14 February 2018

3QFY18 Results Update | Sector: Healthcare

Sun Pharma
BSE SENSEX S&P CNX
34,156 10,501
CMP: INR574 TP: INR675(+18%) Buy
Bloomberg SUNP IN Operating performance in-line; Halol resolution key catalyst
Equity Shares (m) 2,406.0  Revenue fell 14% YoY to INR65.9b (1.9% miss) in 3QFY18. Gross margin
M.Cap.(INRb)/(USDb) 1,382.1 / 21.3
728 / 433
shrunk 330bp QoQ (-260bp YoY) to 68.2%, primarily due to higher raw
52-Week Range (INR)
1, 6, 12 Rel. Per (%) 0/10/-32 material cost for Taro and change product mix. EBITDA of INR13.9b was ~1%
Avg Val, INRm 2823.0 below our estimate of INR14.1b. EBITDA margin improved ~120bp QoQ to
Free float (%) 45.6 21.2%, led by ~20% decrease in other expenses due to cost-rationalization
measures. Reported PAT declined ~75% YoY to INR3.7b, primarily due to
Financials & Valuations (INR b)
one-time expense of INR5.1b related to change in US tax laws, adjusted for
Y/E Mar 2018E 2019E 2020E
which PAT stood at INR8.8b (8.8% miss).
Net Sales 265.0 306.3 353.6
EBITDA 53.7 77.0 95.9  Improvement in US business remains key: US business declined 36% YoY
PAT 32.6 52.6 67.2 (+6% QoQ) to USD328m in 3QFY18. Note that 3QFY17 included sales from
EPS (INR) 13.6 21.9 27.9 Imatinib (six months’ exclusivity). Sequential improvement in the US
Gr. (%) -48.1 61.4 27.7 business can be attributed to re-coup of deferred sales from 2QFY18 and
BV/Sh (INR) 156.7 171.6 192.5
some expansion in market share. We expect pick-up in US sales from FY19,
RoE (%) 8.8 13.3 15.3
RoCE (%)
driven by Halol resolution, as well as commercialization of Tildrakuzumab in
7.9 13.8 16.3
P/E (x) 42.4 26.3 20.6 the US (FY19) and Seciera (2HFY19E). India business for SUNP grew ~10%
P/BV (x) 3.7 3.3 3.0 YoY to INR22.2b.
 Earnings call takeaways: (a) Tildrakuzumab PDUFA date is in end-March
2018. (b) SUNP guided for a marginal miss in revenue for FY18, but
Estimate change maintained EBITDA margin guidance of 20-22% for 2HFY18. (c) SUNP
TP change rationalized its ANDA portfolio in the US due to the weak industry outlook.
Rating change (d) Expect 4Q revenues to be similar to 3Q. (e) Cost-rationalization measures
taken by the company will help improve margins.
 Maintain Buy; Halol resolution key catalyst ahead: We expect the stock to
remain under pressure in the near term due to challenges related to growth
and margins. We maintain Buy rating with a TP of INR675, based on 24x
FY20E (v/s INR610, based on 24x 1HFY20E). We cut FY18/19E EPS by 6%/5%,
building in a slower recovery in the US business and margin improvement.

Kumar Saurabh –Research Analyst (Kumar.Saurabh@MotilalOswal.com); +91 22 6129 1519

Ankeet Pandya–Research Analyst (Ankeet.Pandya@MotilalOswal.com)
Investors are advisedEMISPDF
to refer through important disclosures made at the last page of the Research Report.
in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
Motilal Oswal research is Downloaded
available by
onin-ingacapital1
www.motilaloswal.com/Institutional-Equities, Bloomberg,
from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Thomson
Unauthorized DistributionReuters,
Prohibited.Factset and S&P Capital.
 Sun Pharma

Taro’s 4QCY17 results improve sequentially

Sun Pharma’s US subsidiary Taro reported 4Q numbers on 7th February 2018. Key
highlights of 4CY17 results:
 Revenue declined ~30% YoY to USD155m due to pricing pressure and increasing
competition, despite an increase in volumes.
 Gross margin shrunk ~970bp YoY to 66.2%. EBITDA declined significantly by 50%
YoY (-29% QoQ) to USD66m. EBIDTA margin contracted ~1,770bp YoY (-1,220bp
QoQ) to 42.5%, lowest in the last 7-8 quarters). This was on the back of an
increase in SG&A cost by ~480bp (as % of sales) and R&D cost by ~310bp (as %
of sales), along with a decrease in the gross margin.
 Forex income decreased by USD14.8m to USD3.7m.
 PAT declined ~88% YoY to USD16.6m, primarily due to contraction in margins
and a higher tax rate of 76.6% v/s 12.8% YoY (USD38m increase in tax on the
back of re-measurement of the company's estimated net deferred tax asset as a
result of the Tax Cuts and Jobs Act). Adjusted for one-time impact, PAT declined
by 60% YoY to USD54.6m.

