives
must be consistent with the objectives of business. The overall objective of financial
management is to provide maximum return to the owners of the business on their
investment in the long- term as well as in short term.
There are two objectives of an enterprise
1) Wealth Maximisation- It's far the potential of organisation to growth in market
price of the share over time i.e. proprietor's capital.
2) Profit Maximisation- Earnings maximisation is the functionality of a business
enterprise in generating most output with minimum input. The main cause of an
economic activity is to earn profit. A business enterprise challenge operates specially
for the motive of making earnings. Earnings is a tool to measure the performance of a
business difficulty. Profit maximization is likewise the slender approach, which
consciousness on maximizing the profit of the business concern.
Stock market refers to a marketplace in which the buying and selling of company
stock, both listed securities and unlisted securities takes area. It is distinct from stock
exchange because it includes all the countrywide stock exchanges of the India for
example, we use the term, and “the stock market was down today “or” the stock
market bubble
Stock Exchanges are an organized marketplace, either agency or mutual organisation,
wherein individuals of the agency unite to acquire company stock or different
securities. The individuals may act either as sellers for his or her clients, or as
principal for their very own accounts. Stock exchanges additionally facilitates for the
issue and redemption of securities and other financial instruments together with the

charge of profits and dividends. The report retaining is primary however trade is
connected to such physical location because modern-day markets are automated. The
trade on an exchange is simplest by means of contributors and Stock broker do have a
seat at the exchange.
The capital market is divided into segments:
a) Primary market b) Secondary market
1.1 Primary Market
Mostly corporations are generally started out privately by way of their promoters. But
the promoters’ capital and the borrowed capital from banks or economic
establishments might not be sufficient for strolling the enterprise over the long period.
This is whilst corporate and the government authorities looks on the primary market
to raise long term finances by way of issuing securities which includes debt or equity.
These securities can be issued at face value, at premium or at discount.
 Face value: Face price is the original cost of the safety as shown inside the
certificate/instrument. Most equity shares have a face price of Rs. 10, Rs. 50,
Rs. 100 or Rs. 1000 and do no longer have a great deal bearing on the real
market price of the securities. While issuing securities, they will be offered at
a premium or discount.
 Premium: while the security is obtainable at a charge better than the face value
it's far calleda top class
 Discount: while the security is obtainable at a charge less than the face value
called a discount.
1.2 Secondary market:
The secondary marketplace affords liquidity to the investors in the primary market.
Today we might now not put money into any financial instrument if there has been no
medium to liquidate. The secondary markets offer an efficient platform for buying
and selling of those securities first of all presented inside the primary market.
Additionally, the investors who have carried out for stocks in an IPO may or won't get

allotment. In the event that they don ‘t then they can usually buy the stocks (from time
to time at a discount or at a premium) inside the secondary market. Trading within the
secondary
market is completed through stock alternate. The secondary market is an area wherein
the consumers and dealers meet to exchange in shares in an effective way.
The exchange performs the following functions:
 Provide buying and selling platform to investors and provide liquidity
 Facilitate list of securities
 Registers individuals - brokers, sub brokers
 Create and put in effect by way of-laws.
 Control risk in securities transactions
 Offers indices
Equity research more often a way of analysing business enterprise’s financials,
perform ratio evaluation, forecast the financials (financial modelling and valuations)
and explore scenarios with a goal of making purchase/promote stock funding
recommendation. Equity analyst talk their studies and evaluation of their equity
research reports.
Investors depend upon information to recognize where to put their money into,
investors want statistics to know whether they have to enter or exit a role, and
company financiers (together with bankers, non-public companies and so on.) need
statistics to value businesses and take part in proceedings. This information has to
come from someplace and as a result, there are complete divisions within economic
establishments committed to studying the important problems of firms and this
department is called Equity Research.

Fundamental Analysis
Lev and Thiagarajan (1993) described the aim of Fundamental Analysis as
“determining the value of corporate securities with the aid of a cautious examination
of key value-drivers, inclusive of earnings, competitive position, growth, risk and
return”. The primitive origin of information examined with the aid of a fundamental
analyst are the enterprise financial statements, organisation bulletins, interviews with
management of the organisation and so forth. The goal of fundamental evaluation is to
supply an intrinsic value (or an honest price) of a security that can be compared to the
market value of the security with the intention to determine whether or not the stock is
under or overrated. The fundamental analyst believes that the intrinsic price of the
security is the “accurate” rate and that any deviations among the intrinsic price and
the market price represent worthwhile buying and selling possibilities. A purchase
(sell) possibility arises while the intrinsic value of the security is above (underneath)
the market price of the security. But, if the stock markets are semi-robust form green,
Fundamental analysis will now not yield any threat-adjusted earnings. This is because
all of the gospel analysed by way of the Fundamental analyst is publicly available to
be had and need to as a consequence be already integrated in stock prices
Objectives of Fundamental Analysis
 To expect the direction (trend) of national economy because economic activity
influences the company income, investor attitudes and expectation in the stock
prices.
 To estimate the stock prices adjustments by way of analysing the forces
working inside the basic economy, in addition to impact ordinary to industries
and companies.
 To select the proper time and proper securities for the investment.

The Three Phases of Fundamental Analysis
1) Know-how of the Macro-Economic environment and tendencies (economic
evaluation)
2) Analysing the prospects of the industry to which the company belongs (industry
analysis)
3) Assessing the projected overall performance of the enterprise. (company analysis)
The three segment examination of fundamental Analysis is likewise referred to
as an EIC (economy- industry-company analysis) framework or a top-down
method-
Here, the financial analyst first makes forecasts for the economic system, then for
industries and in the end for companies. The industry forecasts are primarily based at
the forecasts for the economic system and in turn, the company forecasts are primarily
based on the forecasts for both the industry and the economic system. Also on this
technique, industry is in comparison in opposition to other industry and groups of
company in opposition to other company. Usually, businesses are compared with
others inside the same industry.
Therefore, the Fundamental analysis is a three phase analysis of
a) The Economy
b) The Industry and
c) The Company

Phase Nature of
Analysis
Purpose Tools and techniques
FIRST Economic
Analysis
To study the impact of
Macro Economic Factors on
Stock Market Fluctuations.
Economic indicators
GDP, Interest Rates,
Inflation,
SECOND Industry
Analysis
To assess the prospects of
various company groupings.
Industry Analysis,
Industry life cycle,
Porters Five Forces Model.
THIRD Company
Analysis
To examine the financial
and Non-financial factors of
a company to determine
whether to buy, sell or hold
the stocks of a company.
Analysis of financial
Factors Analysis of the
companies through
1) Common size
2) Comparative size
Valuation of equity shares of
selected pharma stocks to
compute its intrinsic value

Strengths of Fundamental Analysis
 Long term trends
Fundamental analysis is beneficial for long term investments based on long-term
trends. The capability to pick out and expect long-term economic, demographic, and
technological or consumer trend can benefit investors and facilitates in choosing the
proper industry businesses or company.
 Value spotting
Sound fundamental analysis will help to identify businesses that constitute a better
value. Many legendary investors think for long-term and price. Fundamental analysis
can assist find the companies in groups with valuable assets, balance sheet, strong
profits.
 Business Acumen
One of the most obvious, however less tangible rewards of fundamental analysis is the
improvement on thorough understanding of the enterprise. After research and
analysis, an investor could be acquainted with the important thing sales and profit
drivers (forces) of a company. Profits and earnings expectancies can be effective
factors of equity prices. A thorough understanding can help an investors keep away
from companies that are vulnerable to shortfalls and identify those who hold to
deliver.
 Value Drivers
Fundamental Analysis permits investors to increase an understanding of the key value
drivers in the company. A stock's price is closely encouraged by using the industry
organization. By analysing these corporations, investors can better position
themselves to identify possibilities which might be at high risk (software sector), low
risk (utilities sector), growth oriented (electronics product), value driven (oil sector),
non-cyclical (customer staples), cyclical and so on.
 Knowing Who is Who
Understanding a company’s concern, investors can better categorize shares in their
relevant industry that may make a massive difference in relative valuations. The

primary cause of buying a share is to sell it eventually at a higher price. In lots of
cases, dividends are also to be predicted. For this reason, dividends and price changes
constitute the return from making an investment in stocks. Therefore, an investor
would be involved to understand the dividend to be paid on the share within the future
as additionally the future price of the share. These values can simply be estimated and
not predicted with certainty. These values are broadly speaking determined by way of
the overall performance of the company which in turn is encouraged with the aid of
the overall performance of the industry to which the company belongs and the general
economic affairs and socio-political state of affairs of the nation.
An investor who would really like to be rational and scientific in his investment
interest has to evaluate a number of information about the performance and the
anticipated destiny overall performance of businesses, industries and the economy as
a whole earlier than taking funding selection. Every proportion is thought to have an
economic worth based totally on its gift and future incomes capability. This is referred
to as its intrinsic value or essential value. The reason of fundamental analysis is to
evaluate the current and future earning capacity of a share based totally at the
economy, industry and company basics and thereby examine the intrinsic value of the
share. The investor can then examine the intrinsic value of the share with the
prevailing market price to reach at a funding choice. If the market price of the share is
underneath its intrinsic value, the investor would decide to buy the share as its miles
under-priced and vice-versa. The price of one of these share is expected to move up in
future to match with its intrinsic price.
Importance of Fundamental Analysis
1. Earnings
The important thing for all investors’ look after is earnings. Before investing in a
business scrip investor need to realize how a good deal the company is making in
income. Future earnings are a key issue because the future prospects of the business
enterprise and growth opportunities are determinants of the stock price.
Factors determining profits of the company are such as sales, expenses, assets and

liabilities. A simplified view of the income is earnings per share (EPS). This is a
determination of the profits which denotes the amount of earnings for every
outstanding share.
2. Profit Margin
Amount of earnings do not show the overall story, growing earnings are good
however if the cost will increase more than revenues then the profit margin isn't
enhancing. The profit margin measures how much a business enterprise keeps in
profits out of their sales. This degree is therefore very useful for evaluating
comparable corporations, inside the same industry.
Higher earnings margin indicates that the corporation has better control over its costs
than its competitors. Profit margin is shown in percentage and 10% earnings margin
denotes that the organization has net earnings of 10% for each rupee of their revenues.
3. Return on Equity (ROE)
Return of Equity (ROE) is an economic ratio that doesn't consider the stock price.
Because it ignores the price entirely. It can essentially be notion of because the parent
ratio that always needs to be considered.
This ratio is a measure of how efficient an organisation is in producing its profits. It is
a ratio of revenue and profits to proprietors ‘funds (Net worth of the Company)
An easy instance of this is that if company A and company B, each generate net
profits of Rs 1 Million but company A has equity capital of Rs 10 Million but
company B has equity capital of Rs 100 Million. Their ROE could be 10% and 1%
respectively meaning that company A is more sound and efficient as it was able to
produce the equal amount of profits with 10 times less equity.
Company Net Profit Equity ROE
A 1mn 10mn 10%
B 1mn 100mn 1%

The reason for why this measure is so important is because it contains info such as:
 Leverage (which is the debt of the company)
 Revenue, profits and margins
 Returning values to shareholders
 Good approximation is that ROE should be 10-40% greater than its
peer.
4. Price-to-Earnings (P/E)
While taking the current market price into attention, the most popular ratio is the
price-to-earnings (P/E) ratio. Because the name endorse it is the current market price
divided by its earnings per share (EPS). It’s far a clean manner to get a quick
appearance of a stock's value.
An excessive P/E suggests that the stock is priced pretty high to its profits, and
companies with higher P/E therefore seem more high-priced. But, this degree, in
addition to other economic ratios, needs to be compared to similar companies within
the same sector or to its very own historical P/E. that is because of unique
characteristics in different sectors and changing markets situations.
This ratio does not tell the entire tale because it does not account for increase in
growth. Usually, companies with high income growth are traded at better P/E values
than groups with more mild growth rate. For that reason, if the business enterprise is
growing rapidly and is predicted to maintain its growth in the future this present day
market rate may not appear so high-priced. This is the reasoning for the lifestyles of
different investment styles; value vs. increase stocks.
Example
While some sectors generally have low P/E measures, different sectors normally have
higher ratios. For instance, utilities typically have P/E ranging from 5 to 10 whilst
technology organizations normally have a P/E ratio starting from 15 to 20 or above.
This is due to expectancies inside the market about the arena and its profits-growth
opportunities. The software sector has strong earnings and isn't predicted to grow
unexpectedly whilst generation businesses are anticipated to develop faster and have a

tendency to need much less capital for its increase.
A good way to account for growth, the P/E ratio can be changed into the
Price/earnings to growth (PEG) ratio. A PEG ratio is calculated by means of dividing
the stocks P/E ratio via its predicted 12-month growth rate. A common rule of thumb
is that the growth rate ought to be more or less equal to the P/E ratio and as a result
the PEG ratio have to be round 1. A quite low PEG ratio shows an undervalued stock
and a PEG ratio an awful lot greater than 1 indicates an overvalued stock
The PEG ratio can be very informative determine, specifically for fast growing and
cyclical groups. In this one ratio you get an understanding of the company's earnings,
growth expectations and whether it's miles buying and selling at a reasonable charge
relative to its fundamentals.
5. Price-to-Book (P/B)
A price-to-book (P/B) ratio is used to evaluate a stocks market price to its book price.
It is able to be calculated because the current share price divided to the book price per
share, in a broader feel, it is able to also be calculated as the total market
capitalization of the company divided by using all of the shareholder’s equity.
This ratio offers positive concept of whether or not an investor is paying too high
price for the stock as it denotes what would be the residual value if the enterprise went
bankrupt these days.
A higher P/B ratio than 1 denotes that the share price is higher than what the
enterprises assed might be bought for. The distinction indicates what investor reflect
on consideration on the future growth capacity of the company.

Pharmaceutical Sector: - An Overview
Introduction
The Indian pharmaceuticals market is the third largest in terms of volume and
thirteenth largest in terms of value, as per a report by Equity Master. Branded generics
dominate the pharmaceuticals market, constituting nearly 70 to 80 per cent of the
market. India is the largest provider of generic drugs globally with the Indian generics
accounting for 20 per cent of global exports in terms of volume. Of late, consolidation
has become an important characteristic of the Indian pharmaceutical market as the
industry is highly fragmented.
India enjoys an important position in the global pharmaceuticals sector. The country
also has a large pool of scientists and engineers who have the potential to steer the
industry ahead to an even higher level.
The UN-backed Medicines Patent Pool has signed six sub-licences with Aurobindo,
Cipla, Desano, Emcure, Hetero Labs and Laurus Labs, allowing them to make generic
anti-AIDS medicine TenofovirAlafenamide (TAF) for 112 developing countries.
The Indian pharmaceutical enterprise is anticipated to grow at 20 consistent with cent
Compound Annual growth rate (CAGR) over the next five years. The Indian pharma
industry, that's anticipated to develop over 15 per cent consistent with annum among
2015 and 2020, will outperform the global pharma enterprise, which is set to grow at
an annual rate of 5% among the same periods. Currently the market size of the
pharmaceutical industry in India stands at US$ 20 billion. As on March 2014, Indian
pharmaceutical manufacturing centres registered with the US Food and Drug
Administration (FDA) stood at 523, highest for any country outdoor America.
Domestic pharmaceutical marketplace grew at a CAGR of 12 per cent year-on-year in
February 2016, broadly in step with the average of 12.9%. Since April 2015. Indian
pharmaceutical firms are eyeing acquisition possibilities in Japan's developing
frequent market as the Japanese government objectives to increase the penetration of
usual tablets to 60 % of the market by way of 2017 from 30% in 2014, because of
ageing populace and rising health cost. India has the largest wide variety US FDA
compliant Plant. The industry is anticipated to attain US$ 55 million by 2020, out of
which US$ 30 million will be for exports. India's biotechnology industry comprising

bio-prescribed drugs, bio-offerings, bio-agriculture, bio-industry and bioinformatics is
expected grow at a 30% a year and attain US$ 100 billion by means of 2025.
Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-zone
contributing nearly sixty-two according to cent of the whole revenues at Rs 12,600
crore (US$ 1.9 billion).

Chapter 2
REVIEW OF LITERATURE AND RESEARCH DESIGN
Review of Literature: -
Khan and Zuberi (1999). Being taken into consideration as mattress-rock of Security
Analysing investment, Fundamental evaluation performs an exceptionally crucial
function to analysts. This is pinnacle-ranking and essential technique in share
investment. For this reason, this could be a reasonably strong base, on which we will
make investment choices effectively. There are approximately 90 % investors that
uses fundamental analysis.
Warrant Edward Buffett, who made maximum of cash from investment; he's an
exquisite instance of a successful people of fundamental analysis. His analysis
centered on the simplicity of the business, the consistency of its working history, the
Splendour of its long-time period possibilities, the satisfactory of control, and the
company’s ability to create price (Banchuenvijit, 2008)
The primary aim of fundamental analysis is figuring out the weaknesses of the market
at some stage in the formation of market share price, through elaborating the amount
of deviation of the market price of stocks relative to the real-intrinsic value of stocks.
Fundamental analysis studies have involved testing the capability of essential alerts to
expect both future earnings or stocks returns. In addition, it assessments for other
contextual elements along with the economic system or industry which can affect the
prediction of future earnings or stock returns (Seng, 2011)
Richardson (2006), fundamental analysis is based upon building high quality
estimates of the parameters in the valuation, which may be written in the following
three mathematically equivalent forms: the discounted dividend version, the loose
coin’s waft model, and the residual profits model. Fundamental analysis entails the
usage of present day and past economic statements in conjunction with industry and
financial facts in order to determine companies‟ intrinsic price and perceive mispriced
securities (Kothari, 2011)
Galatian, Gerasimova and Bykovsky (2011) the factors may be analysed, which

should be taken into account on every step while carrying out the fundamental
analysis of an organisation, and also observe the ability of investor, who wants to
create an attractive portfolio of stocks.
Kim and Doyoun (2010) became determine the intrinsic value by means of
Discounted Cash flow model and free cash flows of the firm have been projected and
discounted to the present value at the decent discount rate calculated through
weighted average cost of capital. with the aid of adding up discounted free cash flows,
the firm value reckoned, and by using subtracting debt amount, the value of equity
portion become accrued. Via dividing the equity cost by the number of outstanding
share, the final intrinsic cost of each share determined. This paper examines how well
the firm-basis principle predicts the price.
Research design
Statement of the Problem:
Equity research is an act of making an ex-ante evaluation of equity shares. The
purpose of which to evaluate the investment worthiness of equity share & find out
about appropriate timing of investment in such shares. An important method of
conducting equity research is through fundamental analysis. Fundamental analysis is
an analysis of various fundamental factors likes economic aggregate, industrial
indicators, financials related to companies. Under fundamental research an investor or
portfolio manager analyses several factors to have a fair idea about the growth &
development of the economy, industry and company as a whole to forecast the future
trend of market. When the capital market in particular seems promising the different
equity shares are evaluated by applying appropriate techniques. The aim of which is
to find out undervalued shares or shares which are likely to do better in future.
Similarly, fundamental analysis can also be carried out at the time of disinvestment
also. Here portfolio manager is interested to identify the appropriate timings for
liquidating its investment in particular share.
Pharmaceutical market is one of the largest in India. It ranks 4th
in world pertaining to
sales. The market capitalisation of pharmaceutical is 8.63% in BSE and 6.93% in
NSE. Most of the investor usually include pharma stocks in their portfolio. A study on

fundamental analysis of pharma stocks will be highly useful to such an investor for
their investment strategy.
Scope of the study:
1) The study will be conducted at Mentes Capital in Girinagar, Bangalore.
2) This study gives an overview on pharmaceutical stocks
3) This study consists of Economic-Industry-Company framework of analysis with
the following aspects
a) Economic analysis consists of various variables such as inflation, interest rates,
foreign exchange rates, infrastructure, and monsoon, economic & political stability.
b) Industry analysis consists of Demand, potential market, targeted Industrial growth.
c) Company analysis consists of financial statement, analysis of financial statements,
Companies prospects, growth, and Management board of company.
Objective of the study:
 To gain in-depth knowledge regarding fundamental analysis.
 To study the macro economic factors which directly or indirectly influence the
performance of selected pharma stocks.
 To analyse the prospects of pharmaceutical Industry through industry analysis.
 To conduct company analysis of selected pharmaceutical company stocks
through its financials.
 To suggest the investors an appropriate strategy based on study at Mentes
capital, Bangalore.

Methodology of Data Collection:
 Exploratory research method will be adopted for the study. The study will be
done mainly based on secondary sources of data.
 The fundamental analysis will be conducted for selected three companies of
pharmaceutical industry namely Sun pharma, Lupin, & Dr Reddy Labs. These
companies are selected based on their market capitalisation
 This study requires qualitative and quantitative information related to
companies such as financial statements, performance charts, stock prices,
annual reports, management reports etc. The data will be collected from
various secondary sources such as company website, various Publication
books, magazines, newspaper, journals and reports prepared by research
Scholars etc.
 Macro-economic analysis
o GDP
o Interest rates
o Inflation
 Industry Analysis
o Industry Life Cycle
o Porter’s Five Forces
o Analysis of sector
 Company Analysis
o Financial Statement Analysis
 Horizontal
 Vertical
 Intrinsic Value is one major assumption in regard to equity valuation. Market
value of the publicly traded securities could be different from the intrinsic
value of the securities. An estimate if intrinsic value reflects the view of real
value of an asset.

