| | | Lupin Limited 12-month rating | Buy | 12m price target | Rs2,510.00 |
Lupin’s solid execution in its key markets—India and the US—has driven strong revenue growth. The company’s US generics business has a strong ANDA (abbreviated new drug application) pipeline with a focus on oral contraceptives, ophthalmics, and potential first-to-file opportunities. The company continues to look for acquisition opportunities in the US branded space and in emerging markets. We estimate a 22% profit CAGR over FY15-17 and expect strong free cash flow. In our upside scenario, we factor in faster approvals in the US and do not assume an erosion in branded business, resulting in 30% YoY growth in sales for the US business in FY16-17 compared to our base case of 18% YoY growth. This suggests EPS of Rs96 for FY17E. We believe the stock could trade at 28x 1-year forward PE, implying an upside valuation of Rs2,950. In our downside scenario, we assume generic competition for Suprax and slower approvals in the US to result in 12% YoY growth in sales in the US business in FY16-17 compared to our base case of 18% YoY growth. This suggests an EPS of Rs73 for FY17E. We believe the stock could trade at 20x 1-year forward PE, implying a downside valuation of Rs1,600. Launches of Nexium, Renvela and Welchol could be key catalysts. Lupin is an India-based pharmaceutical company focused on the manufacture and global marketing of finished dosages and active pharmaceutical ingredients (APIs). Lupin is one of the largest pharma companies in the domestic market as well as the US. The company is also increasing its presence in Japan and Europe. Recently, Lupin established two dedicated centers of excellence for research in inhalation and complex injectable. We are positive on Indian pharma companies based on strong growth in the US generic market. We expect market share gains in the US, as India firms launch more new products and technological capabilities improve with higher investment in R&D. We expect the Indian pharma market to grow at a 12% CAGR in sales over the next five years. We also expect Indian companies to increase their presence in emerging markets through a combination of organic and inorganic growth. 
Source: Company data The company does not disclose segmental margins. | | | Lupin's organic growth has been in mid to high teens Figure 1: Lupin revenue break-up and growth trend (Rs m) | FY14 | FY15 | FY16E | FY17E | FY18E | API | 11,140 | 11,941 | 12,538 | 13,165 | 13,823 | India Formulations | 25,141 | 30,295 | 35,142 | 41,468 | 48,103 | Total US Sales | 48,541 | 54,532 | 69,808 | 95,156 | 107,022 | EU | 2,934 | 3,279 | 3,677 | 4,413 | 5,295 | Japan | 12,955 | 13,239 | 14,818 | 16,892 | 19,257 | Others | 10,960 | 13,646 | 14,824 | 19,267 | 22,390 | Total sales | 111,671 | 126,932 | 150,808 | 190,360 | 215,889 | Total sales growth | 18% | 14% | 19% | 26% | 13% | | | | | | | Organic sales growth | | | 15% | 19% | 13% |
Source: Company data, UBS estimates Reasonable scope for margin expansion in Gavis portfolio Figure 2: Gavis financials (US$ m) | CY15 | CY16E | CY17E | Sales | 96 | 137 | 180 | Ebitda | 35 | 55 | 72 | Ebitda margin (%) | 36% | 40% | 40% |