Exhibit 1: Taro Financials

USD M 4QCY17A 4QCY16A % YoY 3QCY17A % QoQ
Sales 155.5 220.4 -29.5 169.9 -8.5
Growth (%)
Cost of sales (incl Depn) 52.5 53.1 -1.0 44.8 17.3
Gross profit 102.9 167.3 -38.5 125.1 -17.7
GP Margin (%) 66.2 75.9 (971)bp 73.6 (743)bp
Operating expenses:
R&D 17.5 18.0 -3.0 18.0 -3.0
R&D as a % of sales 11.2 8.2 10.6
SG&A 23.7 20.3 16.7 18.3 29.5
SG&A as a % of sales 15.2 9.2 10.8
Operating Profit 61.8 129.0 -52.1 88.8 -30.4
Operating Profit Margin (%) 39.7 58.5 (1,880)bp 52.3 (1,254)bp
EBITDA 66.0 132.7 -50.3 92.8 -28.9
EBITDA margin (%) 42.5 60.2 (1,774)bp 54.6 (1,218)bp
Financial expenses -5.0 -4.0 -4.6
Extraordinary items incl forex -3.7 -18.4 32.7
Other income 0.6 9.0 -1.3
PBT 71.0 160.4 -55.7 59.4 19.6
Taxes 54.4 20.5 6.9
Effective tax rate (%) 76.6 12.8 11.6
Net income before MI 16.6 139.9 -88.1 52.5 -68.4
Minority interest 0.0 0.1 0.1
Net income (Reported) 16.6 139.8 -88.1 52.4 -68.3
Forex fluctuations 3.7 18.5 -32.6
Net income (Adjusted) 12.9 121.2 -89.4 85.0 -84.8
Source: MOSL, Company

14 February 2018 EMISPDF in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
2
Downloaded by in-ingacapital1 from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Unauthorized Distribution Prohibited.
 Sun Pharma

Exhibit 2: Key operating metrics

3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18
Revenue Mix (%)
India 25.1 25.3 26.4 26.4 26.6 24.2 23.2 25.9 25.6 28.1 29.1 34.9 32.4
USA 48.7 49.1 47.4 48.3 45.1 52.3 50.8 47.8 44.5 37.4 37.5 31.5 33.1
RoW 22.5 20.9 21.8 20.5 21.8 18.3 19.9 21.5 25.0 28.5 27.7 26.9 28.1
API 3.6 4.6 4.2 4.6 6.2 5.0 5.9 4.7 4.8 5.8 5.1 6.1 5.8

Revenue Growth
61.0 51.4 2.3 (14.9) 2.1 20.4 22.7 13.2 8.2 (8.7) (24.5) (18.0) (16.3)
(%)
India 84.3 65.8 7.3 0.4 8.3 15.1 7.6 11.1 4.2 6.1 (5.0) 10.5 5.9
USA 26.4 22.6 2.2 (22.2) (5.5) 28.3 31.7 12.0 6.8 (34.7) (44.4) (45.9) (37.6)
RoW 200.3 191.2 (7.2) (16.2) (0.8) 5.8 12.3 18.7 23.8 42.0 4.9 2.6 (5.8)
API 83.0 66.2 73.2 45.2 176.6 88.2 168.2 53.9 14.0 5.2 (34.2) 5.8 1.2

Cost of sales (%) 69.2 85.7 76.5 72.9 69.7 69.0 66.5 65.7 71.1 81.9 82.9 80.0 78.8
Raw material 24.9 26.0 25.9 21.8 24.9 19.6 23.1 23.7 29.3 32.2 27.2 28.5 31.8
Staff cost 15.9 18.4 18.9 17.7 16.3 15.9 15.5 15.4 15.8 18.3 21.6 20.1 20.8
R&D cost 6.8 8.9 7.7 7.0 8.2 9.1 6.5 7.1 8.0 9.2 9.5 7.8 7.2
Other expenses 21.7 32.4 24.0 26.4 20.3 24.4 21.5 19.4 18.0 22.2 24.6 23.7 19.0
Tax Rate 60.2 (101.8) 7.2 18.7 10.0 8.0 13.4 15.1 17.7 3.2 20.4 10.0 65.2