 Valuation Process state three general valuation steps which involves
understanding the business, forecasting company performance, selecting the
appropriate model, converting forecast to a valuation and the last is applying
the valuation conclusion.
o Valuation
 Relative valuation
 DCF valuation
Analysis of Data:
The analysis will be conducted using EIC approach i.e. Economic analysis, Industry
Analysis and Company Analysis. The data so collected will be analysed through
tables, charts, graphs, averages, ratios, correlation, beta, alpha etc. statistical
techniques.
Limitations of the study:
1. The main limitation of this study is time constraint.
2. EIC analysis of Pharmaceutical company stocks uses only limited variables for the
analysis.
3. The data for this study is based on secondary sources only.

Chapter 3
Profile of the Organisation
Industry Profile
Industry Overview:
The services area has been a super stimulus to the Indian economic system accounting
for 56.9% in keeping with cent of the gross Domestic product (GDP), in which the
financial services section has been a major contributor. The growth of the financial
area in India at present is nearly 8.5% every year. The last decades have seen the
sector growing a greater modern-day outlook. The government of India has helped on
this development, introducing reforms to liberalise, regulate and enhance the nation
economic and financial services. These days, India is acknowledged as one of the
world's most vibrant capital markets, notwithstanding challenges, the arena's future
seems to be in precise fingers. The asset management industry in India is most of the
quickest developing in the international. Total asset under management (AUM) of the
mutual fund enterprise clocked a Compound Annual growth rate (CAGR) of 12.05
consistent with cent over FY07-15 to reach US$ 179.6 billion. company investors
accounted for round 45.9 per cent of overall AUM in India, at the same time as High
Net worth individuals (HNWI) and retail buyers account for 28.6 consistent with cent
and 22.9 according to cent, respectively. The Indian capital markets have witnessed a
metamorphosis over the past decade. India is now located a number of the mature
markets of the arena. Key revolutionary initiatives taken by way of the Indian market
institutions has been the depository and percentage dematerialization structures that
have greater the efficiency of the transaction cycle, changing the flexible, however
regularly exploited, ahead buying and selling mechanism with rolling agreement, to
bring about transparency, Corporatisation of stock exchanges and so forth.
Indian capital markets have rewarded foreign Institutional investors (FIIs) with
appealing valuations and increasing returns. Many new instruments have been
introduced in the markets, which include index futures, index options, derivatives and
alternatives and futures in pick out shares.

Source: - http://www.ibef.org/industry/financial-services-india.aspx
Organisation Profile: -
Founder: Mr Kiran Bindu & Mr C. Moral
About company:
In the fast changing dynamics of financial markets decisions involve knowledge,
analytics and experience, for blending the three to give a robust pipeline of trading
and investing Ideas to help outperform chosen benchmark MENTES CAPITAL
come into incorporation on 2nd
July, 2015. The team of analyst’s track stocks, gather
market intelligence and access information via publicly available sources to bring to
you high probability of investment successes. Over the years we have spent in these
markets the founders have honed their skills and have a reputation of dispassion and
focused professionals. The proprietary methods of stock screening and valuation to
find mispriced securities reveal investment and trading opportunities which have a
good success rate. Mentes Capital couple Technical and Fundamental sides of stock
Screening tools in our trade thus giving you the best time to exit or enter mispriced
assets. Mentes Capital is promoted by two finance professionals with a background in

Trading and Investments and also a robust knowledge of conducting Financial
Research and Analysis for Corporate and even Non Profit Organizations. The
Promoters bring in experience in Investment management and investment appraisal.
Located in Bangalore with an access to specialized financial professionals with an
expertise diverse areas like International Financial Reporting system to Income Tax to
Derivatives to Macro Economics, the firm has a good network of experts who
contribute to the Knowledge available to make sound investment decisions. It is a
platform which is specially designed for working and business professionals who
don’t have time to track the Stock Market and wants to make good returns on their
investments. Mentes capital provides a platform for corporate finance, venture capital
practices, private equity and mutual funds. Merger and Acquisition is newly added up
working of Mentes Capital. A person can transform his skills into perfection, a hard-
core research over a particular stock is being done and then they make an interim
report over that and after that recommendation is given to the prospective clients. To
make people knowledgeable about the Equity Market, Mentes Capital also organizes
seminars related to Stock Market. They have globally presence with having their
clients in Middle East also. The research panel consists of highly qualified analysts
who work with Mentes Capital with full dedication.

Vision:
Our vision at MENTES CAPITAL to be the nation’s top five financial advisory over
the next decade with a national reach and presence across all markets sectors.
Mission:
Our mission at MENTES CAPITAL is to provide reliable financial advisory in the
areas of Corporate Finance and Investments and Risk management through which
clients can benefit from. It will increase our core strengths continuously be investment
in our people, processes and practices.
Values:
‘Client first and Ethics before Clients’ Clients are important but ethics are before
clients, Mentes capital believe that a strong relationship should be built with clients as
it is not a short term business.
Quality Policy:
At MENTES CAPITAL, we always aim and strive to provide the best service and
recommendation of stocks to our prospective clients.

About Founders:
KIRAN BINDU
Kiran Bindu has domain expertise in Finance. His areas of interest are Financial
Derivatives and Risk Management. Starting in 1995 Kiran has experience in
Accounting and Auditing areas too. His past corporate credentials include Companies
like Indus League Clothing Limited, MCS Software Consulting and System Domain.
Kiran has over 12 years of Teaching Experience in some of the Best schools in
Bangalore and France. He has Presented Papers in conferences at the International
Week at ESC Clermont (An AACSB accredited French Graduate School of
Management) in 2009 and published articles for Journals. He had delivered corporate
training in Finance in Oracle, HP and Symbol Technologies. His training on Financial
Spreadsheet Modelling has enhanced the learning experience of thousands of his
students over the past 12 years. Valuation is another area of passion, in the recent past
he has valued companies and natural resources like mines for Interest groups in the
Social Activism sphere. He has experience analysing the social cost of PPP and
raising pertinent questions before the Regulatory authorities in the areas of civil
aviation and Electric Utility Companies. As a Mentor at a leading Accelerator called
KYRON he has guided the financial projections and valuation effort of over a dozen
promising tech start-ups. In his spare time Kiran is an avid fitness enthusiast. He like
reading anything on Finance and follows global financial markets keenly.

C MORAL
C Moral holds a Post Graduate Diploma in Business Management from Jain
University Bangalore given under the collaboration of Entrepreneurship Development
Institute of India (EDII) Ahmedabad. He has worked in Deutsche Bank, HBJ Capital
and Phillip Capital as an Investment Analyst and Advisor handling large teams of
Advisors and Private Bankers. He has a passion to create awareness of various aspects
of financial markets. As a research analyst and financial planner his experience helps
clients make better investment choices. He is young, energetic and brilliant in spotting
mispriced assets and has great network in the industry. Young investors and first time
investors can especially seek his guidance on how to invest their savings and can
expect a robust and informed response from him. Be it Traders or Investors speaking
to C Moral get trading tips and advices online real time. While Investors get insight
into stocks likely to be solid multibaggars in years to come.
Source: - http://www.mentescapital.com/about-us.html

Competitors of Mentes Capital:
Mentes Capital being a top research company have many direct competitors &
indirect competitors.
Direct Competitors: Direct competitors are those which are directly related to the
business of the company. Following are some direct competitors of Mentes Capital.
 CapialVia
 Equicom Financial Services
 Stock Axis
 Epic Research
Indirect Competitors: Indirect Competitors are those which have similar kind of
services with some different business model. Normally these are broking firms.
 Share khan
 Religare Securities
 Motilal Oswal
 HDFC Securities
 ICICI Direct

Service Products of Mentes Capital:
Mentes Capital provide services in Trading, Investment and Corporate Finance and
Research.
Trading:
 Cash
Intraday calls are based on technical analysis of after various level of
screening process through technical tools like VSA &RSI etc. on each call.
We have the only superior plan to help you to give descent ROI of 2%-5%
every day with proper risk and rewardbase estimation of the call
 Future
Stock Future trading is the only medium that Mentes Capital believes that a
man could be rich and wealthy but proper follow up in terms of entry and exit
is important at every single investment, where stop loss is strictly mandated.
Purely on technical based calls provided by our certified financial analysts
with experienced more than 30 years in the stock market.
 Options
Option trade is a derivative contract which disseminates the holder is having
right but not the obligation, to buy or sell shares of the underlying financial
securities at a particular price on or before the expiry date. It is also known as
derivative strategy with low risk in the riskiest market with a gain of
handsome money. This service is designed for them who want to book 20%-
40% profit per day in Nifty and stock option segment.

 Commodity
Commodities consist of Bullions, Base Metal & Energy. Traders generally
trade in Bullion Segment i.e. all the Gold & Silver, MCX Metals (Copper,
Zinc, Lead, Nickel, Aluminium & MCX Energy Segment I.e. Crude and
natural Gas.
 Signature Hedging
Hedging or limiting your losses is the strategy adopted only by the most
sophisticated investors. These often complex strategies are restricted to
evolved investors. At Mentes Capital our aim to ensure that our clients’ money
is smart money and smart money always wins. Irrespective of the market
turmoil. The best way to understand hedging is to think of it as insurance.
When people decide to hedge, they are insuring themselves against a negative
event. This doesn't prevent a negative event from happening, but if it does
happen and you're properly hedged, the financial impact of the event is
reduced. So, hedging occurs almost everywhere, and we see it every day.
Investment:
 Mentes Multi-bagger
Mentes Capital picks the potential Multi-bagger companies which have a
potential to report explosive growth over a period of time. We predict from
our many years of experience of tomorrow’s large cap from today’s small or
mid cap. Well before FII’s or DII’s enter into a stock we will recommend
monthly one scrip with exclusive reports on every scrip recommended,
Monthly one scrip so as to build up a healthy portfolio in a years’ time. This
will help our client to create “MASSIVE WEALTH”.

 Mentes Bulls Eye
Mentes capital rightly observed and realized some short and midterm
opportunities in the stock market. These rare but sure shot money making
agenda, which we made it incredibly possible in the past also for the investors
and traders. We believe that 25-30 such opportunities in a year’s time frame
with expected return of 25% -40% can be grabbed from the market.
 Mentes PMS (Portfolio Management Services)
Mentes Capital create stock portfolio which includes midcaps, small caps and
large cap with mix variant potential businesses which have a greater amount of
tendency to become large cap. Portfolio is important to reduce the risk without
sacrificing the return. It is a complex process which tries to make investment
activity more rewarding and less risky. Across the world high net worth
individual turning to specialist portfolio management services for managing
their wealth. This is personalized tailor made service for high net worth
individual like you. We provide professional solutions customized to meet
your financial goals. Meeting investment easy yet rewarding high net worth
individual like you.
Corporate Finance:
Here specific focus is on start-ups and Entrepreneurs. Bangalore provides a vibrant
eco system for technology intensive firms to come to market with their app, service
and product offering quickly and scale their operations because of the availability of
talent. Non tech related start-ups have also come up in recent times delivering various
services and aggregating service providers.

Research:
 Fundamental Research
Fundamental Analysis is an attempt to analysis various fundamental and other
basic factors that affect the risk and the return of the securities. The analysis of
economy, industry, & company fundamental is the main ingredient of the
fundamental approach. Fundamental analysis helps to analyse the strength of
the industry. The objective of Fundamental analysis is to appraise ‘intrinsic
value’ of a security.
 Technical Research
Applied research oriented toward engineering disciplines (but not to a specific
product or process) and aimed at developing tools and test equipment and
procedures, and at providing solutions to specific technical problems.

BBC Analysis:
 Brief of the business
Mentes Capital is an independent equity research and financial advisory firm,
related to Equity Market. Mentes Capital is a platform where a hard core
research is done for a particular industry and best gems are picked out after the
research and then recommendation is given to the prospective clients. Our
clients are from all over the India and are business and working professionals
those who have some knowledge about the Equity Market and can easily
understand the business model of the company. Mentes Capital have unique
business model which is especially designed for those people who don’t have
enough time to track the market on daily basis and wants to make some decent
returns from their investments. Business model of Mentes Capital is totally
based on the hard core research, recommendations and satisfactions of the
prospective clients.
 Best Practices
A best practice is a method or technique that has been generally accepted as superior
to any alternatives because it produces results that are superior to those achieved by
other means or because it has become a standard way of doing things. Mentes
Capital is a start-up so they don’t have such kind of best practice as their
business model is totally different, hence doesn’t required any alternative for
their business. The services they provide are very critical and planned by
highly qualified professionals.
 Culture of the Organization
Organizational culture is a system of shared assumptions, values, and beliefs, which
governs how people behave in organizations. The organizational culture of Mentes
Capital is: -

 Employee Friendly: - Employees are treated as a friend here, they have
free rights to speak for their issues and for any kind of improvement which
they think is beneficial for the organization.
 No Diversification: - Mentes Capital is strongly against of diversification,
employees of any culture, religion or community are welcomed and
equally treated.
 Co-operative Environment: - The environment here is very cooperative,
people can manage and balance their professional and personal life very
easily. There is no hard and fast rule of time management. Managers are
very friendly and of helping nature.
 Dressing Rule: - There is no restriction of dressing but it should be
professional. On Friday’s and Saturday’s, employees are free to wear
casual or semi casual.

SWOT Analysis of Mentes Capital:

Details about SWOT Analysis:
 Strengths:
 Being a Financial Advisory Firm, Mentes Capital’s management is a core
strength of the company. Company is managed by two Finance Professionals
Mr Kiran Bindu and Mr C. Moral. Both of them have expertise and robust
knowledge of the industry.
 The services provided by the Mentes Capital are the backbone of the
company, they are the sole-service provider of these kind of financial services
related to Equity Market. The charges are very nominal for the services they
provide and the work done for those services is highly valuable.
 Research is one of the strength of Mentes Capital as, the research they do for
finding out the gems stock from the market is very critical and important.
They have highly qualified research team for the fundamental and technical
research.
 Mentes Capital is globally present now, people all over the country and also in
Middle East knows about Mentes Capital, people from almost every part of
the country are member of Mentes Capital, which makes Mentes Capital is a
successful and renowned company in Financial Industry.
 Weakness:
 As a newly start-up company, adequate human resource is a problem for
Mentes Capital. They have limited number of employees and work pressure is
quite high, so having proper workforce is a weakness for them. They are
trying to deal with and soon there will be proper human resource for Mentes
Capital.
 It always takes time for a plant to grow in a tree, likewise Mentes Capital is a
Young Brand, and it took time to establish properly in the market. In the

current scenario, people are brand oriented so they did not consider new start-
ups they always trust old because for them ‘Old is Gold’
 Opportunities:
 Building a relationship with client is quite important and this opportunity
Mentes Capital is having as they deal with clients in such a manner that they
can build their trust and good customer relationship with the clients.
 People are scared of Equity Market, they generally don’t want to park their
money in the Equity, Mentes Capital making people aware about Equity
Market and give them opportunity to start Investment with less amount so that
they feel safe and also get some good returns.
 Threats:
 Artificial Intelligence is a biggest threat for Mentes Capital, as there will be
some virtual robot who will update a person about the stocks and market and
person will start believing them. There will be some virtual computer and
that will do all the research work and give updates. The result will be close
to 80% exact and people will trust it. This will create a big threat to the
companies in this industry.

Porter’s Five Force Model
1. Rivalry:
Market saturation will often prevent a single player from gaining an overriding sales
advantage and experiencing a surge in revenue. This internal threat is present in
almost every industry that is not dominated by a monopoly. The rivalries for Mentes
Capital are.
 CapialVia, is a Financial Market Research and Consulting Company which
provides recommendation in day-to-day trading and commodities.
 Stock axis, is an Investment Advisor which provides recommendation for
Multibaggars Stocks.
 The Equicom Financial Services, is new start up and turns out to be a threat
for Mentes Capital.

 Epic Research that comes out to be the biggest rivalryfor Mentes Capital.
 Amore Growth Financials, it is investment advisory and wealth management
firm provides advice for wealth management.
2. Threat of new entrants:
Barriers to entry are one of the most crucial components of Porter's framework.
Barriers to entry can exist in the form of patents, substantial capital requirements,
government regulations, access to a proper distribution network and technological
expertise.
 If there is any new entrant with the same model, there will be huge
competition in the market.
 Profitability of the existing firm will be affected.
 Growth of the industry will face decline.
 Competition will face a new level.
 Equity Market is a critical market; anyone will not be able to survive here.
3. Bargaining power of buyer:
 Shifted towards the favour of buyers.
 Buyers do bargaining as their sole right.
 They always ask for discounts and offers.
 Buyers consider that price of our services are quite high.
 Investors always do bargaining as they will get their returns after a quite long
time.

4. Bargaining power of suppliers:
The threat of disproportionate supplier bargaining power is typically a problem for
smaller companies that are exclusively dependent on the inputs provided by one
seller.
 As there are old players present in the market and new players entering in the
market.
 Advisors, their bargaining power has grown over the last 20 years.
 Suppliers are very less in this industry, so there is no much bargaining power.
 Service providers don’t need suppliers for their services, as there is no bargain
which can happen.
5. Threat of substitution:
5.1 Equity Market and Derivatives:
 CapialVia
 Stock Axis
 Equicom Financial Service
 SS Capital
5.2 Commodities:
 MCX
 Share khan
5.3 Broking Firms:
 India Infoline
 Karvy Financial Solutions
 Kotak Securities
 HDFC Securities
 ICICI Direct

Chapter 4
Data Analysis and Interpretation
Fundamental Analysis is a unique technique to measure the intrinsic value of an
equity share by analysing economic, industry, and company fundamental factors.
Fundamental analyst studies the entire factors that can have an effect on the security
price, consisting of macroeconomic elements (like the overall economy and industry
conditions) and investors related factors (just like the financial condition and
management of businesses).
The Fundamental analysis is a three phase analysis of
a) The Economy
b) The Industry and
c) The Company
Phase Nature of
Analysis
Purpose Tools and techniques
FIRST Economic
Analysis
To study the impact of
Macro Economic Factors on
stock market fluctuations.
Economic indicators
GDP, Interest Rates,
Inflation,
SECOND Industry
Analysis
To assess the prospects of
various company groupings.
Industry Analysis,
Industry life cycle,
Porters Five Forces Model.
THIRD Company
Analysis
To examine the financial
and Non-financial factors of
a company to determine
whether to buy, sell or hold
the stocks of a company.
Analysis of financial
Factors Analysis of the
companies through
3) Common size
4) Comparative size
5) Valuation of equity
shares of selected
pharma stocks to
compute its intrinsic
value

Economy Analysis
GDP
GDP measure the entire cost of goods and services produced in India of particular
period. India: Real gross domestic product (GDP) growth rate from 2010 to 2020
(compared to the previous year)
The statistic shows the growth of the real gross domestic product (GDP) in India from
2010 to 2015, with projections up until 2020. GDP refers to the total market value of
all goods and services that are produced within a country per year. It is an important
indicator of the economic strength of a country. There’s two type of GDP that are
nominal GDP and real GDP. Nominal GDP keep aside the impact of price
adjustments for inflation. Real GDP includes the impact of price changes. Economic
growth also normally measured with the aid of the increase in as GDP suggests the
financial situation it also shapes the attitude of the market concerning positive for
India.
GDP growth rate in India

Source - http://www.statista.com/statistics/263617/gross-domestic-product-gdp-
growth-rate-in-india/
Interpretation –
The GDP of India was 10.26% in year 2010 but after that it declined in the range of
6% to 7% in the following years. The present GDP of 2016 is 7.45% which indicate
the Indian economy is highly productive which in turn will have a positive impact on
stock market.
Interest Rate
The increasing Interest rate will lessen the current price of future cash flows, inflicting
lack of appeal to investment. Investment should shift rapidly in regard of change in
interest rate. Reserve Bank of India via monetary policy in charge of figuring out the
basic interest rate, in India it’s called “Interest rate”. The shift in interest rate have an
effect on time deposit rate and financial institution credit rate. If the interest rate
increases the cost of capital of the company increases, it reduces the possibility of the
company which in turn influences the share prices. If interest rate increases usually
investor s shift their investment towards fixed income securities than the share market
Inflation
Inflation is a procedure of increasing price of products and services in well known.
High inflation rate frequently associated with overheated economies in which the
demand for products and services is an extra than the manufacturing capacity which
leads to pressure to increase in price. In general inflation may want to cause lower in
investment. Because untamed inflation could result in increase in interest rates,
lowering the purchasing power, and if the government not able to intervene it could
cause recession. Inflation and stock market are negatively related. If inflation rises it
leads to increase in the prices of raw material or finished goods which in turn affect
the demand and profitability of the company and vice- versa
.

Government Initiatives in Pharma Sector
The Addendum 2015 of the Indian Pharmacopoeia (IP) 2014, posted by way of the
Indian Pharmacopoeia commission (IPC) on behalf of the Ministry of health & circle
of relatives Welfare, is predicted to play a big role in enhancing the first-rate of
medicines that might in turn promote public health and boost up the increase and
improvement of pharmaceutical sector.
The authorities of India unveiled 'Pharma vision 2020' geared toward making India a
worldwide chief in quit-to-give up drug manufacture. Approval time for new centres
has been reduced to boost investments. In addition, the government introduced
mechanisms such as the Drug charge manipulate Order and the national
Pharmaceutical Pricing Authority to cope with the issue of affordability and
availability of drug treatments. Some of the fundamental initiatives taken by means of
the government to sell the pharmaceutical sector in India are as follows:
 Indian Pharmaceutical association (IPA), the professional association of
pharmaceutical organizations in India, plans to prepare information integrity
suggestions with a view to assist to degree and benchmark the pleasant of Indian
corporations with worldwide friends.
 The government of India plans to incentivise bulk drug producers, including each
state-run and personal organizations, to encourage. Make in India programme and
reduce dependence on imports of lively pharmaceutical ingredients (API), nearly 85
in line with cent of which come from China.
 The department of prescribed drugs has installation an inter-ministerial co-ordination
committee, which would periodically overview, coordinate and facilitate the decision
of the problems and constraints faced by using the Indian pharmaceutical
organizations.