Source: Company data, UBS estimates Gavis acquisition Lupin acquired Gavis acquisition for $880m that is approximately 9x 2014 revenues ($96m). Gavis had Ebitda margins of 36% for 2014 despite R&D at 21% of sales. Gavis complements Lupin's portfolio via strong presence in controlled substances (20 ANDAs pending), dermatology (22 ANDAs pending) and gastro-intestinal segments. Further, it is also developing inhalational products. Lupin guides for 20+ products filings each year by Gavis over the next three years. It guides for 15-20 ANDA approvals each year from Gavis portfolio that should translate to $300m topline by FY18. Lupin expects payback period of 7-8 years. Gavis has 100 people in R&D and another 100 in manufacturing, administrative and sales. Lupin intends to retain most of the people there and have contracted with the founder Dr Veerapan to stay on board for at least the first year. With this acquisition, Lupin gets its first US manufacturing facility and also gets entry into government business. Lupin also expects to be able to enhance reach/ penetration of Gavis's existing products. While cost cutting is not the key intention of the acquisition, there will be opportunities to better align R&D programs of the two teams. Further, Lupin management sees opportunity to brand a couple of Gavis products thereby enhancing durability of the portfolio. While Gavis has been sourcing APIs locally, Lupin will target to supply APIs for some of the key products from India. Run rate in sales expected to ramp up with recent approvals Figure 3: Gavis revenue run rate | 
| Source: IMS Health |
Some areas of overalp will get re-aligned between the two teams (Lupin and Gavis) Figure 4: R&D spending trend | 
| Source: Company data |
Figure 5: ANDA pipeline for Indian pharma companies | 
| Source: Company data |
Figure 6: Lupin's own ANDA filings | 
| Source: Company filings |
Figure 7: Lupin's India business - Therapy mix (FY15) | 
| Source: Company data |
Figure 8: Lupin's top 10 products in the US | Top 10 US brands | Sales ($ m) | % of US sales | Metformin ER (F) | 214 | 11.8% | Fenofibrate | 116 | 6.4% | Celecoxib | 85 | 4.7% | Niacin ER | 126 | 6.9% | Duloxetine HCL | 114 | 6.3% | Suprax | 142 | 7.9% | Lisinopril | 59 | 3.2% | Cefuroxime Axetil | 82 | 4.5% | Levonorges/Eth Est | 50 | 2.7% | Abacav/Lamivu/Zidovu | 44 | 2.4% |
| Source: IMS data |
Figure 9: Lupin's top 10 brands in India | Product | Therapy | Sales (Rs m) | %age of India sales | Gluconorm | Anti-Diabetic | 1070 | 4% | Tonact | Cardiovascular | 750 | 2% | Budamate | Respiratory | 593 | 2% | Ramistar | Cardiovascular | 436 | 1% | R-Cinex | Anti-TB | 406 | 1% | Rablet-D | Gastro-Intestinal | 383 | 1% | Merotrol | Anti-Infective | 356 | 1% | Telekast-L | Respiratory | 346 | 1% | Esiflo | Respiratory | 343 | 1% | Clopitab | Cardiovascular | 308 | 1% |
| Source: IMS data |
Figure 10: Cash flow profile (Rs m) | (Rs m) | 2012 | 2013 | 2014 | 2015 | 2016E | 2017E | EBIT | 12,223 | 19,399 | 27,529 | 32,674 | 40,716 | 57,146 | Depreciation | 2,275 | 3,322 | 2,610 | 4,347 | 5,603 | 7,272 | Change in working cap | (6,270) | (5,496) | (3,466) | 7,269 | (7,952) | (13,204) | Other operating | 92 | 258 | 1,054 | 1,572 | 193 | 225 | Operating cash flow | 8,321 | 17,482 | 27,727 | 45,863 | 38,559 | 51,439 | Interest | (355) | (410) | (267) | (98) | (1,199) | (2,150) | Taxes paid | (2,756) | (5,829) | (9,536) | (9,704) | (11,913) | (16,567) | Capex | (9,992) | (2,981) | (4,837) | (6,624) | (30,775) | (8,500) | Free cash flow | (4,782) | 8,262 | 13,087 | 29,437 | (5,327) | 24,223 |
| Source: Company data, UBS Estimates |
Return ratios dipped because of Gavis acquisition though will rise as margins continue to expand Figure 11: Lupin's return ratios | 
| Source: Company filings, UBS estimates |
Figure 12: Lupin’s PE and P/CF ratio (x) | 
| Source: Reuters, UBS |
Figure 13: EV/IC chart | 