Margins (%)
Gross Margins 75.1 74.0 74.1 78.2 75.1 80.4 76.9 76.3 70.7 67.8 72.8 71.5 68.2
EBITDA Margins 31.2 14.5 26.1 27.2 30.6 33.0 35.4 38.3 31.0 21.7 17.6 20.7 21.8
EBIT Margins 27.1 11.6 25.9 25.2 30.3 30.0 34.5 38.4 29.5 21.0 14.6 19.3 18.8
PAT margins 9.9 19.4 11.6 18.6 25.8 26.5 28.4 32.0 22.5 19.7 (5.2) 15.2 6.1
Source: Company, MOSL

14 February 2018 EMISPDF in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
3
Downloaded by in-ingacapital1 from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Unauthorized Distribution Prohibited.
 Sun Pharma

Story in charts
Exhibit 3: Revenues declined 14%YoY in 3QFY18 Exhibit 4: US business declines significantly by 36% YoY
Sales (INR b) Growth YoY (%) US sales (USD m) Growth YoY (%)
62
52 26 22 25
18
9
Thousands

24 18 5
7 13 8 -11
2 -19
-15 -11 -14
-23 -15 -34 -36
-44 -42 -44

69 62 68 69 71 76 80 78 77 68 62 66 66 546 492 487 511 486 580 608 555 511 382 351 309 328
3QFY15

4QFY15

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

3QFY15

4QFY15

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18
Source: Company, MOSL Source: Company, MOSL

Exhibit 5: India biz grew 6% YoY Exhibit 6: Taro sales

Domestic formulations (INR b) Growth YoY (%) Taro Sales (USD m) Growth YoY (%)
84
66
Thousands

65.3
30.5
11.3 8.7 8.6 8.6 7.9
8 8 15 8 11 11
1 4 6 6 -15.4 -14.7
-5 -25.9-31.0-25.7-29.5

17 16 17 18 19 18 19 20 20 19 18 22 21 238 244 215 212 258 265 234 229 220 196 161 170 155
3QFY15

4QFY15

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18
3QFY15

4QFY15

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

Source: Company, MOSL Source: Company, MOSL

Exhibit 7: EBITDA margin Exhibit 8: R&D expense stood at 7.2% of sales in 3QFY18
EBITDA (INR b) EBITDA Margin (%) R&D cost (INR b) % of sales
8.9 9.1 9.2
33 34 34 8.2 8.5
31 31 7.7 8.0 7.8
27 29 6.8 7.0 7.1 7.2
26 6.5
20 21
18 17
14

22 9 18 19 22 25 27 27 22 12 11 13 14 4.7 5.5 5.0 4.8 5.8 6.7 5.2 5.5 6.1 6.3 5.2 5.1 4.7
3QFY15

4QFY15

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

3QFY15

4QFY15

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

Source: Company, MOSL Source: Company, MOSL

14 February 2018 EMISPDF in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
4
Downloaded by in-ingacapital1 from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Unauthorized Distribution Prohibited.
 Sun Pharma

Exhibit 9: Revenues to remain subdued over FY17-20E Exhibit 10: US generic sales to improve FY19 onwards
Formulations (INR b) API (INR b) US Sales (USD m) Growth YoY (%)
110.8
23
16 20
15
11 17 47.5 55.0 42.9 39.3
1288 14.6 14.6
8 -7.5 -1.2
6 8
5 -37.3
106 154 266 270 299 250 290 335 494 729 1130 1615 2249 2080 2054 1475 1690
53 75

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E
FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E
Source: Company, MOSL Source: Company, MOSL

Exhibit 11: India biz to grow at 13% CAGR from FY17-20E Exhibit 12: Margins to pick up FY19 onwards
India sales (INR b) Growth YoY (%) EBITDA (INR m) EBITDA Margin (%)
82% 43.7 43.3
39.9
Thousands
Thousands

34.2
28.3 28.7 29.0
30%
22% 24% 25.1 27.1
8% 11% 15% 14% 20.3
2% 7%

24 29 30 37 67 73 77 86 99 113 20 32 49 69 77 80 88 54 77 96
FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E
FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E