 The department of Pharmaceuticals has deliberate to release a venture capital fund of
Rs 1,000 crore (US$ 154 million) to support Begin-America within the research and
development in the pharmaceutical and biotech enterprise.
 Indian and international organizations have expressed one hundred seventy-five
funding intentions well worth Rs 1,000 crore (US$ 146.72million) in the
pharmaceutical region of Gujarat. The memorandums of know-how (MoUs) would be
signed at some stage in the vibrant Gujarat Summit.
 Telangana has proposed to set up India's largest included pharmaceutical city spread
over eleven,000 acres near Hyderabad, whole with effluent remedy plant life and a
township for employees, in a bid to attract funding of Rs 30,000 crore (US$ 4.41
billion) in stages. Hyderabad, that is referred to as the bulk drug capital of India,
money owed for nearly a fifth of India's exports of drugs, which stood at Rs ninety-
five,000 crores (US$ 13.94 billion) in 2014-15.
 On the release of Cluster improvement Programme of pharmaceutical sector, Mr.
Ananth Kumar, Minister of Fertiliser and chemicals, announced that six
pharmaceutical parks may be authorised and established this 12 month with a view to
have enough infrastructure and facilities for trying out and treatment of medicine and
additionally for offering education to enterprise experts.
Road Ahead
The Indian pharmaceutical marketplace length is predicted to grow to US$ one
hundred billion by means of 2025, pushed via increasing customer spending, fast
urbanisation, and elevating healthcare coverage amongst others. Going ahead, better
growth in home sales would also rely upon the ability of businesses to align their
product portfolio toward persistent therapies for sicknesses inclusive of along with
cardiovascular, anti-diabetes, anti-depressants and anti-cancers which can be at the
upward push.
The Indian government has taken many steps to lessen costs and convey down
healthcare costs. Speedy creation of generic drugs into the market has remained in

focus and is predicted to benefit the Indian pharmaceutical corporations. In addition,
the thrust on rural fitness programmes, lifesaving tablets and preventive vaccines also
augurs nicely for the pharmaceutical companies.
Investments in Pharmaceutical Sector
The union cabinet has given its nod for the modification of the prevailing foreign
direct investment (FDI) policy inside the pharmaceutical area so as to permit FDI up
to 100 percent under the automated course for production of medical electronics
gadgets concern to positive conditions.
The drugs and pharmaceuticals sector attracted cumulative FDI inflows really worth
US$ 13.45 billion among April 2000 and December 2015, according to statistics
releasedwith the aid of the department of industrial policy and promotion (DIPP).
A number of the primary investments in the Indian pharmaceutical sector are as
follows:
 Pink Blue Supply Solutions Pvt Ltd, A Clinical materials provider, has raised
Rs 1.5 Crore (US$ 0.22 Million) In A seed round of investment from
Termsheet.Io, A transaction-targeted service provider for start-up and Investor
 Dr Reddy's Laboratories, one of the foremost pharmaceutical companies of
India, has entered into a strategic collaboration settlement with Turkey-based
totally TR-Pharm, to check in and sooner or later commercialise three bio
similar products in Turkey
 Lupin has completed the acquisition of US-primarily based GAVIS
pharmaceuticals in a deal worth US$ 880 million, which is anticipated to
beautify its product pipeline in dermatology, managed materials and
excessive-price speciality merchandise.
 Cipla Ltd, one of the main pharmaceutical and biotechnology groups in India,
has received US-primarily based everyday drug makers, InvaGen
Pharmaceutical Inc. and Exelan Pharmaceutical Inc., for US$ 550 million,
which is expected to strengthen Cipla's US commercial enterprise

 Cipla announced the purchase of two US-based totally corporations, InvaGen
prescribed drugs Inc. and Exelan prescription drugs Inc., for US$550 million.
Glaxosmithkline prescribed drugs has commenced work on its largest
Greenfield pill manufacturing facility in Vemgal in Kolar district, Karnataka,
with an envisioned investment of Rs1, 000 crores (US$ 146.seventy-two
million).
 Lupin has acquired US based totally pharmaceutical companies, Gavis
prescribed drugs LLC and Novel Laboratories Inc, in a deal really worth at
US$ 880 million.
 Numerous on-line pharmacy shops like PharmEasy, Netmeds, Orbimed, are
attracting investments from several traders, because of double digit growth in
the Rs 97,000 crore (US$ 14.8 billion) Indian pharmacy marketplace.
 StelisBiopharma introduced the leap forward creation of its customised,
multi-product, biopharmaceutical manufacturing facility at Bio-Xcell
Biotechnology Park in Nusajaya, Johor, Malaysia's park and surroundings for
business and healthcare biotechnology at a total project funding amount of us$
60 million.
 Strides Arcolab entered right into a licensing settlement with US-based Gilead
Sciences Inc to fabricate and distribute the latter's fee-efficient
TenofovirAlafenamide (TAF) product to treat HIV sufferers in developing
international locations. The licence to fabricate Gilead's low-price drug
extends to 112 nations.
 CDC, the United Kingdom development finance group, invested US$ 48
million in Narayana Hrudayalaya hospitals, a multi-speciality healthcare
provider, with an intention to increase less costly treatment in eastern, vital
and western India.

 Cadila Healthcare Ltd announced the release of a biosimilar for Adalimumab
- for rheumatoid arthritis and different automobile immune issues. The drug
can be advertised under the brand call Exemptia at one-fifth of the charge for
the branded model-Humira. Cadila’s biosimilar is the primary in class and an
exact reproduction of the original in terms of protection, purity and potency of
the product, claims the company.
 Torrent pharmaceuticals entered into a distinctive licensing settlement with
Reliance existence Sciences for marketing three biosimilar in India â€”
Rituximab, Adalimumab and Cetuximab. Indian Immunologicals Ltd plans to
set up a new vaccine production facility in Pondicherry with an investment of
Rs 300 crore (US$ 44.02 million).
 SRF Ltd has obtained international DuPont Dymel, the pharmaceutical
propellant business of DuPont, for US$ 20 million.
 Intas pharmaceuticals is the first global corporation to launch a biosimilar
model of Lucentis, the sector largest selling drug for remedy of degenerative
eye situation referred to as Razumab.

Industry Analysis
Pharmaceutical sector
The Indian pharmaceutical enterprise is anticipated to grow at 20 consistent with cent
Compound Annual growth rate (CAGR) over the next five years. The Indian pharma
enterprise, that's anticipated to develop over 15 per cent consistent with annum among
2015 and 2020, will outperform the global pharma enterprise, which is set to grow at
an annual rate of 5% among the same periods. Currently the market size of the
pharmaceutical industry in India stands at US$ 20 billion. As on March 2014, Indian
pharmaceutical manufacturing centres registered with the US Food and Drug
administration (FDA) stood at 523, highest for any country outside U S. Domestic
pharmaceutical marketplace grew at a CAGR of 12 per cent year-on-year in February
2016, broadly in step with the average of 12.9%. Since April 2015. Indian
pharmaceutical firms are eyeing acquisition possibilities in Japan's developing
frequent market as the Japanese government objectives to increase the penetration of
usual tablets to 60 % of the market by way of 2017 from 30% in 2014, because of
ageing populace and rising health cost. India has the largest wide variety US FDA
compliant plant. The industry is anticipated to attain US$ 55 million by 2020, out of
which US$ 30 million will be for exports. India's biotechnology industry comprising
bio-prescribed drugs, bio-offerings, bio-agriculture, bio-industry and bioinformatics is
expected grow at a 30% a year and attain US$ 100 billion by means of 2025.
Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-zone
contributing nearly sixty-two according to cent of the whole revenues at Rs 12,600
crore (US$ 1.9 billion).
Growth of Pharmaceutical sector
• The Indian pharmaceuticals market increased at a CAGR of 17.46 per cent in 2015
from US$ 6 billion in 2005 and is expected to expand at a CAGR of 15.92 per cent
to US$ 55 billionby 2020.
• By 2020, India is likely to be among the top three pharmaceutical markets by
incremental growth and sixth largest market globally in absolute size.
• India’s cost of production is significantly lower than that of the US and almost half
of that of Europe. It gives a competitive edge to India over others.

-
Source: http://www.ibef.org/industry/pharmaceutical-india/showcase#sthash.lD8OuwtQ.dpuf
Generic drugs form the largest segment
 With 70 per cent of market share (in terms of revenues), generic drugs form
the largest segment of the Indian pharmaceutical sector.
 India supply 20 per cent of global generic medicines market exports in terms
of volume, making the country the largest provider of generic medicines
globally and expected to expand even further in coming years
 Over the Counter (OTC) medicines and patented drugs constitute 21 per cent
and 9 per cent, respectively, of total market revenues of US$ 20 billion
Source at: http://www.ibef.org/industry/pharmaceutical-
india/showcase#sthash.lD8OuwtQ.dpuf

Industry Life Cycle
An enterprise has to grow in cylical manner from very speedy start up growth
to strong mature growth. usually industry lifestyles cycles is assessed with the aid of 4
stages:
a) Start-up level
Start-up level is frequently characterised by using extensive speedy growth.
b) Consolidation level
Prior to start-up degree is consolidation stage, the survivors of start-up level
are becoming more stable. The industry growth continues to be quicker than
the overall economic system as product penetrate and emerge as normally
used.
c) Maturity level
Maturity level characterized through growth that is no faster than the general
economic growth, product become extra standardized and manufacturer are
competing on price basis resulting in lower profit margin.
d) Relative Decline
In relative decline stage, the industry would possibly have slower growth than
the general economy, or in reality shrinks in poor growth.

Bargaining PowerofSuppliers
1) Volume benefits occurs inputs
standard, available locally,
2) Numerous Suppliers-switching cost
low supplier can go for forward
integration.
3) Raw material cost constitutes more
than 50% of the total expenses
Threats of Substitutes
1) No substitutes for
the medicine
2) Biotechnologyis a
threat to synthetic
pharma products
Barriersto Entry
1) Very low barriers to entry
2) Government policy
supportive for entrybut
price regulationexists
3) Economies of scale exist
4) Proprietarytechnology
exist and product will
exist after 2015.
Industry Competition
1) Highly competitive.
2) Top three players have
40% of market share.
3) Lower fixedcost and high
working capital
Bargaining Power of Buyers
1) End consumer do not have bargaining power
2) Brand identityexists but is in the hands of
Influencer(Doctors)
3) Price sensitivityis less
4) High fragmented market, so buyer
concentrationv/s industry is low
Pharmaceutical Sector through Porters Five Forces Model
1. Industry Competition-
Pharma industry is one of the most aggressive industries within the
country with as many extraordinary players fighting for the market share.
The contention inside the industry can be gauged from the reality that the
top participant in the India has most effective 25% market share, and the
top 3 players collectively have about 40% market share. hence, the
concentration ratio for this industry could be very high. high growth

possibilities make it appealing for brand new players to enter within the
industry.
Another foremost component that adds to the industry rivalry is the truth
that the access obstacles to pharma Industry are very low. The fixed cost
requirement is low however the requirement for working capital is
excessive. The fixed asset turnover, that is one of the gauges of fixed cost
requirement, tells us that in larger companies this ratio is inside the range
of 3.five to 4 instances. For smaller businesses, it might be even better.
Many smaller players that are targeted on a selected location, have a
higher grasp of the distribution channel, making it easier to succeed, albeit
in a confined way. An crucial truth is that pharma is a stable market and its
growth rate commonly tracks the economic growth of the india with a few
multiple (1.2 instances common in India). although volume growth has
been constant over a time frame, value growth has now not followed.
The product differentiation is one key element, which offers competitive
gain to the companies in any industry. but, in pharma industry product
differentiation is not viable on the grounds that India has observed process
patents until date, with laws favouring imitators. therefore, product
differentiation is not the driving force, value competitiveness is. but,
businesses like Pfizer and Glaxo have created huge manufacturers in
through the years, which act as product differentiation tools. this may
decorate over the long time, as product patents come into play from 2015.
2. Bargaining power of Suppliers- The pharma industry relies upon upon
several natural chemicals. The chemical enterprise is once more very
competitive and fragmented. The chemical compounds used in the pharma
industry are largely a commodity. The providers have very low bargaining
power and the corporations within the pharma enterprise can switch from
their suppliers with out incurring a very excessive cost.
However, but, what can manifest is that the provider can go for forward
integration to become a pharma agency. organizations like Orchid

chemicals and Sashun chemical were essentially chemical organizations,
who grew to become themselves into pharmaceutical companies.
3. Bargaining power of Buyers- The specific function of pharma industry is
that the end person of the product is different from the influencer (doctor/
physician). The customer has no preference however to buy what
physician says. but, whilst we have a look at the customer's power, we
study the have an impact on they've at the prices of the product. In pharma
industry, the customers are scattered and that they as such does not wield a
lot power in the pricing of the products. but, government with its
guidelines, performs an critical function in regulating pricing through the
NPPA. (National Pharmaceutical Pricing Authority).
4. Barriers to Entry-
Pharma industry is one of the most effortlessly available industries for an
entrepreneur in India. The capital requirement for the enterprise could be
very low, growing a local distribution network is easy, for the reason that
factor of sales is limited in this enterprise in India. but, creating brand
awareness and franchisee amongst doctors is the important thing for long-
term survival. additionally, satisfactory rules by using the government may
also positioned a few limitation for establishing new manufacturing
operations. Going ahead, the approaching new patent regime will raise the
barriers to entry. however it's miles not going to discourage new entrants,
as marketplace for generics will be as large.
5. Threats of Subtitutes- This is one of the benefits of the pharma industry.
anything happens, demands for pharma products continues and the
industry prospers. one of the key reasons for high competitiveness in the
industry is that as an on going concern, pharma industry seems to have an
infinite future. however, these days, the advances made in the subject of
biotechnology, can show to be a threat to the synthetic pharma Industry.

6. Conclusion-
This model gives a fair concept the industry wherein a organization
operates and the various external forces that have an impact on it.
however, it ought to be stated that any industry is not static in nature. it is
dynamic and over a time period the version, which have used to examine
the pharma enterprise may also itself evolve.
Going ahead, we foresee growing competition inside the enterprise
however the form of competition could be extraordinary. it will likely be
between big players (with economies of scale) and it could be feasible that
a few form of oligopoly or cartels come into play. this is as a result of the
truth that the enterprise will circulate in the direction of consolidation. the
bigger players in the industry will continue to exist with their products
and franchisee. in the Indian context, corporations like Cipla, Ranbaxy
and Glaxo are probable to be key players. though consolidation in the
current big names isn't ruled out. Smaller players, who have no
differentiating strengths, are probably to both acquired or cease to exist.
The barriers to access will increase going forward. The change in the
patent regime, will see new proprietary products developing, making
imitation difficult. The players with big capability might be able to steer
widespread power of fringe players through their aggressive pricing with a
view to create issue for the smaller players. Economies of scale will play
an essential element too. last but not the least, in a sizeable united states of
america of ndia's length, authorities too may have larger position to play.

NameLastPriceMarketCap.(Rs.cr.)SalesTurnoverNetProfitTotalAssetsNoofsharesO/SEPSP/EMcap/SalesMcap/AssetsNPMarginROAMarketShareAssetsShareIntrinsicValueValuationKratio
SunPharma811.7195354.158017.2-1474.1328209.4240.67-6.13-132.5224.376.93-18%-5.23%25.24%15.40%81405.35overvalue0.42
Lupin1475.366474.519752.472397.359067.8345.0653.2127.736.827.3325%26.44%8.59%4.95%41218.83overvalue0.62
DrReddysLabs3015.6551449.310010.941679.3513758.817.0698.4330.645.143.7417%12.21%6.65%7.51%52501.44undervalue1.02
AurobindoPharm740.743343.518095.11516.348256.0758.5225.9128.585.355.2519%18.37%5.60%4.51%35883.66Overvalue0.83
Cipla512.3541161.3910131.781181.0912470.7680.3414.7034.854.063.3012%9.47%5.32%6.81%49805.82Undervalue1.21
RanbaxyLabs859.836598.556864.94-8797088.0642.57-20.65-41.645.335.16-13%-12.40%4.73%3.87%30628.96Overvalue0.84
CadilaHealth319.432698.345284.431271.125788.6102.3712.4225.726.195.6524%21.96%4.23%3.16%24338.38Overvalue0.74
GlaxoSmithKline3772.9531958.023287.58471.651854.38.4755.6867.769.7217.2314%25.44%4.13%1.01%11141.75Overvalue0.35
DivisLabs982.2526075.653084.01847.063588.0926.5531.9130.788.467.2727%23.61%3.37%1.96%14684.42overvalue0.56
TorrentPharma135122861.9934766234990.8116.9236.8236.706.584.5818%12.48%2.95%2.73%18718.33overvalue0.82
Glenmark774.7521860.25085.61007.535299.6528.2235.7121.704.304.1220%19.01%2.82%2.89%22801.81undervalue1.04
PiramalEnter1019.517592.812401.41372.7415250.1517.2621.6047.207.331.1516%2.44%2.27%8.33%39953.99undervalue2.27
AlkemLab1371.116393.563182.93438.844175.1211.9636.7037.365.153.9314%10.51%2.12%2.28%16235.98overvalue0.99
AjantaPharma1370.8512063.651356.2306.37836.58.8034.8139.388.9014.4223%36.63%1.56%0.46%4760.06overvalue0.39
AlembicPharma604.911403.332011.04286.611002.1818.8515.2039.795.6711.3814%28.60%1.47%0.55%6513.02overvalue0.57
Wockhardt954.510548.071886.55331.822207.9911.0530.0331.795.594.7818%15.03%1.36%1.21%9012.71overvalue0.85
AbbottIndia4742.3510077.162288.64228.96937.522.12107.7544.014.4010.7510%24.42%1.30%0.51%6947.28overvalue0.69
Biocon481.496282241.6361.222651.920.0018.0626.654.303.6316%13.62%1.24%1.45%10773.85undervalue1.12
StridesShasun1045.259338.89929.42532.321801.328.9359.5817.5410.055.1857%29.55%1.21%0.98%6073.88overvalue0.65
SanofiIndia4046.759319.922193.1321.51485.842.30139.6028.994.256.2715%21.64%1.20%0.81%8002.31overvalue0.86
Pfizer1794.458209.21853.3169.821975.524.5715.26117.584.434.164%3.53%1.06%1.08%8410.72undervalue1.02
DrLalPathLab930.67690.92636.6187.97319.238.2610.6487.4312.0824.0914%27.56%0.99%0.17%2066.29overvalue0.27
IpcaLabs589.057433.763085.14256.113055.7112.6220.2929.032.412.438%8.38%0.96%1.67%13467.85undervalue1.81
SunPharmaAdv291.27189.42155.74-39.52103.4824.69-1.60-181.9246.1669.48-25%-38.19%0.93%0.06%563.61overvalue0.08
NatcoPharma397.656926.04715.57152.921143.8317.428.7845.299.686.0621%13.37%0.89%0.62%4119.92overvalue0.59
JubilantLife396.66317.093176.3205.114024.4915.9312.8830.801.991.576%5.10%0.82%2.20%15877.19undervalue2.51
SequentScienti147.13504.45444.8241.31484.2623.821.7384.837.887.249%8.53%0.45%0.26%2041.83overvalue0.58
Shilpa426.153285.7565.484.18630.177.7110.9239.035.815.2115%13.36%0.42%0.34%2628.84overvalue0.80
FDC176.63140.53877.65145.91930.4717.788.2021.523.583.3817%15.68%0.41%0.51%3971.39undervalue1.26
Wyeth1333.853030.52679.3387.92271.792.2738.7034.474.4611.1513%32.35%0.39%0.15%2047.28overvalue0.68
ShasunPharma428.552882.231078.441.34934.876.736.1569.722.673.084%4.42%0.37%0.51%4402.57undervalue1.53
AstraZeneca1152.52881.25517.07-20.84150.752.50-8.34-138.265.5719.11-4%-13.82%0.37%0.08%1429.78overvalue0.50
DishmanPharma337.32721.91478.6958.641341.978.077.2746.425.692.0312%4.37%0.35%0.73%4076.69undervalue1.50
IndocoRemedies2792570.99853.6482.81604.279.228.9931.053.014.2510%13.70%0.33%0.33%3174.16undervalue1.23
GranulesIndia119.752508.241213.3195.23784.9720.954.5526.342.073.208%12.13%0.32%0.43%4342.35undervalue1.73
SectorAnalysis