| Source: |
Figure 14: Contingent liability analysis (Rs m) | | FY09 | FY10 | FY11 | FY12 | FY13 | FY14 | FY15 | Income tax | 47 | 108 | 152 | 45 | 82 | 173 | 826 | Excise/ sales tax | 121 | 197 | 195 | 417 | 424 | 356 | 377 | Octroi/ stamp duty | 299 | 259 | 311 | 433 | 420 | 6,223 | 6,379 | Contingent liabilities | 467 | 564 | 659 | 894 | 927 | 6,752 | 7,582 | %age of PBT | 8% | 7% | 7% | 7% | 5% | 24% | 22% |
| Source: Company data |
Figure 15: Board Remuneration | 
| Source: Company data |
We would like to thank Prince Poddar, an employee of Evalueserve, for his assistance in preparing this research report. Evalueserve staff provide research support services to UBS. | | Lupin Limited (LUPN.BO) | | | | | | | | | | | Revenues | 93,694 | 110,866 | 125,997 | 150,215 | 19.2 | 189,669 | 26.3 | 215,095 | 246,224 | 311,264 | Gross profit | 58,214 | 72,693 | 84,427 | 102,710 | 21.7 | 134,465 | 30.9 | 154,646 | 179,493 | 233,131 | EBITDA (UBS) | 22,720 | 30,138 | 37,021 | 46,319 | 25.1 | 64,418 | 39.1 | 74,024 | 86,355 | 116,652 | Depreciation & amortisation | (3,322) | (2,610) | (4,347) | (5,603) | 28.9 | (7,272) | 29.8 | (8,016) | (8,823) | (10,523) | EBIT (UBS) | 19,399 | 27,529 | 32,674 | 40,716 | 24.6 | 57,146 | 40.4 | 66,008 | 77,532 | 106,128 | Associates & investment income | 258 | 1,054 | 1,572 | 193 | -87.8 | 225 | 16.9 | 412 | 792 | 3,592 | Other non-operating income | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Net interest | (410) | (266) | (98) | (1,199) | NM | (2,150) | -79.3 | (1,394) | (719) | (494) | Exceptionals (incl goodwill) | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Profit before tax | 19,246 | 28,317 | 34,148 | 39,710 | 16.3 | 55,222 | 39.1 | 65,026 | 77,605 | 109,227 | Tax | (5,842) | (9,621) | (9,704) | (11,913) | -22.8 | (16,567) | -39.1 | (19,508) | (23,282) | (32,768) | Profit after tax | 13,404 | 18,695 | 24,444 | 27,797 | 13.7 | 38,655 | 39.1 | 45,518 | 54,324 | 76,459 | Preference dividends | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Minorities | (263) | (331) | (412) | (465) | -13.0 | (526) | -13.0 | (594) | (672) | (858) | Extraordinary items | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Net earnings (local GAAP) | 13,142 | 18,364 | 24,032 | 27,331 | 13.7 | 38,129 | 39.5 | 44,924 | 53,652 | 75,601 | Net earnings (UBS) | 13,142 | 18,364 | 24,032 | 27,331 | 13.7 | 38,129 | 39.5 | 44,924 | 53,652 | 75,601 | Tax rate (%) | 30.4 | 34.0 | 28.4 | 30.0 | 5.6 | 30.0 | 0.0 | 30.0 | 30.0 | 30.0 |
| | | | | | | | | | | EPS (UBS, diluted) | 29.39 | 40.99 | 53.60 | 60.81 | 13.4 | 84.83 | 39.5 | 99.94 | 119.36 | 168.19 | EPS (local GAAP, diluted) | 29.39 | 40.99 | 53.60 | 60.81 | 13.4 | 84.83 | 39.5 | 99.94 | 119.36 | 168.19 | EPS (UBS, basic) | 29.39 | 40.99 | 53.60 | 60.81 | 13.4 | 84.83 | 39.5 | 99.94 | 119.36 | 168.19 | Net DPS (Rs) | 4.00 | 6.00 | 7.50 | 9.00 | 20.0 | 11.00 | 22.2 | 13.00 | 15.00 | 15.00 | Cash EPS (UBS, diluted) | 36.82 | 46.82 | 63.29 | 73.27 | 15.8 | 101.01 | 37.9 | 117.78 | 138.99 | 191.61 | Book value per share | 112.70 | 151.40 | 195.81 | 243.66 | 24.4 | 314.78 | 29.2 | 398.56 | 499.29 | 776.30 | Average shares (diluted) | 447.13 | 447.98 | 448.38 | 449.49 | 0.2 | 449.49 | 0.0 | 449.49 | 449.49 | 449.49 |
