DIVIS LABORATORIES LTD - Quantamental Equity Research Report

	Quantamental Equity Research on DIVIS LABORATORIES LTD | Release: 16 Dec 2018 22:57:10 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:DIVISLAB and BSE CODE:532488
	Last Close:	INR 1491.4
	Fair Value:	INR 1508.6
	Est. Price by Mar 19:	INR 1705.5
	Market Capitalization (INR Crs):	39591.98
	Industry:	Pharmaceuticals
	Rating:	BUY
	Upside:	14%
	Company Profile
	Divis Laboratories is engaged in the manufacture of Active Pharmaceutical ingredients (APIs), Intermediates and Nutraceutical ingredients with predominance in exports. Company through its custom synthesis business, supports innovator pharma companies for their patented products business right for clinical trials to launch as well as late life cycle management.
	Growth Per Share
	Particulars	1-Year	3-Year	5-Year
	Revenue %	-5%	52%	113%
	EBIT %	-12%	14%	54%
	Earnings %	-17%	3%	42%
	Book Value %	10%	67%	133%
	Stock Total Return %	81%	25%	121%
	Share holding pattern
	Particulars	%age
	(A) Promoter & Promoter Group	52.02
	(B) FII/FPI	17.52
	(C) DII/Insurance Companies	16.79
	(D) Public holding < 2 lakhs of cap.	7.06
	(E) Others	6.61
	Grand Total	100.00
	Fundamentals (Historical and Estimated)
	Particulars	Mar-10	Mar-11	Mar-12	Mar-13	Mar-14	Mar-15	Mar-16	Mar-17	Mar-18	Mar-19 E	Mar-20 E	Mar-21 E	Mar-22 E	Mar-23 E
	Price	347	349	404	520	679	920	1032	637	1151	1706	1951	2172	2353	2498
	Return on Equity	22%	24%	25%	24%	26%	24%	25%	19%	15%	16%	16%	16%	15%	14%
	Price to Earning	53.4	42.5	39.2	45.2	45.5	57.7	49.3	24.1	35.1	43.0	43.0	43.0	43.0	43.0
	EVTI	18.7	13.4	11.0	12.5	13.7	15.4	14.2	5.8	7.3	9.4	9.4	9.4	9.3	9.3
	EVTIFM	53.4	42.5	39.2	45.2	45.5	57.7	49.3	24.1	35.1	43.0	43.0	43.0	43.0	43.0
	Price to Book Value	11.9	10.1	9.9	10.8	11.9	13.7	12.6	4.7	5.1	6.7	6.8	6.8	6.5	6.2
	Debt to Equity	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
	Dividend Yield	0%	1%	1%	1%	1%	1%	0%	1%	1%	1%	1%	1%	1%	1%
	Cash Flow to Firm	10%	7%	5%	5%	7%	7%	2%	7%	3%	2%	2%	3%	3%	4%
	Detailed Estimates
	Title	Mar-18	Mar-19 E	Mar-20 E	Mar-21 E	Mar-22 E	Mar-23 E
	Sales	3,815.94	4,450.19	5,060.58	5,607.66	6,050.96	6,353.51
	EBITDA	1,364.09	1,763.48	2,005.35	2,222.14	2,397.81	2,517.70
	EBIT	1,221.67	1,597.39	1,824.69	2,030.89	2,200.90	2,336.24
	PBT	1,219.36	1,595.08	1,824.69	2,030.89	2,200.90	2,336.24
	NPAT	869.58	1,052.91	1,204.48	1,340.59	1,452.81	1,542.16
	Price to Earning	35.13	43.00	43.00	43.00	43.00	43.00
	Price to Book Value	5.13	6.74	6.84	6.75	6.52	6.21
	Debt to Equity	0.01	-	-	-	-	-
	Return on Equity	0.15	0.16	0.16	0.16	0.15	0.14
	Enterprise Value to Total Income (EVTI)	7.32	9.41	9.44	9.43	9.35	9.31
	Enterprise Value to Total Income to Firm Margin(EVTIFM)	37.66	47.37	47.34	47.06	46.47	45.81
	Price or Est. Share Prices	1,150.66	1,705.50	1,951.05	2,171.55	2,353.35	2,498.10
	DISCOUNTED CASH FLOW
	Title	Mar-19 E	Mar-20 E	Mar-21 E	Mar-22 E	Mar-23 E
	PBT	1,595.08	1,824.69	2,030.89	2,200.90	2,336.24
	Interest	2.31	-	-	-	-
	Depreciation	166.09	180.66	191.26	196.92	181.46
	Cash Flow Before Tax	1,763.48	2,005.35	2,222.14	2,397.81	2,517.70
	Tax Rate	33.99	33.99	33.99	33.99	33.99
	Cash Flow After Tax	1,164.07	1,323.73	1,466.84	1,582.80	1,661.93
	Terminal Cash Flow	-				48,371.55
	Total Cash Flow	1,164.07	1,323.73	1,466.84	1,582.80	50,033.48
Present Value of Cash Flow					40,048.45
Debt					-
Value of Equity					40,048.45
Fair Value Per Share					1,508.60
Equity					39,592
Debt					63
Beta	Take from Reuters				-0.03
Risk Free Rate	Prevailing Yield in India				7%
Market Risk Premium	Assuming 8.82% premium for Equity Investments				7%
Interest Paid					2
Tax Benefit					1
Interest Net of Tax					2
Debt					63
Cost of Debt					3%
Cost of Equity					7%
Debt Weight					0%
Equity Weight					100%
WACC					7%
Cash Flow of Mar-23 E					1,661.93
Growth					3.6%
Present Value of Terminal Cashflow					48,371.55
Peer Comparision
#	Name	CMP Rs.	Mar Cap Rs.Cr.	B.V. Rs.	Annualized ROE %	ROCE %	Latest EVTI	Latest EVTIFM	CMP / BV	P/E	Debt / Eq	Div Yld %	Growth Rate R %	SGR %	Ann Total Income	Unpledged Prom Hold %	PQEIOI	QoQ Sales %	Qtr Sales Var %	QoQ Profits %	Qtr Profit Var %	Graham's Number Rs.
1	Lupin	843.85	38,164	298.72	10.15	10.21	2.61	129.08	2.82	31.00	0.53	0.59	1.02	0.78	16,728	47.00	1,092	2.47	-0.02	31.18	-41.54	-
2	Divi's Lab.	1,491.40	39,592	237.46	34.93	21.37	6.90	27.90	6.28	34.43	0.01	0.67	24.27	31.34	5,460	52.02	125	29.11	44.35	49.40	92.31	481.09
3	Jubilant Life	735.95	11,724	288.71	26.08	15.26	1.63	14.79	2.55	15.02	0.85	0.41	24.18	21.89	9,093	50.68	57	9.18	38.23	3.91	64.05	570.37
4	Vinati Organics	1,675.40	8,610	174.75	42.54	27.52	8.05	37.37	9.59	40.44	0.02	0.27	35.70	44.19	1,054	74.01	159	-4.51	57.34	1.21	123.09	403.46
5	Granules India	87.80	2,232	55.66	23.86	11.92	1.23	14.70	1.58	13.33	0.75	1.14	19.30	15.78	2,392	17.80	52	28.16	47.97	16.33	49.38	90.91
6	Suven Life Scie.	232.45	2,959	72.55	9.84	25.09	6.74	50.93	3.20	19.22	0.03	0.65	8.65	31.66	384	60.00	259	-53.29	-16.23	-53.63	-43.28	140.42