Source: Company, MOSL Source: Company, MOSL

14 February 2018 EMISPDF in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
5
Downloaded by in-ingacapital1 from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Unauthorized Distribution Prohibited.
 Sun Pharma

Financials and Valuations

Income Statement (INR Million)
Y/E Mar 2013 2014 2015 2016 2017 2018E 2019E 2020E
Net Sales 112,388 160,044 272,865 277,442 302,642 265,029 306,286 353,619
Change (%) 40.3 42.4 70.5 1.7 9.1 -12.4 15.6 15.5
EBITDA 49,063 69,257 77,198 79,561 87,751 53,672 76,963 95,869
EBITDA Margin (%) 43.7 43.3 28.3 28.7 29.0 20.3 25.1 27.1
Depreciation 3,362 4,092 11,947 10,135 12,648 14,100 15,000 15,500
EBIT 45,701 65,165 65,250 69,426 75,103 39,572 61,963 80,369

Interest 443 442 5,790 4,769 3,998 4,500 3,000 2,300

Other Income 3,727 6,282 6,946 9,848 19,374 8,000 10,000 12,500
Extraordinary items -5,836 -25,174 -2,378 -6,852 0 0 0 0
PBT 43,148 45,831 64,029 67,653 90,479 43,072 68,963 90,569
Tax 8,456 7,022 9,147 9,349 12,116 11,591 10,344 15,397
Tax Rate (%) 19.6 15.3 14.3 13.8 13.4 26.9 15.0 17.0
Min. Int. & Assoc. Share 4,863 7,375 9,488 11,145 8,719 4,000 6,000 8,000
Reported PAT 29,830 31,434 45,394 47,159 69,644 27,481 52,619 67,172
Adjusted PAT 34,791 52,813 47,415 47,069 62,890 32,611 52,619 67,172
Change (%) 34.2 51.8 -10.2 -0.7 33.6 -48.1 61.4 27.7

Balance Sheet (INR Million)

Y/E Mar 2013 2014 2015 2016 2017 2018E 2019E 2020E
Share Capital 1,036 2,071 2,406 2,407 2,399 2,399 2,399 2,399
Reserves 148,862 183,178 253,826 327,418 363,997 374,635 410,411 460,740
Net Worth 149,897 185,249 256,232 329,825 366,397 377,034 412,810 463,139
Debt 2,072 24,982 77,827 83,164 80,910 58,073 41,800 30,179
Deferred Tax -7,122 -9,110 -17,516 -30,462 -21,780 -21,780 -21,780 -21,780
Total Capital Employed 161,197 220,333 345,203 423,379 463,435 455,236 480,738 527,447
Gross Fixed Assets 56,026 63,886 130,369 123,033 133,994 158,994 183,994 213,994
Less: Acc Depreciation 24,421 28,904 60,617 47,201 49,041 63,141 78,141 93,641
Net Fixed Assets 31,604 34,982 69,752 75,831 84,953 95,853 105,853 120,353
Capital WIP 5,626 8,415 20,386 12,035 15,648 17,212 18,934 20,827
Investments 24,116 27,860 27,163 11,161 9,610 9,610 9,610 9,610
Current Assets 113,420 177,393 297,403 332,175 374,799 354,061 381,794 432,751
Inventory 25,778 31,230 56,680 64,225 68,328 61,068 65,665 75,234
Debtors 27,108 22,004 53,123 67,757 72,026 54,766 52,536 60,831
Cash & Bank 40,587 75,902 109,980 131,817 151,408 155,191 180,557 210,891
Loans & Adv, Others 19,948 48,257 77,619 68,377 83,036 83,036 83,036 85,794
Curr Liabs & Provns 38,439 61,509 126,574 100,434 125,739 125,665 139,618 160,259
Curr. Liabilities 15,752 15,887 59,198 51,741 73,469 65,555 70,490 80,763
Provisions 22,687 45,622 67,376 48,693 52,270 60,111 69,127 79,496
Net Current Assets 74,981 115,884 170,828 231,742 249,060 228,395 242,177 272,492
Total Assets 161,198 220,333 345,203 423,379 463,435 455,236 480,738 527,447

14 February 2018 EMISPDF in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
6
Downloaded by in-ingacapital1 from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Unauthorized Distribution Prohibited.
 Sun Pharma