GranulesIndia119.752508.241213.3195.23784.9720.954.5526.342.073.208%12.13%0.32%0.43%4342.35undervalue1.73
SuvenLifeSci1952482.01520.86108.75649.0112.738.5422.824.773.8221%16.76%0.32%0.35%2578.55undervalue1.04
JBChemicals252.552142.131061.42113.581121.448.4813.3918.862.021.9111%10.13%0.28%0.61%4794.12undervalue2.24
FreseniusKabi132.52096.52596.380.59813.3415.825.0926.013.522.5814%9.91%0.27%0.44%3113.04undervalue1.48
UnichemLabs222.052017.171090.9864.4947.639.087.0931.321.852.136%6.80%0.26%0.52%4458.17undervalue2.21
MarksansPharma46.651909.45408.6867.11401.740.931.6428.454.674.7516%16.71%0.25%0.22%1776.99overvalue0.93
CaplinLabs1012.21529.43240.2340.9494.581.5127.0937.366.3716.1717%43.29%0.20%0.05%720.47overvalue0.47
MorepenLab26.81205.53370.260.58377.5344.980.012078.503.263.190%0.15%0.16%0.21%1641.06undervalue1.36
AartiDrugs448.051085.051087.2277.6706.432.4232.0413.981.001.547%10.98%0.14%0.39%3898.03undervalue3.59
Merck643.51068.17939.553.56554.31.6632.2719.941.141.936%9.66%0.14%0.30%3239.85undervalue3.03
Hikal118.25972.02871.8640.52965.938.224.9323.991.111.015%4.19%0.13%0.53%4040.44undervalue4.16
Alembic35.65951.97145.8124.15264.2326.700.9039.426.533.6017%9.14%0.12%0.14%910.84overvalue0.96
NectarLife37.15833.131643.6466.261818.7922.432.9512.570.510.464%3.64%0.11%0.99%7612.06undervalue9.14
TTKHealthcare950737.77482.9316.16156.560.7820.8145.651.534.713%10.32%0.10%0.09%1371.47undervalue1.86
SMSPharma87.1737.32579.2935.24406.898.474.1620.921.271.816%8.66%0.10%0.22%2146.75undervalue2.91
VivimedLabs418.15677.56431.5818.94967.891.6211.6935.771.570.704%1.96%0.09%0.53%3121.38undervalue4.61
NeulandLab702.1623.69464.715.78338.840.8917.7639.521.341.843%4.66%0.08%0.19%1750.58undervalue2.81
AmrutanjanHeal421.95616.69163.3317.29104.831.4611.8335.673.785.8811%16.49%0.08%0.06%582.63overvalue0.94
PanaceaBiotec93.1570.24679.2-65.231487.986.13-10.65-8.740.840.38-10%-4.38%0.07%0.81%4831.59undervalue8.47
HesterBio494.45420.6290.0414.58120.580.8517.1428.854.673.4916%12.09%0.05%0.07%464.95undervalue1.11
AstecLife196381.32253.4614.78221.711.957.6025.801.501.726%6.67%0.05%0.12%1039.29undervalue2.73
RPGLife222.4367.76242.271157.941.650.60367.761.522.330%0.63%0.05%0.09%869.81undervalue2.37
MangalamDrugs254.25365.57220.666.14100.551.444.2759.541.663.643%6.11%0.05%0.05%693.08undervalue1.90
OrchidPharma37.75335.841753.73-191.043579.998.90-21.47-1.760.190.09-11%-5.34%0.04%1.95%11875.43undervalue35.36
GuficBio42.1325.64151.753.7556.57.730.4886.842.155.762%6.64%0.04%0.03%447.68undervalue1.37
ThemisMedicare337.9287.72166.862.05146.480.852.41140.351.721.961%1.40%0.04%0.08%685.39undervalue2.38
LincolnPharma154.9252.65228.614.77159.421.639.0617.111.111.586%9.26%0.03%0.09%844.53undervalue3.34
Kopran49.3213.22325.5915.48211.624.323.5813.770.651.015%7.31%0.03%0.12%1167.49undervalue5.48
SectorialAnalysis

PiramalPhytoca67.45175.14.54-3.468.272.60-1.33-50.6138.5721.17-76%-41.84%0.02%0.00%28.46overvalue0.16
LykaLabs79.3174.7890.481.37125.982.200.62127.581.931.392%1.09%0.02%0.07%478.24undervalue2.74
BrooksLabs85.6138.5685.219.47111.931.625.8514.631.631.2411%8.46%0.02%0.06%435.01undervalue3.14
BalPharma105.9136.32187.134.02102.381.293.1233.910.731.332%3.93%0.02%0.06%626.94undervalue4.60
SharonBioMedi11130.83833.95-225.86939.1711.89-18.99-0.580.160.14-27%-24.05%0.02%0.51%3899.65undervalue29.81
NathBio-Genes77.3123.71185.3325.36128.071.6015.854.880.670.9714%19.80%0.02%0.07%681.98undervalue5.51
ParenteralDrug40.05119.41176.59-54.08516.82.98-18.14-2.210.680.23-31%-10.46%0.02%0.28%1553.69undervalue13.01
SterlingBio3.9106.15415.64-376.855587.1627.22-13.85-0.280.260.02-91%-6.74%0.01%3.05%13664.21undervalue128.73
VenusRemedies89.5102.41451.884.55750.211.143.9822.510.230.141%0.61%0.01%0.41%2665.56undervalue26.03
Wanbury45.5590.96249.923.21180.092.001.6128.340.360.511%1.78%0.01%0.10%936.58undervalue10.30
JagsonpalPharma33.387.24138.151.17134.742.620.4574.560.630.651%0.87%0.01%0.07%598.29undervalue6.86
AlpaLabs40.6585.5357.39-1.4115.122.10-0.67-61.091.490.74-2%-1.22%0.01%0.06%383.96undervalue4.49
ElderPharma37.376.6483.4717.181330.242.058.374.460.160.064%1.29%0.01%0.73%4059.86undervalue53.00
DrDatsonLabs6.470.13421.050.67782.9810.960.06104.670.170.090%0.09%0.01%0.43%2675.92undervalue38.16
BafnaPharma29.9555.87142.526.11135.321.873.289.140.390.414%4.52%0.01%0.07%608.78undervalue10.90
CelestialBio24.6550.527.451.397.82.050.6338.851.840.525%1.33%0.01%0.05%281.50undervalue5.57
KilitchDrugs35.647.1119.03-0.19119.951.32-0.14-247.952.480.39-1%-0.16%0.01%0.07%314.56undervalue6.68
PlethicoPharma12.141.22136.63-273.61802.593.41-80.32-0.150.300.05-200%-34.09%0.01%0.44%2124.21undervalue51.53
ParabolicDrugs5.232.18233.02-379.32761.416.19-61.29-0.080.140.04-163%-49.82%0.00%0.42%2232.11undervalue69.36
OrtinLabs17.930.3260.410.942.191.690.5333.690.500.721%2.13%0.00%0.02%223.32undervalue7.37
CountryCondos3.930.2632.931.67167.760.2218.120.921.895%10.44%0.00%0.01%105.71undervalue3.49
ArvindRemedies427.25787.07-320.04853.346.81-46.98-0.090.030.03-41%-37.50%0.00%0.47%3604.79undervalue132.29
Ind-Swift5.1525.93417.17-145.13870.925.03-28.82-0.180.060.03-35%-16.66%0.00%0.48%2869.13undervalue110.65
SyncomHealth5.923.661.86-3.82191.264.00-0.96-6.180.380.12-6%-2.00%0.00%0.10%567.67undervalue24.05
PanchsheelOrg2914.5435.81.8924.720.503.777.690.410.595%7.65%0.00%0.01%131.69undervalue9.06
TwilightLitaka4.2510.5331.5-139.58147.782.48-56.34-0.080.330.07-443%-94.45%0.00%0.08%404.43undervalue38.41
SuryaPharma0.152.4612.64-726.771830.8716.40-44.320.000.190.00-5750%-39.70%0.00%1.00%4218.47undervalue1714.82
SectorTotal773901.26129569.4211137.98183140.42
Average4.204.58
40.48%
MarketcapandSalesTurnover0.738597901SupposeaNewfirminthepharmaceuticalSpace/industryhas
MarketcapandAssetsinplace0.891045386Salesof100
Assets80
SectorismakingProfitThenusingtheMultiplesitsMarcapCapoughttobe419.53
SecondEstimateusingAssets366.34
Valueofthenewfirm(Average)392.93
SectorAnalysis

Sector Analysis Methodology
Step 1: Select Stocks based on ROC and Rank them in the following trenches
ROA > 20% Top Category
ROA> 15% but less than 20% Second Category
ROAC>10% but less than 15% Third Category
ROA>5% but less than 10% Fourth Category
ROA is Positive Fifth Category
ROA is Negative Reject.
Stocks we have rejected because of Negative ROA
Step 2: Within Category pick lowest P/E ratio stocks as they are likely to be
undervalued, Within Category pick highest P/E ratio Stocks as they are likely
to be overvalued.
Step 3: Pick firms with highest M Cap Share, highest Market Share and
highest
Profit Shares as they are likely to be existing large cap stocks within the
sector.
Step 4: Using the Regression Characteristic Line Value all the firm on a
comparable company’s basis, call it Value or Intrinsic Value on Comparable.
Correlation between M Cap and Total Assets - 0.89
Correlation between M Cap and Net Profit - 0.11
Correlation between M Cap and ROC - 0.11
Pick the highest which is Total Assets since it explains the M Cap the best.
Regression Characteristic Line Mcap = a+b*Total Assets
Alpha - 718.009
Beta - 0.15
Market Capitalisation = Alpha + Beta*Total Assets
Step 5: Calculate the K - Ratio which is Value/Mcap. Higher this ratio larger
the undervaluation and better it is.

Interpretation: -
The selected companies Sun Pharma, Lupin and Dr Reddys labs being the
large capitalisation acquire around 40.48% of the market share in
pharmaceutical sector.
74.44% of the companies are having good earning in the pharma industry i.e.
67 companies approx... Remaining are in losses because of the internal affairs
in the management.
It is observed that overvalued company’s prices are growing at a lesser rate,
and undervalued company’s prices at higher rates.
The intrinsic value helps in determination of overvalued and undervalued
stocks in the industry.
K-ratio is the ratio of the intrinsic value to the market capitalisation which
depicts that higher the ratio more undervalued the stock will be. These stocks
can be recommended for the investment for the long term considering the
other factor as well such as mergers and acquisition etc.
Astec Lifesciences is the good pick for the long term investment, it is selected
because it is undervalued 2.73 times i.e. company is giving good returns on
assets, Market capitalization of the Astec is 1.72 times of its Assets which
indicates the positive growth, it is negatively correlated with nifty means when
the nifty go up the stock Astec Lifesciences will drop down.
The companies selected with the red colour is recommended to sell, because
of the negative performance. These companies have borrowed huge amount of
fund for the working capital.
There are other companies which are undervalued such as suven lifesci,
morepen labs, unichem labs, glenmark, Piramal enterprises, etc. They have
positive ROC, NP margin, Market capitalisation to Sales, Market

capitalisation to Assets, having an economical share price where an investor
can invest for the short and medium period of time i.e. 3 months to 9 months.
The overvalued companies having high volatility in the market and positively
correlated with the Nifty.
The company whose ROA is more than 20% having P/E ratio is low is likely
to be undervalued indicates the healthy company with the large market Share,
K ratio helps to identify the undervalued company, higher the ratio larger the
undervaluation.

Company Analysis
Financial Analysis-
Financial statement analysis (or financial analysis) is the process of reviewing and
analysing a company's financial statements to make better economic decisions. These
statements include the income statement, balance sheet, statement of cash flows, and
a statement of changes in equity. Financial statement analysis is a method or process
involving specific techniques for evaluating risks, performance, financial health, and
future prospects of an organization
a) Horizontal Analysis-
Horizontal Analysis compares economic information over time, generally from
beyond quarters or years. Horizontal Analysis is executed by comparing financial data
from a past statement, which includes the financial statement such as Balance sheet,
income statement. While evaluating this beyond records one will need to look for
variations inclusive of better or lower profits.
b) Vertical Analysis-
Vertical analysis is a percentage analysis of financial statements. Each line item listed in the
financial statement is listed as the percentage of another line item. For example, on an income
statement each line item will be listed as a percentage of gross sales. This technique is also
referred to as normalization or common-sizing.
Valuation
a) Discounted Cash Flow
DCF valuation argues that the value of an asset may be envisioned by way of
calculating the present value of anticipated future cash flow which tied to the asset. In
stock holder perspective, dividends are one acquainted form of cash flow, which are
dispensed to the shareholders legal by means of the organization’s board of directors.
“Dividends represent cash flows at the shareholder perspective within the sense that
they may be paid without delay to shareholders.” The present value model which
undertake dividends as the future cash flows is referred to as dividend discount
models. The other type of cash flow is free cash flow.

Free cash flow model typically classified into two, free cash flow to equity model
prior to the payment of debt holder liabilities, free cash flow to firm defines cash flow
before those payments. Discounted cash flow is a common method to cost debt
securities, in terms of equity valuation the task is greater. There’s two important
troubles in discounted cash flow valuation, the cash flow and the discount rate.
b) Relative Valuation
Relative valuation argues that the intrinsic price of an asset will be estimated by way
of looking at the pricing of similar asset associated similar variables including
incomes, book value, income, etc. The fundamental idea of relative valuation is that
comparable belongings could promote (sell) at similar prices, and relative valuation
usually applied by using the usage of price multiples or enterprise value multiples.
One of the most familiar price multiple is price-to-earnings ratio (PE), which is the
price of stock divided by Earnings per share. A stock with PE that is lower than the
comparable companies is said as enormously undervalued. One among conservative
investing strategies which the application of relative valuation is to really
overweighting relatively undervalued assets and underweighting to distinctly
overvalued assets. Relative valuation also often involves various classes of assets
comparison, clustered as industry, in preference to a single comparison.

Sun Pharmaceutical Industries Ltd
 Among the top five
Indian pharma
companies
 Strong presence in
generics market
 Over half the sales
from North America
 Market
capitalization of US$ 15.6 billion
 Revenue base of about US$ 2.1 billion-
Sun Pharmaceutical Industries Ltd is an international specialty pharma company. The
Company manufactures and markets pharmaceuticals formulations as branded
generics, as well as generics in India, the United States (US) and several other
markets across the world.
The Company’s business is divided into four segments: Indian Branded Generics, US
Generics, International Branded Generics (ROW) and Active Pharmaceutical
Ingredients (API).
Its brands are prescribed in chronic therapy areas like cardiology, psychiatry,
neurology, gastroenterology, and diabetology and respiratory. It makes specialty
APIs, including peptides, steroids, hormones and anticancer. APIs and Dosage forms
are made at 20 plants across India, Israel, the US, Canada, Hungary, Brazil, Mexico
and Bangladesh. Its API products include Acamprosate Calcium, Alendronate
Sodium, Amifostine trihydrate, Budensonide and Carvedilol.
In September 2010, it acquired Taro Pharmaceutical Industries Ltd.
Source: http://www.sunpharma.com/

http://www.ibef.org/industry/pharmaceutical-india/showcase/sun-pharmaceutical-
industries-ltd#sthash.i7N0qBrN.dpuf
Sun Pharma: Leveraging its generic market capabilities
1983 Commenced operations in Kolkata
1987 Nationwide marketing operations
rolled out
2007 Launches Reditux™ (Rituximab) –
the world’s first biosimilar of a
monoclonal antibody
2004 First international acquisition: Niche
Brand in the US
2012 Acquired controlling stake in Taro
and full control on Caraco
Source: - http://www.ibef.org/industry/pharmaceutical-india/showcase/sun-
pharmaceutical-industries-ltd#sthash.i7N0qBrN.dpuf

Sun Pharma Returns Table
Date Adj Close Returns Adj Close Returns
31-03-2011 213.3154 100 5833.75 100
01-04-2011 224.5235 5.12% 105.12 5749.5 -1.45% 98.55
02-05-2011 230.1637 2.48% 107.727 5473.1 -4.93% 93.69
01-06-2011 240.022 4.19% 112.2407 5647.4 3.14% 96.63
01-07-2011 249.808 4.00% 116.7304 5482 -2.97% 93.76
01-08-2011 236.985 -5.27% 110.5787 5001 -9.18% 85.15
02-09-2011 226.1774 -4.67% 105.4147 4943.25 -1.16% 84.16
03-10-2011 246.6923 8.68% 114.5646 5326.6 7.47% 90.44
01-11-2011 256.9864 4.09% 119.2503 4832.05 -9.74% 81.63
01-12-2011 243.3669 -5.45% 112.7512 4624.3 -4.39% 78.04
02-01-2012 268.2341 9.73% 123.7219 5199.25 11.72% 87.19
01-02-2012 269.1633 0.35% 124.1549 5385.2 3.51% 90.25
01-03-2012 278.7239 3.49% 128.4879 5295.55 -1.68% 88.74
02-04-2012 294.9353 5.65% 135.7475 5248.15 -0.90% 87.94
01-05-2012 277.2568 -6.18% 127.3583 4924.25 -6.37% 82.34
01-06-2012 310.9266 11.46% 141.9536 5278.9 6.95% 88.06
02-07-2012 319.6314 2.76% 145.8715 5229 -0.95% 87.23
01-08-2012 330.9944 3.49% 150.9624 5258.5 0.56% 87.72
03-09-2012 344.4392 3.98% 156.9707 5703.3 8.12% 94.84
01-10-2012 343.7459 -0.20% 156.6567 5619.7 -1.48% 93.44
01-11-2012 351.5206 2.24% 160.1659 5879.85 4.53% 97.67
03-12-2012 364.594 3.65% 166.0119 5905.1 0.43% 98.09
01-01-2013 355.5565 -2.51% 161.845 6034.75 2.17% 100.22
01-02-2013 397.2279 11.08% 179.7774 5693.05 -5.83% 94.37
01-03-2013 405.5473 2.07% 183.4988 5682.55 -0.18% 94.20
01-04-2013 470.9638 14.95% 210.9319 5930.2 4.27% 98.22
01-05-2013 517.0425 9.33% 230.6119 5985.95 0.94% 99.14
03-06-2013 500.9237 -3.17% 223.3015 5842.2 -2.43% 96.73
Sunpharma Nifty

01-07-2013 559.8777 11.13% 248.1549 5742 -1.73% 95.05
01-08-2013 516.2007 -8.12% 228.0047 5471.8 -4.82% 90.47
02-09-2013 590.2957 13.41% 258.5802 5735.3 4.70% 94.73
01-10-2013 605.7172 2.58% 265.2515 6299.15 9.38% 103.61
01-11-2013 569.1036 -6.24% 248.6998 6176.1 -1.97% 101.57
02-12-2013 564.5766 -0.80% 246.7102 6304 2.05% 103.65
01-01-2014 585.719 3.68% 255.7892 6089.5 -3.46% 100.06
03-02-2014 641.4354 9.09% 279.0404 6276.95 3.03% 103.09
03-03-2014 571.8397 -11.48% 247.0066 6704.2 6.58% 109.88
01-04-2014 629.5956 9.62% 270.7686 6696.4 -0.12% 109.76
01-05-2014 607.5579 -3.56% 261.1292 7229.95 7.67% 118.17
02-06-2014 684.4664 11.92% 292.2558 7611.35 5.14% 124.24
01-07-2014 786.9449 13.95% 333.0255 7721.3 1.43% 126.03
01-08-2014 850.9193 7.82% 359.0681 7954.35 2.97% 129.77
01-09-2014 854.4006 0.41% 360.5403 7964.8 0.13% 129.94
01-10-2014 842.59 -1.39% 355.5288 8322.2 4.39% 135.65
03-11-2014 836.9089 -0.68% 353.1112 8588.25 3.15% 139.92
01-12-2014 823.8026 -1.58% 347.5321 8282.7 -3.62% 134.85
01-01-2015 914.6995 10.47% 383.9187 8808.9 6.16% 143.15
02-02-2015 875.9786 -4.33% 367.295 8844.6 0.40% 143.73
02-03-2015 1020.497 15.27% 423.3809 8491 -4.08% 137.87
01-04-2015 935.7293 -8.67% 386.6738 8181.5 -3.71% 132.75
01-05-2015 962.8887 2.86% 397.7327 8433.65 3.04% 136.78
01-06-2015 871.6929 -9.95% 358.1583 8368.5 -0.78% 135.72
01-07-2015 819.6664 -6.15% 336.1315 8532.85 1.94% 138.36
03-08-2015 895.962 8.90% 366.0472 7971.3 -6.81% 128.94
01-09-2015 865.5136 -3.46% 353.382 7948.9 -0.28% 128.58
01-10-2015 889.55 2.74% 363.0647 8065.8 1.46% 130.45
02-11-2015 729.65 -19.82% 291.1053 7935.25 -1.63% 128.32
01-12-2015 820.15 11.69% 325.1355 7946.35 0.14% 128.50
01-01-2016 872.95 6.24% 345.4239 7563.55 -4.94% 122.16
01-02-2016 853.9 -2.21% 337.79 6987.05 -7.93% 112.47
01-03-2016 820 -4.05% 324.1095 7738.4 10.21% 123.96
01-04-2016 815.1 -0.60% 322.1649 7555.2 -2.40% 120.99
Sunpharma Nifty
Alpha 0.020737
Beta 0.291297
Return on Market = Average of Nifty Returns
Return on Sun Pharma = Alpha + Beta *Returns on market
Return on Sun Pharma = 2.20% Average = 0.42%

Interpretation: -
The above table shows past 5 year historical prices i.e. Apr-1, 2011 to
Apr-1, 2016 which is used to find out the return on monthly basis.
Return is calculated using
the formula
OR
Using natural Log function on excel spreadsheet [ln (Current Price/Previous Price)]
Alpha- Alpha is tool which measure the performance on risk adjusted basis. It is
calculated by using intercept of equity returns and Nifty returns on excel spreadsheet.
Beta - Beta is measure of systematic risk of a security in comparison to market as a
whole. It is calculated by using slope of equity returns and Nifty returns for a period
of 60 months on excel spreadsheet.
The dates are arranged in chronological order for the calculation of returns.
The first column of both shows the adjusted closing prices of Sun Pharma.
The second column shows the monthly returns of both nifty and Sun pharma, it can be
observed that the volatility and the risk in the stock is more in comparison with nifty.
The third column of the both Nifty and Sun Pharma shows the investment of Rs 100
on 31-Mar-2011 or Rs 100 as base at the beginning of the period which has increased
over a period. In the table we observe that Rs 100 invested in Sun pharma on 31-
March 2011 has become Rs. 322.146 over the period of 60 months means giving
returns of 222.14% in 5 years.
If Rs 100 invested in the Nifty that has given return of 20.99% only over a period of 5

years.
Nifty and Sun Pharma both were positive but Sun Pharma has given good returns.
For the calculation of return on Sun Pharma, Average return on Market (NIFTY) is
considered with volatility and risk measurement tool i.e. Alpha and Beta shown above
in table.