| | | | | | | | | | | Cash and equivalents | 4,349 | 7,975 | 4,814 | 5,627 | 16.9 | 10,300 | 83.0 | 19,803 | 44,838 | 147,107 | Other current assets | 48,630 | 52,682 | 57,764 | 68,332 | 18.3 | 86,038 | 25.9 | 97,733 | 111,942 | 142,304 | Total current assets | 52,978 | 60,657 | 62,577 | 73,959 | 18.2 | 96,337 | 30.3 | 117,536 | 156,780 | 289,411 | Net tangible fixed assets | 27,425 | 29,820 | 32,398 | 57,570 | 77.7 | 58,797 | 2.1 | 59,782 | 60,958 | 60,761 | Net intangible fixed assets | 5,683 | 6,777 | 17,044 | 55,236 | 224.1 | 55,236 | 0.0 | 55,236 | 55,236 | 55,236 | Investments / other assets | 21 | 1,785 | 16,584 | 16,584 | 0.0 | 16,584 | 0.0 | 16,584 | 16,584 | 16,584 | Total assets | 86,108 | 99,039 | 128,603 | 203,349 | 58.1 | 226,955 | 11.6 | 249,137 | 289,558 | 421,992 | Trade payables & other ST liabilities | 22,019 | 22,593 | 34,560 | 37,369 | 8.1 | 42,082 | 12.6 | 46,012 | 50,481 | 56,786 | Short term debt | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Total current liabilities | 22,019 | 22,593 | 34,560 | 37,369 | 8.1 | 42,082 | 12.6 | 46,012 | 50,481 | 56,786 | Long term debt | 11,645 | 6,537 | 5,371 | 54,570 | NM | 40,970 | -24.9 | 20,970 | 10,970 | 10,970 | Other long term liabilities | 1,632 | 1,779 | 1,182 | 1,182 | 0.0 | 1,182 | 0.0 | 1,182 | 1,182 | 1,182 | Preferred shares | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Total liabilities (incl pref shares) | 35,297 | 30,909 | 41,113 | 93,120 | 126.5 | 84,234 | -9.5 | 68,164 | 62,633 | 68,938 | Common s/h equity | 50,216 | 67,461 | 87,249 | 109,522 | 25.5 | 141,488 | 29.2 | 179,146 | 224,427 | 348,939 | Minority interests | 595 | 669 | 241 | 706 | 193.1 | 1,232 | 74.5 | 1,827 | 2,498 | 4,115 | Total liabilities & equity | 86,108 | 99,039 | 128,603 | 203,349 | 58.1 | 226,955 | 11.6 | 249,137 | 289,558 | 421,992 |
| | | | | | | | | | | Net income (before pref divs) | 13,142 | 18,364 | 24,032 | 27,331 | 13.7 | 38,129 | 39.5 | 44,924 | 53,652 | 75,601 | Depreciation & amortisation | 3,322 | 2,610 | 4,347 | 5,603 | 28.9 | 7,272 | 29.8 | 8,016 | 8,823 | 10,523 | Net change in working capital | (5,496) | (3,466) | 7,269 | (7,952) | - | (13,204) | -66.0 | (7,999) | (9,997) | (11,565) | Other operating | 275 | 417 | 412 | 465 | 13.0 | 526 | 13.0 | 594 | 672 | 858 | Operating cash flow | 11,243 | 17,924 | 36,061 | 25,447 | -29.4 | 32,723 | 28.6 | 45,535 | 53,150 | 75,417 | Tangible capital expenditure | (2,981) | (4,837) | (6,624) | (30,775) | -364.6 | (8,500) | 72.4 | (9,000) | (10,000) | (10,000) | Intangible capital expenditure | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Net (acquisitions) / disposals | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Other investing | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Investing cash flow | (2,981) | (4,837) | (6,624) | (30,775) | -364.6 | (8,500) | 72.4 | (9,000) | (10,000) | (10,000) | Equity dividends paid | (2,094) | (2,938) | (4,057) | (4,869) | -20.0 | (5,951) | -22.2 | (7,032) | (8,114) | (8,114) | Share issues / (buybacks) | 2 | 386 | 413 | 0 | - | 0 | - | 0 | 0 | 0 | Other financing | 0 | 0 | 0 | 0 | - | 0 | - | 0 | 0 | 0 | Change in debt & pref shares | (4,755) | (5,107) | (1,166) | 49,199 | - | (13,600) | - | (20,000) | (10,000) | 0 | Financing cash flow | (6,848) | (7,659) | (4,811) | 44,330 | - | (19,551) | - | (27,032) | (18,114) | (8,114) | Cash flow inc/(dec) in cash | 1,414 | 5,428 | 24,626 | 39,002 | 58.4 | 4,673 | -88.0 | 9,503 | 25,035 | 57,303 | FX / non cash items | (1,090) | (1,802) | (27,788) | (38,189) | -37.4 | 0 | - | 0 | 0 | 44,966 | Balance sheet inc/(dec) in cash | 324 | 3,626 | (3,161) | 814 | - | 4,673 | NM | 9,503 | 25,035 | 102,269 |
Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts.Cash EPS (UBS, diluted) is calculated using UBS net income adding back depreciation and amortization.