Financials and Valuations

Ratios
Y/E Mar 2013 2014 2015 2016 2017 2018E 2019E 2020E
Basic (INR)
EPS 14.5 22.0 19.7 19.6 26.1 13.6 21.9 27.9
Cash EPS 13.8 14.8 23.8 23.8 34.2 17.3 28.1 34.4
Book Value 62.3 77.0 106.5 137.1 152.3 156.7 171.6 192.5
DPS 2.2 2.6 3.0 1.0 3.5 6.0 6.0 6.0
Payout (incl. Div. Tax.) 17.5 18.7 15.4 4.8 12.5 53.5 28.7 22.4
Valuation(x)
P/E 39.7 26.2 29.1 29.4 22.0 42.4 26.3 20.6
Price / Book Value 9.2 7.5 5.4 4.2 3.8 3.7 3.3 3.0
EV/Sales 11.7 8.1 4.8 4.8 4.3 4.8 4.0 3.4
EV/EBITDA 26.9 18.8 17.1 16.6 14.8 23.8 16.0 12.4
Dividend Yield (%) 0.4 0.4 0.5 0.2 0.6 1.0 1.0 1.0
Profitability Ratios (%)
RoE 25.6 31.5 21.5 16.1 18.1 8.8 13.3 15.3
RoCE 28.8 33.4 22.7 18.3 19.0 7.9 13.8 16.3
RoIC 45.2 55.5 37.8 26.2 23.4 10.3 19.3 23.9
Turnover Ratios (%)
Asset Turnover (x) 0.8 0.8 1.0 0.7 0.7 0.6 0.7 0.7
Debtors (No. of Days) 88 50 71 89 87 75 63 63
Inventory (No. of Days) 84 71 76 84 82 84 78 78
Creditors (No. of Days) 91 64 110 95 125 113 112 114
Leverage Ratios (%)
Net Debt/Equity (x) -0.2 -0.2 -0.1 -0.1 -0.2 -0.2 -0.3 -0.3

Cash Flow Statement (INR Million)

Y/E Mar 2013 2014 2015 2016 2017 2018E 2019E 2020E
Adjusted EBITDA 49,063 69,257 77,198 79,561 87,751 53,672 76,963 95,869
Non cash opr. exp (inc) -2,109 -18,892 4,569 2,996 19,374 8,000 10,000 12,500
(Inc)/Dec in Wkg. Cap. -2,336 -5,589 -20,865 -39,077 2,274 24,447 11,585 19
Tax Paid -10,379 -9,010 -17,553 -22,295 -3,434 -11,591 -10,344 -15,397
Other operating activities 0 0 0 0 0 0 0 0
CF from Op. Activity 34,239 35,767 43,348 21,185 105,964 74,527 88,203 92,991
(Inc)/Dec in FA & CWIP -22,501 -18,580 -82,570 -43,401 -36,936 -26,565 -26,721 -31,893
Free cash flows 11,737 17,187 -39,223 -22,216 69,028 47,962 61,482 61,098
(Pur)/Sale of Invt -1,987 -3,745 698 16,002 1,551 0 0 0
Others 0 0 0 0 0 0 0 0
CF from Inv. Activity -24,488 -22,324 -81,872 -27,399 -35,385 -26,565 -26,721 -31,893
Inc/(Dec) in Net Worth 4,334 6,674 33,994 30,296 -34,910 0 0 0
Inc / (Dec) in Debt -668 22,910 52,845 5,337 -2,254 -22,837 -16,273 -11,621
Interest Paid -443 -442 -5,790 -4,769 -3,998 -4,500 -3,000 -2,300
Divd Paid (incl Tax) & Others -6,058 -7,270 -8,445 -2,816 -9,825 -16,843 -16,843 -16,843
CF from Fin. Activity -2,835 21,872 72,605 28,049 -50,987 -44,180 -36,116 -30,764
Inc/(Dec) in Cash 6,915 35,315 34,080 21,836 19,592 3,782 25,366 30,334
Add: Opening Balance 33,672 40,587 75,902 109,980 131,817 151,408 155,191 180,557
Closing Balance 40,587 75,902 109,982 131,816 151,408 155,191 180,557 210,891

14 February 2018 EMISPDF in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
7
Downloaded by in-ingacapital1 from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Unauthorized Distribution Prohibited.
 Sun Pharma

Corporate profile
Exhibit 1: Sensex rebased
Company description
Sun Pharma is among the largest players in the
domestic formulations market and the most
profitable one. It makes and markets specialty
medicines and APIs for chronic therapy areas such
as cardiology, psychiatry, neurology, etc. Sun has
forayed into regulated markets by acquiring
majority stake in CaracoPharma and has
strengthened its presence in US by recent
acquisition of Taro.
Source: MOSL/Bloomberg