Balance Sheet of Sun Pharma
Consolidated Balance Sheet of Sun Pharmaceutical Industries
Mar 11 Mar 12 Mar 13 Mar 14 Mar 15
EQUITIES AND LIABILITIES CAGR
SHAREHOLDER'S FUNDS
Equity Share Capital 15% 103.56 103.56 103.56 207.12 207.12
Revaluation Reserves 0 0 0 0 3.98
Reserves and Surplus 22% 9379.76 12132.22 14886.17 18317.83 25378.61
Total Shareholders Funds 22% 9483.32 12235.78 14989.73 18524.95 25589.71
Equity Share Application Money 0 0 0 0 14.9
Share Capital Suspense 0 0 0 0 33.48
Minority Interest 27% 847.15 1161.45 1635.08 1921.18 2851.19
NON-CURRENT LIABILITIES
Long Term Borrowings 54% 157.28 155.42 115.26 48.67 1368.42
Deferred Tax Liabilities [Net] -6% 134.83 155.2 205.35 275.67 98.52
Other Long Term Liabilities 95% 6.68 8.93 8.94 9.14 186.34
Long Term Provisions 187% 13 138.73 787.06 2601.62 2532.34
Total Non-Current Liabilities 68% 311.79 458.28 1116.61 2935.1 4185.62
CURRENT LIABILITIES
Short Term Borrowings 97% 207.78 109.57 82.95 2440.34 6227.92
Trade Payables 36% 689.88 992.72 1356.53 1328.26 3153.83
Other Current Liabilities 63% 238.77 363.66 218.65 260.41 2765.97
Short Term Provisions 46% 638.95 1152.54 1481.66 1960.58 4205.28
Total Current Liabilities 56% 1775.38 2618.49 3139.79 5989.59 16353
Total Capital And Liabilities 32% 12417.64 16474 20881.21 29370.82 49027.9
ASSETS
NON-CURRENT ASSETS
Tangible Assets 26% 2233.42 2613.51 3160.43 3498.18 6975.18
Intangible Assets 47% 287.96 316.03 1354.09 1484.48 2006.33
Capital Work-In-Progress 45% 235.46 344.65 562.61 841.54 1531.77
Intangible Assets Under Development 0 0 0 0 506.84
Fixed Assets 32% 2756.84 3274.19 5077.13 5824.2 11020.12
Non-Current Investments 12% 346.01 588.96 1106.35 787.56 598.87
Deferred Tax Assets [Net] 30% 500.06 683.51 917.59 1186.69 1850.16
Long Term Loans And Advances 48% 378.98 594.75 837.76 1051.18 2680.5
Other Non-Current Assets 16% 26.23 17.41 7.86 0.11 55.35
Total Non-Current Assets 33% 4780.09 6180.63 9079.64 10684.36 19905.96
CURRENT ASSETS
Current Investments 2% 1883.75 1623.91 1305.22 1998.46 2117.43
Inventories 31% 1489.48 2086.98 2577.76 3123.01 5667.99
Trade Receivables 36% 1149.37 2078.74 2710.77 2200.42 5312.32
Cash And Cash Equivalents 38% 2204.63 3367.19 4058.71 7590.15 10998.04
Short Term Loans And Advances 21% 849.17 1042.67 1079.6 1244.55 2193.25
OtherCurrentAssets 115% 61.15 93.88 69.51 2529.87 2832.91
Total Current Assets 31% 7637.55 10293.37 11801.57 18686.46 29121.94
Total Assets 32% 12417.64 16474 20881.21 29370.82 49027.9
------------------- in Rs. Cr. -------------------

Interpretation: -
The above table shows the consolidated Balance Sheet of Sun Pharma, it is observed
that company has maintained sufficient Reserve and Surplus which means company
has adequate internal source of funding to finance its investments... We can observe
the net worth on CAGR at 22%. The company had borrowed huge amount of long
term funds in the financial year ended 2015. Sun Pharma has maintained sufficient
cash balances to meet short term obligation, current asset has grown from Rs. 7637.55
to Rs. 29121.94 in 5 years.

Financial Analysis
a) Horizontal Analysis
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 100.00% 100.00% 100.00% 200.00% 200.00%
Revaluation Reserves
Reserves and Surplus 100.00% 129.34% 158.71% 195.29% 270.57%
Total Shareholders Funds 100.00% 129.02% 158.06% 195.34% 269.84%
Equity Share Application Money
Share Capital Suspense
Minority Interest 100.00% 137.10% 193.01% 226.78% 336.56%
Long Term Borrowings 100.00% 98.82% 73.28% 30.94% 870.05%
Deferred Tax Liabilities [Net] 100.00% 115.11% 152.30% 204.46% 73.07%
Other Long Term Liabilities 100.00% 133.68% 133.83% 136.83% 2789.52%
Long Term Provisions 100.00% 1067.15% 6054.31% 20012.46% 19479.54%
Total Non-Current Liabilities 100.00% 146.98% 358.13% 941.37% 1342.45%
CURRENT LIABILITIES
Short Term Borrowings 100.00% 52.73% 39.92% 1174.48% 2997.36%
Trade Payables 100.00% 143.90% 196.63% 192.53% 457.16%
Other Current Liabilities 100.00% 152.31% 91.57% 109.06% 1158.42%
Short Term Provisions 100.00% 180.38% 231.89% 306.84% 658.15%
Total Current Liabilities 100.00% 147.49% 176.85% 337.37% 921.10%
Total Capital And Liabilities 100.00% 132.67% 168.16% 236.52% 394.82%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 100.00% 117.02% 141.51% 156.63% 312.31%
Intangible Assets 100.00% 109.75% 470.24% 515.52% 696.74%
Capital Work-In-Progress 100.00% 146.37% 238.94% 357.40% 650.54%
Intangible Assets Under Development
Fixed Assets 100.00% 118.77% 184.16% 211.26% 399.74%
Non-Current Investments 100.00% 170.21% 319.75% 227.61% 173.08%
Deferred Tax Assets [Net] 100.00% 136.69% 183.50% 237.31% 369.99%
Long Term Loans And Advances 100.00% 156.93% 221.06% 277.37% 707.29%
Other Non-Current Assets 100.00% 66.37% 29.97% 0.42% 211.02%
Total Non-Current Assets 100.00% 129.30% 189.95% 223.52% 416.43%
CURRENT ASSETS
Current Investments 100.00% 86.21% 69.29% 106.09% 112.41%
Inventories 100.00% 140.11% 173.06% 209.67% 380.53%
Trade Receivables 100.00% 180.86% 235.85% 191.45% 462.19%
Cash And Cash Equivalents 100.00% 152.73% 184.10% 344.28% 498.86%
Short Term Loans And Advances 100.00% 122.79% 127.14% 146.56% 258.28%
OtherCurrentAssets 100.00% 153.52% 113.67% 4137.15% 4632.72%
Total Current Assets 100.00% 134.77% 154.52% 244.67% 381.30%
Total Assets 100.00% 132.67% 168.16% 236.52% 394.82%
Horizontal Analysis

Interpretation: -
It is depicted that in year ended Mar-14, company had issued equity to raise capital,
Reserve and surplus has constantly increased over the period of 5 years.
Net worth has increased to 270% because the company has accumulated the
undistributed profit over the period.
Long term borrowings and provisions has increased rapidly 9 times and 19 times
respectively till Mar-15
Company has borrowed huge long term and short term funds in the year ended 2015
comparing with past years.
Non-current assets of the Sun pharma have reduced from the year 2011 to 2014 and
again rose to 200% in financial year 2015.
Investment has fallen around 60% from the last year.
Stock of the Sun Pharma has risen up to 380%, and company has done too much
credit sales as we observed the trade receivable has increased to 462% in the year
ended 2015
Sun Pharma has invested on fixed asset on time to time that rose to 650%, company
had given too much long term loans and advances in the year ended 2015.
Total Current Asset did not increase as we observed the increment in Current
Liabilities.

b) Vertical Analysis
SHAREHOLDER'S FUNDS
Revaluation Reserves 0.00% 0.00% 0.00% 0.00% 0.01%
Equity Share Application Money 0.00% 0.00% 0.00% 0.00% 0.03%
Share Capital Suspense 0.00% 0.00% 0.00% 0.00% 0.07%
CURRENT LIABILITIES
Trade Payables 5.56% 6.03% 6.50% 4.52% 6.43%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 17.99% 15.86% 15.14% 11.91% 14.23%
Intangible Assets Under Development 0.00% 0.00% 0.00% 0.00% 1.03%
Fixed Assets 22.20% 19.87% 24.31% 19.83% 22.48%
CURRENT ASSETS 0.00% 0.00% 0.00% 0.00% 0.00%
Inventories 11.99% 12.67% 12.34% 10.63% 11.56%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%
Vertical Analysis

Interpretation: -
Here, we observed that shareholder funds with respect to total liabilities has decreased
year on year which was 76.37% in Mar 2011, now it is 52.29% in the year ended Mar
2015, because of the downfall in the Reserve and Surplus.
Long term borrowings and short term borrowings has decreased in year ended 2012,
2013, and 2014 and again increased in the year ended 2015 we observed the
increment in the fixed asset as well so it can be depicted that long term borrowings
were used in capital expenditure (Investment in Fixed Assets).
Sun Pharma has maintained 22% of cash balances on March 2015 to meet day to day
obligations.
We observed that there is fluctuation in assets of the Sun Pharma and the liabilities
(borrowings) has increased over a period.

Income Statement of Sun Pharma
ConsolidatedProfit&LossaccountofSunPharmaceuticalIndustries
Mar-11 Mar-12 Mar-13 Mar-14 Mar15
INCOME CAGR
RevenueFromOperations[Gross] 36.55% 5806.79 8112.85 11408.71 16199.51 27570.88
Less:Excise/SeviceTax/OtherLevies 27.27% 85.15 107.45 169.82 195.12 284.38
RevenueFromOperations[Net] 36.67% 5721.64 8005.4 11238.89 16004.39 27286.5
CostofGoodsSold 35.77% 1460.69 1639.93 2073.34 2779.32 6739.17
CostOfMaterialsConsumed 22.79% 1489.78 1851.6 1949.98 2243.39 4158.69
PurchaseOfStock-InTrade 69.42% 176.68 237.2 351.84 612.47 2465.99
ChangesInInventoriesOfFG,WIPAndStock-InTrade -188.94% -205.77 -448.87 -228.48 -76.54 114.49
GrossProfit 36.98% 4260.95 6365.47 9165.55 13225.07 20547.33
EmployeeBenefitExpenses 40.16% 818.95 1187.73 1534.53 2074.44 4429.86
EBITDA 36.17% 3442 5177.74 7631.02 11150.63 16117.47
DepreciationAndAmortisationExpenses 42.29% 204.85 291.16 336.17 409.23 1194.72
EBIT 35.75% 3237.15 4886.58 7294.85 10741.4 14922.75
FinanceCosts 50.95% 73.88 28.2 43.16 44.19 578.99
OtherExpenses 41.41% 1485.13 1987.51 2795.75 4224.91 8397.71
OtherOperatingRevenues 87.98% 6.26 14.09 60.97 75.97 146.94
OtherIncome 9.07% 354.78 471.51 388.09 552.23 547.66
EBT 26.63% 2039.18 3356.47 4905 7100.5 6640.65
Profit/LossBeforeExceptional,ExtraOrdinaryItemsAndTax 26.63% 2039.18 3356.47 4905 7100.5 6640.65
ExceptionalItems
Profit/LossBeforeTax 25.71% 2039.18 3356.47 4321.42 4583.09 6402.9
TaxExpenses-ContinuedOperations
CurrentTax 80.26% 86.58 405.15 813.13 807.96 1647.93
DeferredTax -277.17% 42 -91.96 32.42 -105.79 -733.24
TotalTaxExpenses 48.05% 128.58 313.19 845.55 702.17 914.69
Profit/LossAfterTaxAndBeforeExtraOrdinaryItems 23.50% 1910.6 3043.28 3475.87 3880.92 5488.21
Profit/LossFromContinuingOperations 23.50% 1910.6 3043.28 3475.87 3880.92 5488.21
ProfitLossFromDiscontinuingOperations -100.00% -3.23 -1.11 -6.53 -1.92 0
NetProfitLossFromDiscontinuingOperations -100.00% -3.23 -1.11 -6.53 -1.92 0
Profit/LossForThePeriod 23.54% 1907.37 3042.17 3469.34 3879 5488.21
MinorityInterest 59.29% -91.31 -385.48 -486.28 -737.53 -936.27
ShareOfProfit/LossOfAssociates 0 0 0 0 -12.56
ConsolidatedProfit/LossAfterMIAndAssociates 20.11% 1816.06 2656.69 2983.06 3141.47 4539.38
-------------------inRs.Cr.-------------------

Interpretation: -
It can be depicted from the above income statement Revenue has increased year on
year but at the same rate cost of goods sold has also increased.
Gross profit of the firm has increased at the same growth rate i.e. 36.98% year on
year.
EBITDA has increased nearly 40% comparing with last year
Depreciation expenses has increased 5 times over a period of 5 years.
Finance cost has raised more than 10 times in 2015compared to last year.
Due to increase in the finance cost and other expenses EBT in 2015 has decreased to
8% to the last year.
Profit after Tax (PAT) has increased in 2015 over the last year at the same growth
rate.

Financial Analysis
a) Horizontal Analysis of Sun Pharma
Consolidated Profit & Loss account of Sun Pharmaceutical Industries
Mar-11 Mar-12 Mar-13 Mar-14 Mar 15
INCOME
Revenue From Operations [Gross] 100.00% 139.71% 196.47% 278.98% 474.80%
Less: Excise/Sevice Tax/Other Levies 100.00% 126.19% 199.44% 229.15% 333.98%
Revenue From Operations [Net] 100.00% 139.91% 196.43% 279.72% 476.90%
Cost of Goods Sold 100.00% 112.27% 141.94% 190.27% 461.37%
Cost Of Materials Consumed 100.00% 124.29% 130.89% 150.59% 279.15%
Purchase Of Stock-In Trade 100.00% 134.25% 199.14% 346.65% 1395.74%
Changes In Inventories Of FG,WIP And Stock-In Trade 100.00% 218.14% 111.04% 37.20% -55.64%
Gross Profit 100.00% 149.39% 215.11% 310.38% 482.22%
Employee Benefit Expenses 100.00% 145.03% 187.38% 253.30% 540.92%
EBITDA 100.00% 150.43% 221.70% 323.96% 468.26%
Depreciation And Amortisation Expenses 100.00% 142.13% 164.11% 199.77% 583.22%
EBIT 100.00% 150.95% 225.35% 331.82% 460.98%
Finance Costs 100.00% 38.17% 58.42% 59.81% 783.69%
Other Expenses 100.00% 133.83% 188.25% 284.48% 565.45%
Other Operating Revenues 100.00% 225.08% 973.96% 1213.58% 2347.28%
Other Income 100.00% 132.90% 109.39% 155.65% 154.37%
EBT 100.00% 164.60% 240.54% 348.20% 325.65%
Profit/Loss Before Exceptional, ExtraOrdinary Items And Tax 100.00% 164.60% 240.54% 348.20% 325.65%
Exceptional Items
Profit/Loss Before Tax 100.00% 164.60% 211.92% 224.75% 313.99%
Tax Expenses-Continued Operations
Current Tax 100.00% 467.95% 939.17% 933.19% 1903.36%
Deferred Tax 100.00% -218.95% 77.19% -251.88% -1745.81%
Total Tax Expenses 100.00% 243.58% 657.61% 546.10% 711.38%
Profit/Loss After Tax And Before ExtraOrdinary Items 100.00% 159.28% 181.93% 203.13% 287.25%
Profit/Loss From Continuing Operations 100.00% 159.28% 181.93% 203.13% 287.25%
Profit Loss From Discontinuing Operations 100.00% 34.37% 202.17% 59.44% 0.00%
Net Profit Loss From Discontinuing Operations 100.00% 34.37% 202.17% 59.44% 0.00%
Profit/Loss For The Period 100.00% 159.50% 181.89% 203.37% 287.74%
Share Of Profit/Loss Of Associates
Consolidated Profit/Loss After MI And Associates 100.00% 146.29% 164.26% 172.98% 249.96%
Hprizontal Analysis
Interpretation: -
 The growth in the revenue is nearly 5 times over 5 years.
 Expenses incurred in the purchase of stock in trade has increased
heavily around 1395% results in increase in cost of goods sold in year
2015.
 Gross profit has grown at constant rate of 36.98% every year.

 Employee benefit expenses has raised 5 times as compared to Mar
2011, which resulted in decrease in EBITDA.
 Depreciation (non cash) expenses has also increased to 583% in 5
years
 Finance cost were decreased in earlier year but in year ended Mar 2015
it risen to 783%.
 Other operating revenue has increased to 2347% in 5 years but 50%
increased year on year.

Consolidated Profit & Loss account of Sun Pharmaceutical Industries
Mar-11 Mar-12 Mar-13 Mar-14 Mar 15
INCOME
Changes In Inventories Of FG,WIP And Stock-In Trade -3.54% -5.53% -2.00% -0.47% 0.42%
Gross Profit 73.38% 78.46% 80.34% 81.64% 74.53%
EBITDA 59.28% 63.82% 66.89% 68.83% 58.46%
EBIT 55.75% 60.23% 63.94% 66.31% 54.13%
Finance Costs 1.27% 0.35% 0.38% 0.27% 2.10%
Other Expenses 25.58% 24.50% 24.51% 26.08% 30.46%
Other Income 6.11% 5.81% 3.40% 3.41% 1.99%
EBT 35.12% 41.37% 42.99% 43.83% 24.09%
Exceptional Items
Tax Expenses-Continued Operations
Current Tax 1.49% 4.99% 7.13% 4.99% 5.98%
Deferred Tax 0.72% -1.13% 0.28% -0.65% -2.66%
Profit Loss From Discontinuing Operations -0.06% -0.01% -0.06% -0.01% 0.00%
Net Profit Loss From Discontinuing Operations -0.06% -0.01% -0.06% -0.01% 0.00%
Minority Interest -1.57% -4.75% -4.26% -4.55% -3.40%
Share Of Profit/Loss Of Associates 0.00% 0.00% 0.00% 0.00% -0.05%
Vertical Analysis

Interpretation: -
In above analysis we observe excise rate has decreased to 0.17% from last year.
Increase in cost of goods sold resulted in decrease in gross profit over a last year.
Increase in expenditure on employee benefit and depreciation has led to decrease in
EBITDA and EBIT 10%, 12% respectivelyy-o-y.
EBT has drastically fallen over the last year nearly to 20%
We can observe the reduction in the total tax expenses though there is an increase in
current tax.
Over a period of 5 years we can observe the downfall in the profits nearly to 13%.

OperatingVariables
CashDebtEBITDAMARGIN
CompanyName(inCr)(inCr)20152016201520162015201620152016
812.2207.11168214.74210,998.047,596.342,851.191,67,664.2327286.528,145.908,176.618434.1361922.23.15%29.97%29.97%123.53
1508.744.9467800.978481.35470.9824.167,814.7112,599.7113,683.403,859.344191.2785449.258.60%30.63%30.63%197.43
311317.0353014.391,872.403,617.20054,759.1914,908.4015,848.903,767.704005.386137148.616.31%25.27%25.27%578.3
765.529.1922344.945469.113,863.5525.8225,765.2112,043.2314,186.202,563.623019.7934.5234.5217.79%21.29%21.29%176.58
474.480.2938089.576564.261,701.76180.4839,407.5610,950.7613,752.702,327.252922.7171522.0725.59%21.25%21.25%134.26
BookValue
(Rs)
SunPharma
Lupin
DrReddysLabs
AurobindoPharma
EPSSharePrice(
Rs.)
TotalShares(in
Cr)
EquityValue(in
Cr)
Minority
Interest
Enterprise
Value(inCr)
Projected
Revenue
Growth
EBITDARevenue(inCr)
Cipla
ValuationStatisticsEV/EBITDA(x)EV/Revenue(x)P/EMultiple(x)
CompanyName201520162015201620152016
812.21,67,664.236.5720.5119.886.145.9642.7536.59
1508.767,814.717.6443.4440.0013.3112.2515.0416.49
311354,759.195.3844.5041.8611.2510.585.935.47
765.525,765.214.3465.4055.5213.9211.8223.5323.53
474.439,407.563.5372.0457.3715.3112.1954.1536.80
AurobindoPharma
Cipla
SharePrice(
Rs.)
EnterpriseValue
(inCr)
Price/Book
Value(x)
SunPharma
Lupin
DrReddysLabs
RELATIVECOMPARABLEVALUATION

Interpretation: -
EV/EBITDA, EV/ Revenue, P/E Multiples are one of the important ratio in valuation
of M&A and also in DCF valuation.
Sun Pharma is compared with same level in peer group of value chain.
Sun pharma Value is highest followed by Lupin, Dr Reddys, Cipla, Aurobindo
Pharma respectively
PV/BV- The ratio tell how much market is paying for every rupee of assets owned by
the company. For Sun Pharma market or Investors are paying Rs 6.57 for Rs 1 of
assets. Lowest PV to BV ratio means company is undervalued i.e. Cipla is
undervalued.
EV/EBITDA is a comparison of enterprise value and earnings before interest, taxes,
depreciation and amortization. It explains the true earnings potential of the business;
lower the ratio is an indication of undervaluation. Higher the ratio lowers the earning
capacity of the firm. Sun Pharma having a lower EV/EBITDA i.e.19.88, Sun Pharma
is undervalued, Sun Pharma earning capacity is much higher comparing with peer
group in the industry.
EV/Revenue shows the total value of the company to its sales. It shows how many
rupees’ company is generating with its sales. Lower the ratio, undervalued the
company. Sun Pharma has lower ratio in its peer group means it is undervalued.
Generally lower P/E outperforms overtime. Investors compare a company P/E and
conclude that the one having lower P/E ratio is cheaper among the two companies in
same industry. Sun Pharma is the second highest in P/E multiple but the earning
capacity of Sun Pharma is more, we can say that Sun Pharma is undervalued.