Lupin Limited (LUPN.BO) | | | | | | | | | P/E (local GAAP, diluted) | 19.6 | 20.6 | 24.5 | 34.0 | 24.4 | 20.7 | 17.3 | 12.3 | P/E (UBS, diluted) | 19.6 | 20.6 | 24.5 | 34.0 | 24.4 | 20.7 | 17.3 | 12.3 | P/CEPS | 15.6 | 18.1 | 20.8 | 28.2 | 20.5 | 17.5 | 14.9 | 10.8 | Equity FCF (UBS) yield % | 3.2 | 3.5 | 5.0 | (0.6) | 2.6 | 4.0 | 4.7 | 7.1 | Net dividend yield (%) | 0.7 | 0.7 | 0.6 | 0.4 | 0.5 | 0.6 | 0.7 | 0.7 | P/BV x | 5.1 | 5.6 | 6.7 | 8.5 | 6.6 | 5.2 | 4.1 | 2.7 | EV/revenues (core) | 2.8 | 3.5 | 4.5 | 6.2 | 4.9 | 4.3 | 3.6 | 2.9 | EV/EBITDA (core) | 11.7 | 12.8 | 15.4 | 20.1 | 14.4 | 12.6 | 10.3 | 7.6 | EV/EBIT (core) | 13.7 | 14.0 | 17.4 | 22.8 | 16.3 | 14.1 | 11.5 | 8.4 | EV/OpFCF (core) | 15.8 | 15.7 | 19.2 | 24.6 | 17.2 | 14.8 | 11.9 | 8.6 | EV/op. invested capital | 4.8 | 6.3 | 8.4 | 8.7 | 6.2 | 5.8 | 5.2 | 4.7 |
| | | | | | | | | Market cap. | 256,091 | 376,983 | 586,126 | 920,860 | 920,860 | 920,860 | 920,860 | 920,860 | Net debt (cash) | 9,836 | 9,836 | (440) | 24,750 | 24,750 | 24,750 | (16,351) | (16,351) | Buy out of minorities | 659 | 632 | 455 | 474 | 969 | 1,530 | 2,498 | 4,115 | Pension provisions/other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | Total enterprise value | 266,585 | 387,450 | 586,142 | 946,083 | 946,579 | 947,139 | 907,007 | 908,624 | Non core assets | (21) | (1,785) | (16,584) | (16,584) | (16,584) | (16,584) | (16,584) | (16,584) | Core enterprise value | 266,564 | 385,666 | 569,558 | 929,499 | 929,995 | 930,555 | 890,423 | 892,040 |
| | | | | | | | | Revenue | 37.4 | 18.3 | 13.6 | 19.2 | 26.3 | 13.4 | 14.5 | 26.4 | EBITDA (UBS) | 56.7 | 32.6 | 22.8 | 25.1 | 39.1 | 14.9 | 16.7 | 35.1 | EBIT (UBS) | 58.7 | 41.9 | 18.7 | 24.6 | 40.4 | 15.5 | 17.5 | 36.9 | EPS (UBS, diluted) | 51.2 | 39.5 | 30.8 | 13.4 | 39.5 | 17.8 | 19.4 | 40.9 | Net DPS | 25.1 | 50.0 | 24.9 | 20.0 | 22.2 | 18.2 | 15.4 | 0.0 |
| | | | | | | | | Gross profit margin | 62.1 | 65.6 | 67.0 | 68.4 | 70.9 | 71.9 | 72.9 | 74.9 | EBITDA margin | 24.2 | 27.2 | 29.4 | 30.8 | 34.0 | 34.4 | 35.1 | 37.5 | EBIT margin | 20.7 | 24.8 | 25.9 | 27.1 | 30.1 | 30.7 | 31.5 | 34.1 | Net earnings (UBS) margin | 14.0 | 16.6 | 19.1 | 18.2 | 20.1 | 20.9 | 21.8 | 24.3 | ROIC (EBIT) | 35.0 | 44.8 | 47.9 | 38.0 | 38.2 | 41.0 | 45.3 | 56.3 | ROIC post tax | 24.4 | 29.6 | 34.3 | 26.6 | 26.7 | 28.7 | 31.7 | 39.4 | ROE (UBS) | 29.2 | 31.2 | 31.1 | 27.8 | 30.4 | 28.0 | 26.6 | 26.4 |
| | | | | | | | | Net debt / EBITDA | 0.3 | (.0) | 0.0 | 1.1 | 0.5 | 0.0 | (0.4) | (1.2) | Net debt / total equity % | 14.4 | (2.1) | 0.6 | 44.4 | 21.5 | 0.6 | (14.9) | (38.6) | Net debt / (net debt + total equity) % | 12.6 | (2.2) | 0.6 | 30.7 | 17.7 | 0.6 | (17.5) | (62.8) | Net debt/EV % | 2.7 | (0.4) | 0.1 | 5.3 | 3.3 | 0.1 | (3.8) | (15.3) | Capex / depreciation % | 89.7 | 185.4 | 152.4 | NM | 116.9 | 112.3 | 113.3 | 95.0 | Capex / revenue % | 3.2 | 4.4 | 5.3 | 20.5 | 4.5 | 4.2 | 4.1 | 3.2 | EBIT / net interest | 47.3 | NM | NM | 34.0 | 26.6 | 47.4 | NM | NM | Dividend cover (UBS) | 7.3 | 6.8 | 7.1 | 6.8 | 7.7 | 7.7 | 8.0 | 11.2 | Div. payout ratio (UBS) % | 13.6 | 14.6 | 14.0 | 14.8 | 13.0 | 13.0 | 12.6 | 8.9 |