Exhibit 2: Shareholding pattern (%) Exhibit 3: Top holders

Dec-17 Sep-17 Dec-16 Holder Name % Holding
Promoter 54.4 54.4 54.4 LIC of India 5.5
DII 14.9 13.9 12.2 ICICI Prudential Value Discovery Fund 2.7
FII 17.2 18.2 21.8 Lakshdeep Investments & Finance (P) Ltd. 1.5
Others 13.5 13.6 11.7 Government of Singapore 1.3
Note: FII Includes depository receipts Source: Capitaline NA 0.0
Source: Capitaline

Exhibit 4: Top management Exhibit 5: Directors

Name Designation Name Name
Israel Makov Chairman Ashwin Dani Hasmukh S Shah
Dilip S Shanghvi Managing Director Keki M Mistry S Mohanchand Dadha
Sunil R Ajmera Company Secretary Sailesh T Desai Sudhir V Valia
Rekha Sethi

Source: Capitaline *Independent

Exhibit 6: Auditors Exhibit 7: MOSL forecast v/s consensus

Name Type EPS MOSL Consensus
Variation (%)
(INR) forecast forecast
C J Goswami & Associates Secretarial Audit
FY18 13.6 14.7 -7.5
Deloitte Haskins & Sells Statutory
FY19 21.9 21.1 4.0
Kailash Sankhlecha & Associates Cost Auditor
FY20 27.9 26.2 6.4
S R B C & Co LLP Statutory
Source: Bloomberg

Source: Capitaline

14 February 2018 EMISPDF in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
8
Downloaded by in-ingacapital1 from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Unauthorized Distribution Prohibited.
 Sun Pharma

NOTES

14 February 2018 EMISPDF in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
9
Downloaded by in-ingacapital1 from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Unauthorized Distribution Prohibited.
Explanation of Investment Rating
Investment Rating Expected return (over 12-month)
BUY >=15% Sun Pharma
SELL < - 10%
NEUTRAL > - 10 % to 15%
UNDER REVIEW Rating may undergo a change
NOT RATED We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the inconsistency, take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures:
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services,
Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed public company, the details in respect of
which are available on www.motilaloswal.com. MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited
(BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) & National Securities Depository Limited (NSDL) and is member of Association of
Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf
Regulatory Enquiries against Motilal Oswal Securities Limited by SEBI:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and
adjudge violation of SEBI Regulations; MOSL requested SEBI to provide all documents, records, investigation report relied upon by SEBI which were referred in Show Cause Notice. The matter is closed and MOSL had to pay Rs. 2
lakhs towards penalty for misplacement of original POA of client.
MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in the subject company at
the end of the month immediately preceding the date of publication of the Research Report. MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act
as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial
instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.;
however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though there
might exist an inherent conflict of interest in some of the stocks mentioned in the research report. Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have
received any compensation from the subject company in the past 12 months.
In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:
a) managed or co-managed public offering of securities from subject company of this research report,
b) received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,
c) received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.
d) Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.
MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure of Interest Statement in
this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result,
the recipients of this report should be aware that MOSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or
brokerage service transactions.
Terms & Conditions:
This report has been prepared by MOSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part
or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report
is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied,
is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to
buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by
virtue of their receiving this report.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the
specific recommendations and views expressed by research analyst(s) in this report.
Disclosure of Interest Statement Sun Pharma
Analyst ownership of the stock No
A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOSL or
its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have
expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject
MOSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities
and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong)
Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only
available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from
registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered
investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption
under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional
Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional
investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule
15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S.,
MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of
this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject
to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal
Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the
Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced
in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in
this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of
independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document
(including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including
those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy,
completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the
views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval.
MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform
investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this
into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and
the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or
published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such
distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all
jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall
be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. The person accessing this information specifically agrees
to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSL
or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm
Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id: na@motilaloswal.com, Contact No.:022-30801085.
Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MSE); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100.
Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth
management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real
Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products

14 February 2018 EMISPDF in-ingacapital1 from 111.119.199.238 on 2018-02-15 05:22:59 GMT. DownloadPDF.
10
Downloaded by in-ingacapital1 from 111.119.199.238 at 2018-02-15 05:22:59 GMT. EMIS. Unauthorized Distribution Prohibited.