LUPIN
 3rd largest Indian pharmaceutical
company
 Net profit of Rs 13,142 million (US$
216.05 million) in FY 13
 Gross sales of Rs 95,235 million (US$
1.56 billion) in FY 13
 8th largest generics player globally by market capitalization
Source: http://www.ibef.org/industry/pharmaceutical-
india/showcase/lupin#sthash.yhwKRHPH.dpuf
Lupin is a renowned pharma player having a wide range of quality, affordable generic
and branded formulations and APIs. The company, which was named after the Lupin
flower, commenced its business in 1968.
It has world class manufacturing facilities across India and Japan that have played a
critical role in enabling the company realise its global aspirations. Benchmarked to
international standards, Lupin’s facilities are approved by international regulatory
agencies such as US FDA, UK MHRA, Japan's MHLW, TGA Australia, WHO, and
the MCC South Africa.
The company first gained recognition when it became one of the world's largest
manufacturers of Tuberculosis (TB) drugs. Today, it has significant market share in
the cardiovascular, diabetology, asthma, paediatrics, CNS, anti-infectives and
NSAIDs therapy segments.
Advanced market formulations comprised nearly 52 per cent of Lupin’s revenues in
FY 12. Its drugs and products reached over 100 countries in the world.
The company has emerged as the fifth largest and among the fastest-growing
companies in the US. The company's consolidated revenues and profit after tax were
Rs 94,616 million (US$ 1.55 billion) and Rs 13,142 million (US$ 216.05 million),
respectively, for FY 2012–13.
Source: http://www.lupinpharmaceuticals.com/

Lupin: On a High Growth Path
2014 Acquires Nanomi B.V. – enters complex
injectables space
2013 Inaugurates new plant at Nagpur
2011 Enters into joint development agreement
with Medicis
2007 Receives ‘Best new manufacturer of the
year’ award from Amerisource Bergen
2002 Crosses 100 mark in patent filings
Source- www.ibef.org/industry/pharmaceutical-india/showcase/lupin#sthash.yhwKRHPH.dpuf

Lupin Returns Table
Date Adj Close Returns 1 Adj Close Returns
30-03-2011 5833.75 100 405.648 100
01-04-2011 5749.5 -1.45% 98.55 429.209 5.65% 105.65
02-05-2011 5473.1 -4.93% 93.69 457.492 6.38% 112.39
01-06-2011 5647.4 3.14% 96.63 437.339 -4.51% 107.32
01-07-2011 5482 -2.97% 93.76 445.502 1.85% 109.31
01-08-2011 5001 -9.18% 85.15 439.624 -1.33% 107.86
01-09-2011 4943.25 -1.16% 84.16 464.704 5.55% 113.84
03-10-2011 5326.6 7.47% 90.44 460.638 -0.88% 112.84
01-11-2011 4832.05 -9.74% 81.63 464.704 0.88% 113.83
01-12-2011 4624.3 -4.39% 78.04 438.743 -5.75% 107.29
03-01-2012 5199.25 11.72% 87.19 465.341 5.89% 113.60
01-02-2012 5385.2 3.51% 90.25 471.072 1.22% 114.99
01-03-2012 5295.55 -1.68% 88.74 518.732 9.64% 126.08
02-04-2012 5248.15 -0.90% 87.94 541.167 4.23% 131.41
01-05-2012 4924.25 -6.37% 82.34 530.684 -1.96% 128.84
01-06-2012 5278.9 6.95% 88.06 526.227 -0.84% 127.76
02-07-2012 5229 -0.95% 87.23 592.113 11.80% 142.83
01-08-2012 5258.5 0.56% 87.72 584.427 -1.31% 140.96
03-09-2012 5703.3 8.12% 94.84 587.235 0.48% 141.64
01-10-2012 5619.7 -1.48% 93.44 558.167 -5.08% 134.45
01-11-2012 5879.85 4.53% 97.67 582.358 4.24% 140.15
03-12-2012 5905.1 0.43% 98.09 604.874 3.79% 145.47
02-01-2013 6034.75 2.17% 100.22 595.463 -1.57% 143.19
01-02-2013 5693.05 -5.83% 94.37 576.396 -3.25% 138.53
01-03-2013 5682.55 -0.18% 94.20 619.359 7.19% 148.49
01-04-2013 5930.2 4.27% 98.22 692.326 11.14% 165.02
01-05-2013 5985.95 0.94% 99.14 726.913 4.87% 173.07
03-06-2013 5842.2 -2.43% 96.73 770.023 5.76% 183.04
Nifty Lupin

Date Adj Close Returns 1 Adj Close Returns
01-07-2013 5742 -1.73% 95.05 862.447 11.34% 203.79
01-08-2013 5471.8 -4.82% 90.47 788.245 -9.00% 185.45
02-09-2013 5735.3 4.70% 94.73 847.299 7.22% 198.85
01-10-2013 6299.15 9.38% 103.61 879.029 3.68% 206.16
01-11-2013 6176.1 -1.97% 101.57 847.299 -3.68% 198.58
02-12-2013 6304 2.05% 103.65 899.077 5.93% 210.36
02-01-2014 6089.5 -3.46% 100.06 873.089 -2.93% 204.19
03-02-2014 6276.95 3.03% 103.09 988.764 12.44% 229.60
03-03-2014 6704.2 6.58% 109.88 926.883 -6.46% 214.76
01-04-2014 6696.4 -0.12% 109.76 982.954 5.87% 227.37
02-05-2014 7229.95 7.67% 118.17 929.664 -5.57% 214.70
02-06-2014 7611.35 5.14% 124.24 1041.011 11.31% 238.99
01-07-2014 7721.3 1.43% 126.03 1177.059 12.28% 268.34
01-08-2014 7954.35 2.97% 129.77 1280.297 8.41% 290.90
01-09-2014 7964.8 0.13% 129.94 1390.11 8.23% 314.84
01-10-2014 8322.2 4.39% 135.65 1363.615 -1.92% 308.78
03-11-2014 8588.25 3.15% 139.92 1474.573 7.82% 332.94
01-12-2014 8282.7 -3.62% 134.85 1422.281 -3.61% 320.91
02-01-2015 8808.9 6.16% 143.15 1579.007 10.45% 354.46
02-02-2015 8844.6 0.40% 143.73 1730.603 9.17% 386.96
02-03-2015 8491 -4.08% 137.87 2000.427 14.49% 443.02
01-04-2015 8181.5 -3.71% 132.75 1765.514 -12.49% 387.68
04-05-2015 8433.65 3.04% 136.78 1825.973 3.37% 400.73
01-06-2015 8368.5 -0.78% 135.72 1878.563 2.84% 412.11
01-07-2015 8532.85 1.94% 138.36 1696.7 -10.18% 370.15
03-08-2015 7971.3 -6.81% 128.94 1935.55 13.17% 418.90
01-09-2015 7948.9 -0.28% 128.58 2034 4.96% 439.68
01-10-2015 8065.8 1.46% 130.45 1928.9 -5.31% 416.36
02-11-2015 7935.25 -1.63% 128.32 1786.95 -7.64% 384.53
01-12-2015 7946.35 0.14% 128.50 1837.25 2.78% 395.21
04-01-2016 7563.55 -4.94% 122.16 1710.75 -7.13% 367.01
01-02-2016 6987.05 -7.93% 112.47 1754.55 2.53% 376.29
01-03-2016 7738.4 10.21% 123.96 1479.25 -17.07% 312.07
01-04-2016 7555.2 -2.40% 120.99 1540.1 4.03% 324.65
Nifty Lupin

Alpha 0.02 Return on Market = Average of nifty returns
Beta 0.02
Return on Lupin = Alpha + Beta *Returns on market
Return on Lupin = 0.021871
Interpretation: -
The above table shows past 5 year historical prices i.e. Apr-1, 2011 to
Apr-1, 2016 which is used to find out the return on monthly basis.
Return is calculated using
the formula
OR
Using natural Log function on excel spreadsheet [ln (Current Price/Previous Price)]
Alpha- Alpha is tool which measure the performance on risk adjusted basis. It is
calculated by using intercept of equity returns and Nifty returns on excel spreadsheet.
Beta - Beta is measure of systematic risk of a security in comparison to market as a
whole. It is calculated by using slope of equity returns and Nifty returns for a period
of 60 months on excel spreadsheet.
The dates are arranged in chronological order for the calculation of returns.
The first column of both shows the adjusted closing prices of Lupin.
The second column shows the monthly returns of both Nifty and LUPIN, it can be
observed that the volatility and the risk in the stock is more in comparison with nifty.
The third column of the both Nifty and LUPIN shows the investment of Rs 100 on 31-
Mar-2011 or Rs 100 as base at the beginning of the period which has increased over a
period. In the table we observe that Rs 100 invested in Sun pharma on 31-March 2011

has become Rs. 324.65 over the period of 60 months means giving returns of
224.65% in 5 years.
If Rs 100 invested in the Nifty that has given return of 20.99% only over a period of 5
years.
Nifty and LUPIN both were positive but Sun Pharma has given good returns.
For the calculation of Return on LUPIN, Average Return on Market (NIFTY) is
considered with volatility and risk measurement tool i.e. Alpha and Beta shown above
in table.

Balance Sheet of Lupin
Consolidated Balance Sheet of Lupin
EQUITIES AND LIABILITIES CAGR
SHAREHOLDER'S FUNDS
Equity Share Capital 0.15% 89.24 89.33 89.51 89.68 89.9
Reserves and Surplus 22.44% 3191.84 3923.56 5114.67 6841.89 8784.16
Total Shareholders Funds 22.02% 3281.08 4012.89 5204.18 6931.57 8874.06
Minority Interest -14.09% 51.51 72.29 59.45 66.94 24.1
Long Term Borrowings -19.39% 299.16 432.96 247.06 150.96 101.83
Deferred Tax Liabilities [Net] 2.47% 179.18 191.01 233.68 248.66 202.41
Other Long Term Liabilities -4.68% 56.02 73.28 50.12 45.86 44.08
Long Term Provisions 34.16% 37.28 66.98 112.45 132.49 162.03
Total Non-Current Liabilities -2.24% 571.64 764.23 643.31 577.97 510.35
CURRENT LIABILITIES
Short Term Borrowings -14.14% 791.09 1047.91 726.82 402.38 369.15
Trade Payables 14.52% 993.03 1397.83 1543.09 1594.13 1956.06
Other Current Liabilities 32.78% 201.02 377.17 381.04 287.64 829.76
Short Term Provisions 19.57% 234.99 261.7 355.97 345.4 574.26
Total Current Liabilities 10.93% 2220.13 3084.61 3006.92 2629.55 3729.23
Total Capital And Liabilities 16.49% 6124.36 7934.02 8913.86 10206.03 13137.74
ASSETS
NON-CURRENT ASSETS
Tangible Assets 11.27% 1540.08 2057.7 2413.39 2603.83 2627.14
Intangible Assets -13.44% 191.26 187.96 79.46 93.9 92.94
Capital Work-In-Progress 1.17% 490.41 440.64 249.69 284.26 519.69
Intangible Assets Under Development 0 3.08 61.01 19.86 56.28
Fixed Assets 8.21% 2221.75 2689.38 2803.55 3001.85 3296.05
Non-Current Investments -4.44% 3.15 2.8 2.06 2.06 2.51
Deferred Tax Assets [Net] 17.22% 38.05 46.78 70.44 70.81 84.2
Long Term Loans And Advances -2.70% 314.42 393.89 387.36 372.99 274.2
Other Non-Current Assets -41.12% 4.52 0 0 0 0.32
Total Non-Current Assets 12.78% 2907.38 3636.85 3770.73 4105.58 5305.39
CURRENT ASSETS
Current Investments 0 0 0 176.41 1655.89
Inventories 15.85% 1199.96 1732.67 1948.93 2129.45 2503.56
Trade Receivables 16.17% 1255.64 1731.81 2186.99 2464.1 2656.57
Cash And Cash Equivalents 2.76% 420.14 402.47 434.88 797.5 481.35
Short Term Loans And Advances 8.41% 228.4 309.17 339.67 301.69 342.06
OtherCurrentAssets 11.32% 112.84 121.05 232.66 231.3 192.92
Total Current Assets 19.48% 3216.98 4297.17 5143.13 6100.45 7832.35
Total Assets 16.49% 6124.36 7934.02 8913.86 10206.03 13137.74
------------------- in Rs. Cr. -------------------

Interpretation: -
From the above balance sheet we observe Lupin has accumulated undistributed profits
over period proves the soundness, health of the business to the owners (shareholders).
Long term borrowings and short term borrowing of the Lupin has decreased in the
year ended Mar 2015.
Lupin has made a Capital expenditure in year ended Mar 2015 Rs 519.69 cr which has
risen up by 70% year on year.
Lupin has repaid borrowings as we see the decrease in cash balances and the
borrowing for the year ended Mar 2015.

Financial Analysis of Balance Sheet
SHAREHOLDER'S FUNDS
CURRENT LIABILITIES
Trade Payables 100.00% 140.76% 155.39% 160.53% 196.98%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 100.00% 133.61% 156.71% 169.07% 170.58%
Intangible Assets Under Development
Fixed Assets 100.00% 121.05% 126.19% 135.11% 148.35%
CURRENT ASSETS
Current Investments
Inventories 100.00% 144.39% 162.42% 177.46% 208.64%
Total Assets 100.00% 129.55% 145.55% 166.65% 214.52%
Horizontal Analysis

Interpretation: -
 It is depicted that Lupin has issued Equity shares every year to raise capital.
 Lupin has maintained the shareholders’ funds over the past years which
represents the shareholder’s wealth.
 Total debt of the Lupin is decreased in the year ended Mar 2015.
 Current Liabilities and provision for the short term has increased too much as
compared to last 5 years.
 We observe the short fall in the cash balance and borrowings results in Lupin
has repaid the borrowings.

SHAREHOLDER'S FUNDS
NON-CURRENT LIABILITIES 0.00% 0.00% 0.00% 0.00% 0.00%
CURRENT LIABILITIES
Trade Payables 16.21% 17.62% 17.31% 15.62% 14.89%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 25.15% 25.94% 27.07% 25.51% 20.00%
Intangible Assets Under Development 0.00% 0.04% 0.68% 0.19% 0.43%
Fixed Assets 36.28% 33.90% 31.45% 29.41% 25.09%
CURRENT ASSETS
Inventories 19.59% 21.84% 21.86% 20.86% 19.06%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%
Vertical Analysis

Interpretation: -
Over the period Lupin has reduced its borrowings
Lupin has reduced the liabilities every year which shows the timely repayment of
dues.
Lupin has made investment of around 12% of total assets value.
Inventories and Trade Receivables in Lupin has decreased shows that Lupin has made
high cash sales and less credit sales in the year ended Mar 2015.

Income Statement of Lupin
Consolidated Profit & Loss account of Lupin
CAGR Mar'11 Mar'12 Mar'13 Mar'14 Mar'15
INCOME
Revenue From Operations [Gross] 17.19% 5742.17 7001.72 9523.53 11167.12 12693.22
Less: Excise/Sevice Tax/Other Levies 21.48% 35.35 42.02 61.9 80.48 93.51
Revenue From Operations [Net] 17.16% 5706.82 6959.7 9461.63 11086.64 12599.71
Cost of Goods Sold 13.18% 2237.93 2603.9 3548.02 3817.38 4157.04
Cost Of Materials Consumed 10.34% 1540.45 1813.86 2224.3 2421.36 2519.42
Purchase Of Stock-In Trade 17.74% 788.19 1106.95 1515.92 1596.43 1783.31
Changes In Inventories Of FG,WIP And Stock-In Trade 9.94% -90.71 -316.91 -192.2 -200.41 -145.69
Gross Profit 19.47% 3468.89 4355.8 5913.61 7269.26 8442.67
Employee Benefit Expenses 17.88% 767.56 969.53 1248.79 1464.65 1747.34
EBITDA 19.91% 2701.33 3386.27 4664.82 5804.61 6695.33
Depreciation And Amortisation Expenses 20.49% 171.18 227.52 332.19 260.97 434.7
EBIT 19.87% 2530.15 3158.75 4332.63 5543.64 6260.63
Finance Costs -22.23% 34.48 35.47 41.02 26.65 9.81
Other Expenses 14.69% 1635.64 2064.77 2574.53 3001.75 3246.04
Other Operating Revenues 8.71% 112.15 123.21 179.67 199.93 170.3
Other Income 60.96% 22.19 14.35 27.85 116.48 239.75
EBT 27.99% 994.37 1196.07 1924.6 2831.65 3414.83
Profit/Loss Before Exceptional, ExtraOrdinary Items And Tax 27.99% 994.37 1196.07 1924.6 2831.65 3414.83
Profit/Loss Before Tax 27.99% 994.37 1196.07 1924.6 2831.65 3414.83
Current Tax 30.50% 266.02 313.15 564.76 955.17 1006.8
Less: MAT Credit Entitlement -100.00% 147.38 37.35 0 0 0
Deferred Tax 66.35% -2.65 32.94 1.26 8.55 -33.76
Tax For Earlier Years 21.19% -1.01 -0.18 18.14 -1.57 -2.64
Total Tax Expenses 53.20% 114.98 308.56 584.16 962.15 970.4
Profit/Loss After Tax And Before ExtraOrdinary Items 22.69% 879.39 887.51 1340.44 1869.5 2444.43
Profit/Loss From Continuing Operations 22.69% 879.39 887.51 1340.44 1869.5 2444.43
Profit/Loss For The Period 22.69% 879.39 887.51 1340.44 1869.5 2444.43
Minority Interest 22.65% -14.84 -19.86 -26.28 -33.13 -41.19
Share Of Profit/Loss Of Associates -100.00% -2 0 0 0 0
Consolidated Profit/Loss After MI And Associates 22.74% 862.55 867.65 1314.16 1836.37 2403.24
------------------- in Rs. Cr. -------------------
Interpretation: -
From the above income statement, we observe that there is an average growth of 20%
in each income and expenses.
Employee benefit expenditure of Lupin has increased to 2.6 times in last 5 years.
Depreciation expenditure of Lupin is high in the year ended March 2015, and other
incomes has shown 100% growth to the last year.
EBT and PAT of Lupin has grown up thrice in the past 5 years.
So, we can depict Lupin is at the stable growth stage in industry life cycle

Financial Analysis of Income Statement
Consolidated Profit & Loss account of Lupin
Mar'11 Mar'12 Mar'13 Mar'14 Mar'15
INCOME
Changes In Inventories Of FG,WIP And Stock-In Trade 100.00% 349.37% 211.88% 220.93% 160.61%
Gross Profit 100.00% 125.57% 170.48% 209.56% 243.38%
EBITDA 100.00% 125.36% 172.69% 214.88% 247.85%
EBIT 100.00% 124.84% 171.24% 219.10% 247.44%
Finance Costs 100.00% 102.87% 118.97% 77.29% 28.45%
Other Expenses 100.00% 126.24% 157.40% 183.52% 198.46%
Other Income 100.00% 64.67% 125.51% 524.92% 1080.44%
EBT 100.00% 120.28% 193.55% 284.77% 343.42%
Current Tax 100.00% 117.72% 212.30% 359.06% 378.47%
Less: MAT Credit Entitlement 100.00% 25.34% 0.00% 0.00% 0.00%
Deferred Tax 100.00% -1243.02% -47.55% -322.64% 1273.96%
Tax For Earlier Years 100.00% 17.82% -1796.04% 155.45% 261.39%
Share Of Profit/Loss Of Associates 100.00% 0.00% 0.00% 0.00% 0.00%
Horizontal Analysis
Interpretation: -
 Over the year’s excise tax has increased to 264%, Revenue from sales has
shown growth of 220%, cost of raw materials has not increased as the
sales, so we observed the 19% growth in gross profit annually.
 Employees cost and depreciation expenses has doubled in the last 5 years
 EBITDA and EBIT has increased at a stable growth.
 We observe the downfall in the finance cost from the year ended Mar 2012
which shows the less cost company has to pay to borrowers of the fund.
 Other income in Lupin has increased to 1080% in past five years, nearly
doubled from last year.

ConsolidatedProfit&LossaccountofLupin
INCOME
RevenueFrom Operations[Gross] 100.00% 100.00% 100.00% 100.00% 100.00%
Less: Excise/SeviceTax/OtherLevies 0.62% 0.60% 0.65% 0.72% 0.74%
RevenueFromOperations[Net] 99.38% 99.40% 99.35% 99.28% 99.26%
CostofGoodsSold 38.97% 37.19% 37.26% 34.18% 32.75%
Cost OfMaterialsConsumed 26.83% 25.91% 23.36% 21.68% 19.85%
PurchaseOfStock-InTrade 13.73% 15.81% 15.92% 14.30% 14.05%
Changes InInventoriesOfFG,WIPAndStock-InTrade -1.58% -4.53% -2.02% -1.79% -1.15%
GrossProfit 60.41% 62.21% 62.09% 65.10% 66.51%
EmployeeBenefitExpenses 13.37% 13.85% 13.11% 13.12% 13.77%
EBITDA 47.04% 48.36% 48.98% 51.98% 52.75%
DepreciationAndAmortisationExpenses 2.98% 3.25% 3.49% 2.34% 3.42%
EBIT 44.06% 45.11% 45.49% 49.64% 49.32%
Finance Costs 0.60% 0.51% 0.43% 0.24% 0.08%
OtherExpenses 28.48% 29.49% 27.03% 26.88% 25.57%
OtherOperatingRevenues 1.95% 1.76% 1.89% 1.79% 1.34%
OtherIncome 0.39% 0.20% 0.29% 1.04% 1.89%
EBT 17.32% 17.08% 20.21% 25.36% 26.90%
Profit/LossBeforeExceptional,ExtraOrdinaryItemsAndTax 17.32% 17.08% 20.21% 25.36% 26.90%
Profit/LossBeforeTax 17.32% 17.08% 20.21% 25.36% 26.90%
CurrentTax 4.63% 4.47% 5.93% 8.55% 7.93%
Less: MATCreditEntitlement 2.57% 0.53% 0.00% 0.00% 0.00%
DeferredTax -0.05% 0.47% 0.01% 0.08% -0.27%
TaxForEarlierYears -0.02% 0.00% 0.19% -0.01% -0.02%
TotalTaxExpenses 2.00% 4.41% 6.13% 8.62% 7.65%
Profit/LossAfterTaxAndBeforeExtraOrdinaryItems 15.31% 12.68% 14.08% 16.74% 19.26%
Profit/LossFrom ContinuingOperations 15.31% 12.68% 14.08% 16.74% 19.26%
Profit/LossForThePeriod 15.31% 12.68% 14.08% 16.74% 19.26%
Minority Interest -0.26% -0.28% -0.28% -0.30% -0.32%
ShareOfProfit/LossOfAssociates -0.03% 0.00% 0.00% 0.00% 0.00%
ConsolidatedProfit/LossAfterMIAndAssociates 15.02% 12.39% 13.80% 16.44% 18.93%
Verticalanalysis

Interpretation: -
 From the vertical analysis we observed that expenses on the cost of
goods sold has been reduced over the period results in increase in the
gross profit in the year ended Mar 2015.
 Employee cost has slightly increased from 13.12% to 13.77% from last
year.
 EBITDA has increased due to decrease in the cost of materials and
EBIT has decreased because of increase in the depreciation expenses
by 1.08% year on-year.
 Finance cost has been reduced to 0.08% in the year ended Mar 2015
which shows the better position of the Lupin.
 Increase in other income and decrease in total tax expenses results in
increase in profit of financial year ended Mar 2015.

Valuation of Lupin
Interpretation: -
For the valuation of LUPIN, DCF Method of valuation is used to arrive at intrinsic
value of the stock. To calculate the free cash flow to firm for the forecasting
period of next 5 years, growth of sales, EBIT, Capital expenditure, Depreciation,
Weighted Cost of capital (WACC) is to be calculated based on the historical data
which is shown in table below.
Sales Growth Rate 17.16%
Operating Income Margin 46.73%
Tax Rate 30%
Depreciation 3.10%
Reinvestment in Non Cash Working Capital 5%
Reinvestment in Fixed Assets 4.93%
Stable Growth Rate 6%
Cost of Capital 6.49%
No of Sh o/s 44.94
This graph shows the upward trend of lupin in terms of gross profit EBITDA and
EBIT.
From the above graph we depict that the lupin upward trend in growth at stable stage
in industry cycle.

The calculation for the forecasted free cash flow to the firm, discounted value of the
firm, and the intrinsic value of the stock is shown in next page.
Free cash flow to firm
PARTICULARS 2016 2017 2018 2019 2020
1 2 3 4 5
Sales 14,762.29 17,296.06 20,264.71 23,742.89 27,818.07
EBIT 6,898.00 8,081.95 9,469.12 11,094.37 12,998.58
EBIT*(1-t) 4,828.60 5,657.37 6,628.38 7,766.06 9,099.01
Add: Depreciation 457.05 535.50 627.41 735.09 861.26
Less: Reinvestment in Non Cash Working Capital 727.78 852.70 999.05 1,170.52 1,371.43
Less: Reinvestment in Fixed Assets 727.85 852.78 999.15 1,170.64 1,371.56
FCFF 3,830.01 4,487.39 5,257.59 6,159.99 7,217.28
Terminal FCFF 15,52,430.56
sub total 3,830.01 4,487.39 5,257.59 6,159.99 15,59,647.84
DCF 4,078.69 5,089.02 6,349.62 7,922.48 21,36,130.08
PV of Operating Assets 21,59,569.89
Add: Cash 59.30
Less: Debt 340.93
Value of Equity 21,59,288.26
Intrinsic Value 48,048.25
CMP 1,470.40
Recommendation Buy

BalanceSheetofLupin
SourcesOfFunds
TotalShareCapital 89.24 89.33 89.51 89.68 89.9
EquityShareCapital 89.24 89.33 89.51 89.68 89.9
Reserves 3063.42 3645.08 4757.2 6889.36 8937.84
Networth 3152.66 3734.41 4846.71 6979.04 9027.74
SecuredLoans 637.46 580.82 411.3 50 20.95
UnsecuredLoans 342 411.83 143.99 89.4 19.14
TotalDebt 979.46 992.65 555.29 139.4 40.09
TotalLiabilities 4132.12 4727.06 5402 7118.44 9067.83
ApplicationOfFunds
GrossBlock 1869.09 2335.41 2762.91 3056.96 3274.26
Less:Accum.Depreciation 514.46 627.93 749.26 877.5 1238.66
NetBlock 1354.63 1707.48 2013.65 2179.46 2035.6
CapitalWorkinProgress 442.09 357.33 240.12 267.05 489.96
Investments 680.88 687.29 688.04 1163.66 3444.23
Inventories 841.11 1123.56 1330.83 1372.24 1739.51
SundryDebtors 1234.28 1490.8 1874.27 2859.92 2515.21
CashandBankBalance 37.46 19.2 20.12 146.28 59.3
TotalCurrentAssets 2112.85 2633.56 3225.22 4378.44 4314.02
LoansandAdvances 621.32 773.05 878.7 810.35 723.9
TotalCA,Loans&Advances 2734.17 3406.61 4103.92 5188.79 5037.92
CurrentLiabilities 880.29 1193.81 1332.67 1367.8 1341.24
Provisions 199.36 237.84 311.06 312.72 598.64
TotalCL&Provisions 1079.65 1431.65 1643.73 1680.52 1939.88
NetCurrentAssets 1654.52 1974.96 2460.19 3508.27 3098.04
TotalAssets 4132.12 4727.06 5402 7118.44 9067.83
-------------------inRs.Cr.-------------------

This balance sheet enables us to identify the find out total debt, working capital,
reinvestment in fixed assets, proportion of debt and equity, RF is the risk free rate
which is given by the RBI, Market risk is 9% for the pharmaceutical industry.
Ke can be calculated with Capital Asset Pricing
Model.
Working Notes Mar 11 Mar 12 Mar 13 Mar 14 Mar 15
Reinvestment in Fixed Assets 381.56 310.29 320.98 440.21
Sales 5706.82 6959.7 9461.63 11086.64
Reinvestment Rate 6.69% 4.46% 3.39% 3.97%
CA-CL 1617.06 1955.76 2440.07 3361.99 3038.74
Reinvestment in Non Cash Working Cap 338.7 484.31 921.92 -323.25
Reinvestment Rate in Non Cash Working Cap 5.94% 6.96% 9.74% -2.92%
Working notes
Debt Ratio D% 23.70%
KD 3.52%
Equity Proportion E% 76.30%
ke 8%
Cost of Capital WACC 6.49%
Rf 7.72%
Rm 9.00%
Beta 0.02
ke 7.74%
The intrinsic value of Lupin is 48048.25 and the current market price is Rs 1470.25
shows that Lupin is undervalued and is expected to move towards the intrinsic value.
Therefore, it is recommended to buy.

DR REDDY LABS
 Global pharmaceutical company
 Compound
annual growth
rate (CAGR) of
14 per cent
during FY 09–14
 Consolidated revenues of Rs 116.3 billion(US$ 1.92 million) in FY 13
 18 per cent growth in net profit in FY 13
 Dr Reddy’s began as an active pharmaceutical ingredients (API) manufacturer
in 1984, producing high-quality APIs for the Indian domestic market. In 1987,
the company started its formulations operations and, after becoming a force to
reckon with in the Indian formulations market, went international in 1991.
 Dr Reddy’s today is more than a 200-million-dollar venture with presence in
almost all major therapeutic areas. The company is committed to providing
affordable and innovative medicines for healthier lives. Through its three
businesses – Pharmaceutical Services and Active Ingredients, Global
Generics, and Proprietary Products, Dr Reddy’s offers a portfolio of products
and services including APIs, custom pharmaceutical services, generics,
biosimilar and differentiated formulations. The company’s major therapeutic
focus is on gastrointestinal, cardiovascular, diabetology, oncology, pain
management and anti-infective. Major markets for Dr Reddy’s include India,
USA, Russia-CIS and Europe, apart from other select geographies within
emerging markets.
 Recently, Dr Reddy’s deepened its focus into the rural markets in India to
ensure the expansion of its reach. In this initiative, the company collaborated
with its CSR wing, Dr Reddy’s Foundation to reach the millions who are still
away from effective treatment and availabilityof the right medicines.
Source: http://www.drreddys.com

Dr Reddy: Providing affordable and innovative healthcare
2013 Features in ‘Forbes Asia Fab 50 companies’ list at a special
Forbes Asia Fab 50 awards ceremony held in China
2011 Receives Pharmexcil Award (Gold Prize) for ‘Outstanding
Export Performance for 2010–11’ in the ‘Large Scale
Industry’ category
2009 Announces Strategic Alliance with GlaxoSmithKline for
emerging markets
2007 Launches Reditux™ (Rituximab) – the world’s first
biosimilar of a monoclonal antibody
2005 Acquires Roche’s API business in Mexico
Source: - http://www.ibef.org/industry/pharmaceutical-india/showcase/dr-
reddy#sthash.8CMFJ9La.dpuf

Dr Reddy Laboratories Returns Table
31-03-2011 1583.313 100 5833.75 100
01-04-2011 1607.318 1.50% 101.5047 5749.5 -1.45% 98.55
02-05-2011 1560.902 -2.93% 98.53034 5473.1 -4.93% 93.69
01-06-2011 1490.612 -4.61% 93.99035 5647.4 3.14% 96.63
01-07-2011 1543.302 3.47% 97.25534 5482 -2.97% 93.76
01-08-2011 1455.679 -5.85% 91.57059 5001 -9.18% 85.15
02-09-2011 1443.176 -0.86% 90.78068 4943.25 -1.16% 84.16
03-10-2011 1625.671 11.91% 101.5903 5326.6 7.47% 90.44
01-11-2011 1534.983 -5.74% 95.75892 4832.05 -9.74% 81.63
01-12-2011 1535.42 0.03% 95.78618 4624.3 -4.39% 78.04
02-01-2012 1644.207 6.85% 102.3431 5199.25 11.72% 87.19
01-02-2012 1598.425 -2.82% 99.45303 5385.2 3.51% 90.25
01-03-2012 1717.186 7.17% 106.5806 5295.55 -1.68% 88.74
02-04-2012 1715.434 -0.10% 106.4718 5248.15 -0.90% 87.94
01-05-2012 1640.169 -4.49% 101.6948 4924.25 -6.37% 82.34
01-06-2012 1617.548 -1.39% 100.2825 5278.9 6.95% 88.06
02-07-2012 1584.964 -2.03% 98.24175 5229 -0.95% 87.23
01-08-2012 1646.451 3.81% 101.9809 5258.5 0.56% 87.72
03-09-2012 1615.094 -1.92% 100.0199 5703.3 8.12% 94.84
01-10-2012 1723.886 6.52% 106.54 5619.7 -1.48% 93.44
01-11-2012 1785.618 3.52% 110.2884 5879.85 4.53% 97.67
03-12-2012 1795.776 0.57% 110.9141 5905.1 0.43% 98.09
01-01-2013 1880.326 4.60% 116.017 6034.75 2.17% 100.22
01-02-2013 1722.855 -8.75% 105.8699 5693.05 -5.83% 94.37
01-03-2013 1733.7 0.63% 106.5342 5682.55 -0.18% 94.20
01-04-2013 1990.541 13.81% 121.2518 5930.2 4.27% 98.22
01-05-2013 2053.156 3.10% 125.0071 5985.95 0.94% 99.14
03-06-2013 2177.651 5.89% 132.3661 5842.2 -2.43% 96.73
NiftyDr Reddy Laboratories

01-07-2013 2253.567 3.43% 136.902 5742 -1.73% 95.05
01-08-2013 2265.125 0.51% 137.6023 5471.8 -4.82% 90.47
02-09-2013 2352.306 3.78% 142.799 5735.3 4.70% 94.73
01-10-2013 2426.645 3.11% 147.242 6299.15 9.38% 103.61
01-11-2013 2454.701 1.15% 148.9346 6176.1 -1.97% 101.57
02-12-2013 2503.897 1.98% 151.89 6304 2.05% 103.65
01-01-2014 2577.939 2.91% 156.3163 6089.5 -3.46% 100.06
03-02-2014 2860.426 10.40% 172.5702 6276.95 3.03% 103.09
03-03-2014 2532.842 -12.16% 151.5807 6704.2 6.58% 109.88
01-04-2014 2673.369 5.40% 159.7657 6696.4 -0.12% 109.76
01-05-2014 2430.843 -9.51% 144.5717 7229.95 7.67% 118.17
02-06-2014 2592.264 6.43% 153.8668 7611.35 5.14% 124.24
01-07-2014 2793.648 7.48% 165.3786 7721.3 1.43% 126.03
01-08-2014 2932.102 4.84% 173.3781 7954.35 2.97% 129.77
01-09-2014 3212.293 9.13% 189.2016 7964.8 0.13% 129.94
01-10-2014 3151.321 -1.92% 185.5758 8322.2 4.39% 135.65
03-11-2014 3586.924 12.95% 209.603 8588.25 3.15% 139.92
01-12-2014 3228.803 -10.52% 187.5562 8282.7 -3.62% 134.85
01-01-2015 3215.923 -0.40% 186.8065 8808.9 6.16% 143.15
02-02-2015 3260.483 1.38% 189.3771 8844.6 0.40% 143.73
02-03-2015 3470.054 6.23% 201.1744 8491 -4.08% 137.87
01-04-2015 3292.51 -5.25% 190.6087 8181.5 -3.71% 132.75
01-05-2015 3516.305 6.58% 203.1432 8433.65 3.04% 136.78
01-06-2015 3540.375 0.68% 204.529 8368.5 -0.78% 135.72
01-07-2015 4076.1 14.09% 233.3488 8532.85 1.94% 138.36
03-08-2015 4302.65 5.41% 245.9708 7971.3 -6.81% 128.94
01-09-2015 4162.35 -3.32% 237.8165 7948.9 -0.28% 128.58
01-10-2015 4279.9 2.78% 244.4397 8065.8 1.46% 130.45
02-11-2015 3107.8 -32.00% 166.2154 7935.25 -1.63% 128.32
01-12-2015 3108.6 0.03% 166.2582 7946.35 0.14% 128.50
01-01-2016 3105.4 -0.10% 166.087 7563.55 -4.94% 122.16
01-02-2016 3036.25 -2.25% 162.3468 6987.05 -7.93% 112.47
01-03-2016 3035.2 -0.03% 162.2906 7738.4 10.21% 123.96
01-04-2016 2979.95 -1.84% 159.3092 7555.2 -2.40% 120.99
NiftyDr Reddy Laboratories
Average Return on Nifty is 0.42%

Alpha 0.008936
Beta 0.337688
Return on Market = Average of Nifty Returns
Return on Dr.Reddy = Alpha + Beta *Returns on market
Return on Dr.Reddy = 1.04%
Interpretation
Past 60 months’ data is used to calculate the Dr Reddy Laboratories return which is
dependent on market return (Nifty). The return is calculated with the help of MS Excel
Alpha is a measure of performance on a risk adjusted basis
Alpha is calculated through intercept of Dr Reddy laboratories and Market returns for the last
60 months (i.e. 5 years).
Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in
comparison to the market as a whole.
Beta is calculated through slope of Dr Reddy laboratories and Market returns for the last 60
months (i.e. 5 years).
Return on Dr Reddy lab is to be calculated with the help of Alpha and Beta.
Market Return is the average of Nifty return for the period of 60 months from 1-4-2011 to 1-
4-2016
Formula used for the calculation of Return on Dr Reddy lab is equal to Alpha+ Beta*
market return which is 1.04%.

Balance Sheet of Dr Reddys Laboratories
Consolidated Balance Sheet of Dr Reddys Laboratories
EQUITIES AND LIABILITIES Mar 11 Mar 12 Mar 13 Mar 14 Mar 15
SHAREHOLDER'S FUNDS
Equity Share Capital 84.6 84.8 84.9 85.1 85.2
Reserves and Surplus 3947.3 4904.2 6284.2 7780.1 9767.9
Total Shareholders Funds 4031.9 4989 6369.1 7865.2 9853.1
Long Term Borrowings 537.2 1641.9 1265.9 2075.5 1431.5
Deferred Tax Liabilities [Net] 99.9 19.1 107 124.1 140.7
Other Long Term Liabilities 56.8 49.5 35 118.1 273.3
Long Term Provisions 28.8 33.3 51.4 56.3 77.9
Total Non-Current Liabilities 722.7 1743.8 1459.3 2374 1923.4
CURRENT LIABILITIES
Short Term Borrowings 1831.9 1588.8 1898.6 2060.7 2185.7
Trade Payables 634.5 756.6 965.7 893.2 867.3
Other Current Liabilities 1328.9 1749.2 2120.4 2020.8 2624.4
Short Term Provisions 413.2 496.8 674.1 815.7 1143.9
Total Current Liabilities 4208.5 4591.4 5658.8 5790.4 6821.3
Total Capital And Liabilities 8963.1 11324.2 13487.2 16029.6 18597.8
ASSETS
NON-CURRENT ASSETS
Tangible Assets 2326.6 2573.2 3141.6 3749.6 4183.7
Intangible Assets 1058.9 838.5 909 891.2 1193.3
Capital Work-In-Progress 575.2 708.5 565.3 638.8 529
Fixed Assets 3960.7 4120.2 4615.9 5279.6 5906
Non-Current Investments 0.9 0.9 0.4 0.4 145.6
Deferred Tax Assets [Net] 122.4 134 174.2 191.7 245
Long Term Loans And Advances 64.1 70.1 84.8 232.2 418.1
Other Non-Current Assets 0 0 20.9 0 6.4
Total Non-Current Assets 4148.1 4325.2 4896.2 5703.9 6721.1
CURRENT ASSETS
Current Investments 0 207 196.6 1066.4 2102.2
Inventories 1599.2 1943.3 2170.7 2418.8 2569.9
Trade Receivables 1761.1 2536.8 3180.4 3325.3 4101.2
Cash And Cash Equivalents 575.1 1606.1 2017.1 2300.6 1872.4
Short Term Loans And Advances 828.4 662.9 925.6 1098.9 1074.7
OtherCurrentAssets 51.2 42.9 100.6 115.7 156.3
Total Current Assets 4815 6999 8591 10325.7 11876.7
Total Assets 8963.1 11324.2 13487.2 16029.6 18597.8
------------------- in Rs. Cr. -------------------

Interpretation: -
 From the above balance sheet we observe Dr Reddy has accumulated
undistributed profits over period of 5 years that proves the soundness, health
of the business to the owners (shareholders).
 Long term borrowings and short term borrowing of Dr Reddys has decreased
and increased respectively in the year ended Mar 2015.
 Dr Reddys lab has Rs 1143.9 cr of short term provision means company has to
pay within a year.
 Dr Reddys lab current liabilities has increased at the rate of 12% y-o-y.
 Dr Reddys has reduced Capital expenditure in year ended Mar 2015 by 16.2%
y-o-y.
 Dr Reddys has repaid long term borrowings as we see the decrease in cash
balances and the borrowing for the year ended Mar 2015.

Financial Analysis of Balance Sheet
SHAREHOLDER'S FUNDS
Equity Share Capital 100% 100% 100% 101% 101%
Reserves and Surplus 100% 124% 159% 197% 247%
Total Shareholders Funds 100% 124% 158% 195% 244%
Long Term Borrowings 100% 306% 236% 386% 266%
Deferred Tax Liabilities [Net] 100% 19% 107% 124% 141%
Other Long Term Liabilities 100% 87% 62% 208% 481%
Long Term Provisions 100% 116% 178% 195% 270%
Total Non-Current Liabilities 100% 241% 202% 328% 266%
CURRENT LIABILITIES
Short Term Borrowings 100% 87% 104% 112% 119%
Trade Payables 100% 119% 152% 141% 137%
Other Current Liabilities 100% 132% 160% 152% 197%
Short Term Provisions 100% 120% 163% 197% 277%
Total Current Liabilities 100% 109% 134% 138% 162%
Total Capital And Liabilities 100% 126% 150% 179% 207%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 100% 111% 135% 161% 180%
Intangible Assets 100% 79% 86% 84% 113%
Capital Work-In-Progress 100% 123% 98% 111% 92%
Fixed Assets 100% 104% 117% 133% 149%
Non-Current Investments 100% 100% 44% 44% 16178%
Deferred Tax Assets [Net] 100% 109% 142% 157% 200%
Long Term Loans And Advances 100% 109% 132% 362% 652%
Other Non-Current Assets
Total Non-Current Assets 100% 104% 118% 138% 162%
CURRENT ASSETS
Current Investments
Inventories 100% 122% 136% 151% 161%
Trade Receivables 100% 144% 181% 189% 233%
Cash And Cash Equivalents 100% 279% 351% 400% 326%
Short Term Loans And Advances 100% 80% 112% 133% 130%
OtherCurrentAssets 100% 84% 196% 226% 305%
Total Current Assets 100% 145% 178% 214% 247%
Total Assets 100% 126% 150% 179% 207%
Horizontal Analysis

Interpretation
 It is observed form the horizontal analysis that the reserve and surplus has
increased on an average growth of 27% year on year,
 Long term borrowing has been paid off in the year ended Mar 2015 and other
long term liabilities has increased to 481% over the past 5 years and twice the
previous year.
 Creditors have been paid off and short term provision has created to meet
short term obligation which may arise in a year
 Credit sales can be observed from the balance sheet as trade receivable has
increased and debt has been paid off as we observe the decrease in cash
balances.
 Other current assets have increased by 79% in the year 2015.

SHAREHOLDER'S FUNDS
CURRENT LIABILITIES
Trade Payables 7.08% 6.68% 7.16% 5.57% 4.66%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 25.96% 22.72% 23.29% 23.39% 22.50%
Fixed Assets 44.19% 36.38% 34.22% 32.94% 31.76%
CURRENT ASSETS 0.00% 0.00% 0.00% 0.00% 0.00%
Inventories 17.84% 17.16% 16.09% 15.09% 13.82%
Total Assets 100% 100% 100% 100% 100%
Vertical Analysis

Interpretation: -
It is observed in the vertical analysis that 52.2% of the liabilities is the owner’s wealth
i.e. shareholder fund which has increased on an average of 4% of liabilities every
year.
Borrowings has been paid off and provision is created to meet obligations.
Capital expenditure in fixed assets has reduced y-o-y.
Investment has been made in the year ended Mar 2015.
Current assets contribute 63.86% in Dr Reddys lab shows company invest in working
capital rather than fixed assets.

Income Statement Analysis
ConsolidatedProfit&LossaccountofDrReddysLaboratories
INCOME
RevenueFromOperations[Gross] 7458.9 9749.1 11753.6 13362.7 14991.3
Less:Excise/SeviceTax/OtherLevies 35.6 40.5 71.8 138.2 82.9
RevenueFromOperations[Net] 7423.3 9708.6 11681.8 13224.5 14908.4
CostofGoodsSold 2125.6 2742.7 3641.8 3481.6 3905
CostOfMaterialsConsumed 1474.5 1949.3 2816.6 2840.7 2825.9
PurchaseOfStock-InTrade 719.4 718.2 805.7 739.8 942
OperatingAndDirectExpenses 96.2 227.8 188 220.7 192.9
ChangesInInventoriesOfFG,WIPAndStock-InTrade -164.5 -152.6 -168.5 -319.6 -55.8
GrossProfit 5297.7 6965.9 8040 9742.9 11003.4
EmployeeBenefitExpenses 1304.8 1591.2 1928.7 2213 2944.6
EBITDA 3992.9 5374.7 6111.3 7529.9 8058.8
DepreciationAndAmortisationExpenses 398.1 518.1 550.2 647.5 759.9
EBIT 3594.8 4856.6 5561.1 6882.4 7298.9
FinanceCosts 24.6 105.6 100.3 126.7 108.2
OtherExpenses 2513.3 3049.5 3605.6 4413.7 4680.1
OtherIncome 52.3 132.3 149.9 169.7 274.1
OtherOperatingRevenues 73.6 105.9 213.8 134.6 114.9
EBT 1182.8 1939.7 2218.9 2646.3 2899.6
ExceptionalItems 0 -135.3 -54.2 0 0
Profit/LossBeforeTax 1182.8 1804.4 2164.7 2646.3 2899.6
CurrentTax 210.6 524.8 657 656.8 624.2
DeferredTax -26.7 -21.3 -19.1 26.3 -61
TotalTaxExpenses 183.9 503.5 637.9 683.1 563.2
Profit/LossAfterTaxAndBeforeExtraOrdinaryItems 998.9 1300.9 1526.8 1963.2 2336.4
Profit/LossFromContinuingOperations 998.9 1300.9 1526.8 1963.2 2336.4
Profit/LossForThePeriod 998.9 1300.9 1526.8 1963.2 2336.4
ConsolidatedProfit/LossAfterMIAndAssociates 998.9 1300.9 1526.8 1963.2 2336.4
-------------------inRs.Cr.-------------------
Interpretation: -
Revenue, Gross Profit, EBITDA, EBIT, and EBT has been doubled in the 5 years.
Finance cost is decreased in the year 2015
Employee benefit and depreciation has increased in the past years that have a direct
effect on PAT.

Financial Analysis
INCOME
RevenueFromOperations[Gross] 100.00% 130.70% 157.58% 179.15% 200.99%
Less:Excise/SeviceTax/OtherLevies 100.00% 113.76% 201.69% 388.20% 232.87%
CostOfMaterialsConsumed 100.00% 132.20% 191.02% 192.66% 191.65%
OperatingAndDirectExpenses 100.00% 236.80% 195.43% 229.42% 200.52%
ChangesInInventoriesOfFG,WIPAndStock-InTrade 100.00% 92.77% 102.43% 194.29% 33.92%
GrossProfit 100.00% 131.49% 151.76% 183.91% 207.70%
EBITDA 100.00% 134.61% 153.05% 188.58% 201.83%
EBIT 100.00% 135.10% 154.70% 191.45% 203.04%
FinanceCosts 100.00% 429.27% 407.72% 515.04% 439.84%
OtherExpenses 100.00% 121.33% 143.46% 175.61% 186.21%
OtherIncome 100.00% 252.96% 286.62% 324.47% 524.09%
EBT 100.00% 163.99% 187.60% 223.73% 245.15%
ExceptionalItems
CurrentTax 100.00% 249.19% 311.97% 311.87% 296.39%
DeferredTax 100.00% 79.78% 71.54% -98.50% 228.46%
Profit/LossFromContinuingOperations 100.00% 130.23% 152.85% 196.54% 233.90%
HorizontalAnalysis

Interpretation: -
 It is observed that due to decrease in the excise tax, other operating and direct
expenses, change in stock has increased gross profit.
 Employee Benefit expenses and depreciation expenses has become twice in
the past 5 years.
 Finance cost has increase from year ended March 2011 and decreased in the
year ended March 2015.
 Total tax expenditure has decreased in the year ended March 2015 result in
increase in profit.
 Over the period of 5 years it is observed that there is an average growth of
20% per year that results in 100% increment in all the expenses and incomes.

INCOME
RevenueFromOperations[Gross] 100.00% 100.00% 100.00% 100.00% 100.00%
Less:Excise/SeviceTax/OtherLevies 0.48% 0.42% 0.61% 1.03% 0.55%
CostOfMaterialsConsumed 19.77% 19.99% 23.96% 21.26% 18.85%
OperatingAndDirectExpenses 1.29% 2.34% 1.60% 1.65% 1.29%
ChangesInInventoriesOfFG,WIPAndStock-InTrade -2.21% -1.57% -1.43% -2.39% -0.37%
GrossProfit 71.03% 71.45% 68.40% 72.91% 73.40%
EBITDA 53.53% 55.13% 52.00% 56.35% 53.76%
EBIT 48.19% 49.82% 47.31% 51.50% 48.69%
FinanceCosts 0.33% 1.08% 0.85% 0.95% 0.72%
OtherExpenses 33.70% 31.28% 30.68% 33.03% 31.22%
OtherIncome 0.70% 1.36% 1.28% 1.27% 1.83%
EBT 15.86% 19.90% 18.88% 19.80% 19.34%
ExceptionalItems 0.00% -1.39% -0.46% 0.00% 0.00%
CurrentTax 2.82% 5.38% 5.59% 4.92% 4.16%
DeferredTax -0.36% -0.22% -0.16% 0.20% -0.41%
Profit/LossFromContinuingOperations 13.39% 13.34% 12.99% 14.69% 15.59%
VerticalAnalysis

Interpretation: -
It is observed that Revenue has decreased when compared with the previous year’s
revenue from operations. In the financial year ended March 2013, cost of goods sold
increased and other expenses were decreased due to which that year profit got
affected.
It is observed that decrease in excise cost has led to increase in gross profit being the
cost of goods sold remains the same as in last year for the year ended Mar 2015.
Increase in Employee expenses and Depreciation has led to decrease in EBITDA and
EBIT respectively.
Decrease in total tax expenses has increased the EAT for the year ended Mar 2015.

Valuation of Dr Reddys Laboratories
Interpretation: -
For the valuation of Dr Reddys Lab, DCF Method of valuation is used to arrive at
intrinsic value of the stock. To calculate the free cash flow to firm for the
forecasting period of next 5 years, growth of sales, EBIT, Capital expenditure,
Depreciation, Cost of Capital (WACC) is to be calculated based on the historical
data which is shown in table below.
Growth
Sales Growth Rate 14.97%
Operating Income Margin 49.10%
Tax Rate 30%
Depreciation 5.05%
Reinvestment in Non Cash Working Capital 1%
Reinvestment in Fixed Assets 8.01%
Stable Growth Rate 6%
Cost of Capital 6.53%
No of Sh O/S ( in Crore) 17.04
This graph shows the slightly upward and downward fluctuation in terms of Gross
Profit, EBITDA and EBIT.
From the above graph we depict that the Dr Reddys Lab no trend in growth at stable
stage in industry cycle.

The calculation for the forecasted free cash flow to the firm, discounted value
of the firm, and the intrinsic value of the stock is shown in next page.
Particulars 2016 2017 2018 2019 2020
1 2 3 4 5
Sales 17,139.49 19,704.46 22,653.30 26,043.43 29,940.91
EBIT 8,416.06 9,675.55 11,123.53 12,788.20 14,702.00
EBIT*(1-t) 5,891.25 6,772.89 7,786.47 8,951.74 10,291.40
Add: Depreciation 865.45 994.97 1,143.87 1,315.05 1,511.85
Less: Reinvestment in Non Cash Working Capital 116.55 133.99 154.04 177.10 203.60
Less: Reinvestment in Fixed Assets 1,373.67 1,579.25 1,815.59 2,087.30 2,399.67
FCFF 5,266.47 6,054.62 6,960.71 8,002.40 9,199.98
Terminal FCFF 1,49,446.86
sub total 5,266.47 6,054.62 6,960.71 8,002.40 1,58,646.84
DCF 4943.87 5335.56 5758.30 6214.52 1,15,655.41
PV of Operating Assets 137907.66
Add: Cash 1872.4
Less: Debt 3,329.10
Value of Equity 136450.96
Intrinsic Value 8,008.57
CMP 3052.95
Recommendation BUY

Consolidated Balance Sheet of Dr Reddys
Laboratories
Mar '11 Mar '12 Mar '13 Mar '14 Mar '15
Sources Of Funds
Equity Share Capital 84.6 84.8 84.9 85.1 85.2
Reserves 3947.3 4904.2 6284.2 7780.1 9767.9
Networth 4031.9 4989 6369.1 7865.2 9853.1
Secured Loans 28.3 30.8 80.2 94.7 77.5
Unsecured Loans 2340.8 3199.9 3084.3 4041.5 3539.7
Total Debt 2369.1 3230.7 3164.5 4136.2 3617.2
Total Liabilities 6401 8219.7 9533.6 12001.4 13470.3
Application Of Funds
Gross Block 4844.8 5214.4 6156.4 7185.9 8355.6
Less: Accum. Depreciation 1459.3 1802.7 2105.8 2545.1 2978.6
Net Block 3385.5 3411.7 4050.6 4640.8 5377
Capital Work in Progress 575.2 708.5 565.3 638.8 529
Investments 0.9 207.9 197 1066.8 2247.8
Inventories 1599.2 1943.3 2170.7 2418.8 2569.9
Sundry Debtors 1761.1 2536.8 3180.4 3325.3 4101.2
Cash and Bank Balance 575.1 1606.1 2017.1 2300.6 1872.4
Total Current Assets 3935.4 6086.2 7368.2 8044.7 8543.5
Loans and Advances 1066.1 909.9 1306.1 1638.5 1900.5
Total CA, Loans & Advances 5001.5 6996.1 8674.3 9683.2 10444
Current Liabilities 2120.1 2574.4 3228.1 3156.2 3905.7
Provisions 442 530.1 725.5 872 1221.8
Total CL & Provisions 2562.1 3104.5 3953.6 4028.2 5127.5
Net Current Assets 2439.4 3891.6 4720.7 5655 5316.5
Total Assets 6401 8219.7 9533.6 12001.4 13470.3
------------------- in Rs. Cr. -------------------
This balance sheet enables us to identify the find out total debt, working capital,
reinvestment in fixed assets, proportion of debt and equity, Rf is the risk free rate
which is given by the RBI, Market risk is 9% for the pharmaceutical industry.
Ke can be calculated with Capital Asset Pricing
Model.

Working Notes
Mar '12 Mar '13 Mar '14 Mar '15
Reinvestment in Fixed Assets 502.9 798.8 1103 1059.9
Sales 7423.3 9708.6 11681.8 13224.5
Reinvestment Rate 6.77% 8.23% 9.44% 8.01%
CA-CL 1864.3 2285.5 2703.6 3354.4 3444.1
Reinvestment in Non Cash Working Cap 421.2 418.1 650.8 89.7
Reinvestment Rate in Non Cash Working Cap 5.67% 4.31% 5.57% 0.68%
Debt Ratio D% 37.01% 39.30% 33.19% 34.46% 26.85%
KD 1.04% 3.27% 3.17% 3.06% 2.99%
Equity Proportion E% 62.99% 60.70% 66.81% 65.54% 73.15%
ke 8.15% 8.15% 8.15% 8.15% 8.15%
Cost of Capital WACC 5.40% 5.85% 6.18% 6.08% 6.53%
WACC= %E*ke+%D*KD*(1-t)
Rf 7.72%
Rm 9.00%
Beta 0.34
ke 8.15%
The intrinsic value of Dr Reddys Lab is 8008.57 and the current market price is Rs
3052.95 shows that Dr Reddys lab is undervalued and is expected to move towards
the intrinsic value. Therefore, it is recommended to buy.

Chapter 5
Findings
Economic Analysis
 The increase in GDP shows the highly productivity of the nation which have a
positive impact on stock market.
 The changes in interest rate have an effect on time deposit rate.
 Inflation and stock market are negatively related. Inflation decreases the purchasing
power of money due to which an investors do not interact with market on continuous
basis.
 Government policy is liberal for the new entrants which gives an opportunity to start-
ups in pharmaceutical sector.
Industry Analysis
 Top three players have 40% of market share i.e. Sun pharma, Lupin, and Dr Reddys
constituting 25.24%, 8.59% and 6.65% respectively.
 In pharma industry Raw material cost constitute more than 50% of the total expenses.
 Being the large cap companies all the three companies are performing well at an
average growth of 20-25% year on year.
 The company marked with red colour should be neglected for the investment as their
ROA, EBITDA margin and other ratios are negative shows that the low earning
capacity of the firm.
 Undervalued companies whose k-ratio is below one are good for the investment
purpose for the short term, long term investment.
Company Analysis
a) Sun Pharma
 It finds that the earning capacity of the Sun Pharma is good irrespective of
P/E ratio which is higher.
 EV/ Revenue of Sun Pharma is lower in its peer group.

 Sun Pharma having a lower EV/EBITDA i.e.19.88, Sun Pharma earning
capacity is much higher comparing with peer group in the industry.
 Sun Pharma has maintained 22% of cash balances to meet day to day
obligations.
 Sun Pharma earning capacity is much higher comparing with peer group in
the industry.
b) Lupin
 Lupin has strong control on cost which has been reduced over a period.
 Despite of increase in cost Lupin has good earning capacity.
 Lupin is showing upward trend in terms of gross profit, EBITDA, EBIT.
c) Dr Reddys Lab
 Over the period of 5 years it is observed that there is an average growth of
20% per year that results in 100% increment in all the expenses and incomes.
 Dr Reddys has sold some tangible assets and invested in investments.
 Dr Reddys has control on material cost which has reduced over a period of
time.
 Dr Reddys lab is undervalued.
Overall Company Analysis
 All the three companies have maintained sufficient amount of reserves and provision
to meet obligation
 The increase in employee benefit expenses and depreciation expense affect the
EBITDA margin and EBIT.
 Rise in EBITDA and EBIT margins indicate increasing efficiency and profitability.
It’s also depict a good idea to determine whether the company is performing in line
with industry peers and competitors.
 Significant changes in revenues, costs of goods sold and SG&A to get a sense of the
company’s profit.

Suggestion
 Based on analysis it is suggested that the investor can invest in pharma sector stocks
whose intrinsic value is more than the market value.
 Astec Lifesciences in the pharmaceutical sector is a good pick for the long term
investment.
 Investor should sell overvalued stock from their portfolio and buy undervalued stock
which can boost their portfolio after a period of time.
 FDI in pharmaceutical sector resulted in increase in the stock prices of the
pharmaceutical companies. Investor should fetch this opportunity on time for making
good return from market.
 Investor should not invest in stocks which has been coloured as red in sectorial
analysis.
 Whenever an investor thinks of investing in a company, it is vital that an investor
should understand what it does, its market and the industry in which it operates. An
investor should never blindly invest in a company.
 An investor should gain valuable insights about a company by examining its income
statement. Increasing sales offers the first sign of strong fundamentals.
Stocks Recommendation
Sun Pharma BUY
Lupin BUY
Dr Reddys Labs BUY

Conclusion
Fundamental Analysis aims at finding the intrinsic value of shares or security
by analysing macroeconomic, industry and company financial position. An
investor can make safest as well as profitable investment by analysing the
variables and ensure good return. Fundamental Analysis suggests that an
investor should not buy or sell shares on the recommendation of
intermediary’s websites etc., the fundamental analysis call upon the investor to
make buy and sell decision based on detailed analysis of publicly available
information. This study focuses on fundamental analysis which uses various
tools in investment strategies for reducing risks and maximisation of returns.
The objective of the study is to conduct fundamental analysis of selected
pharma company stocks and Porters Five Forces analysis for the Pharma
Industry. The study revealed that through economic analysis the Gross
Domestic Product, Interest rates, Inflation has a positive growth that have
positive as well as negative impact on pharma stocks. The Industry analysis
found that pharma sector has positive and stable growth rate and its profit and
sales revenue shows an increasing trend. The company analysis done with the
help of financial analysis that indicates the changes in the income and
expenditure pattern of the Sun Pharma, Lupin, and Dr Reddys Lab are
financially in satisfactory position.

BIBLIOGRAPHY
 http://www.ibef.org/industry/pharmaceutical-india/showcase#sthash.lD8OuwtQ.dpuf
 http://www.mentescapital.com/
 www.investopedia.com/
 http://www.moneycontrol.com/
 in.reuters.com/finance/
 valueresearchonline.com/default.asp?r=r
 bloomberg.in
 in.finance.yahoo.com,
 www.mckinsey.com/
 www.ukessays.com/dissertation/literaturereview/historyoffundamentalanalysyatradin
g mechanism.php
 www.asiapacific.edu/far-Asia-Pacific Finance and Accounting Review 1.3 (2013)
 http://wh-fellows.wharton.upenn.edu
 www.asx.com.au/documents/resources/shares_course_10.pdf?shares_course_10
 www.investors.asn.au/education/.../fundamental-analysis/fundamental-analysis-
basics/
 www.nseindia.com
Books referred
 Fundamental Equity Analysis by David Nincic
 Investment Analysis and Portfolio Management – Prasanna Chandra
 Security Analysis Portfolio Management- Punithavathy Pandian
 Asset Allocation-Roger C. Gibson
 Corporate Finance –Aswath Damodaran
 Foundation of Financial Markets and Institutions- Frank J Fabozzi
 International Financial Management -Jeff Madura
 Fundamental Analysis for Investor- Raghu Palat
 Financial Engineering- John F Marshall
Magazines
 Dalal Times,
 Dalal Street
Journals
 International Journal of Management and Social Sciences Research
(IJMSSR)__ISSN: 2319-4421 Volume 2, No. 6, June 2013
 International Journal of Marketing, Financial Services & Management Research_
ISSN 2277- 3622 Vol.2, No. 5, May (2013)
 Jeffery S. Abarbanell and Brain J. Bushee (1977) “Fundamental Analysis, Future
Earnings and Stock Prices” Journal of Accounting Research,
Videos Referred
 Fundamental of Business Analysis

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