| | | | | | | | | Others | 93,694 | 110,866 | 125,997 | 150,215 | 189,669 | 215,095 | 246,224 | 311,264 | Total | 93,694 | 110,866 | 125,997 | 150,215 | 189,669 | 215,095 | 246,224 | 311,264 |
| | | | | | | | | Others | 19,399 | 27,529 | 32,674 | 40,716 | 57,146 | 66,008 | 77,532 | 106,128 | Total | 19,399 | 27,529 | 32,674 | 40,716 | 57,146 | 66,008 | 77,532 | 106,128 |
Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts. | | | | | Forecast returns | Forecast price appreciation+21.4% | Forecast dividend yield0.4% | Forecast stock return+21.8% | Market return assumption12.8% | Forecast excess return+9.0% |
| Statement of Risk We believe risks include regulatory risks, FDA approval, timing of approvals, litigation (including the appeal process), accounting/disclosure, and product pricing risk from generics competition. Pricing pressure in the US market because of increased competition could continue. Margin pressure on account of rupee appreciation could also negatively impact earnings. The key risk for the US specialty business is erosion of the business due to generic substitution. Required Disclosures This report has been prepared by UBS Securities India Private Ltd, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS. For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities Regulatory Commission. Analyst Certification: Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner, including with respect to UBS, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. UBS Investment Research: Global Equity Rating Definitions 12-Month Rating | Definition | Coverage | IB Services | Buy | FSR is > 6% above the MRA. | 49% | 33% | Neutral | FSR is between -6% and 6% of the MRA. | 40% | 26% | Sell | FSR is > 6% below the MRA. | 12% | 18% | Short-Term Rating | Definition | Coverage | IB Services | Buy | Stock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event. | less than 1% | less than 1% | Sell | Stock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event. | less than 1% | less than 1% |
Source: UBS. Rating allocations are as of 30 September 2015.
1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. 3:Percentage of companies under coverage globally within the Short-Term rating category. 4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months. KEY DEFINITIONS: Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment case. Equity Price Targets have an investment horizon of 12 months. EXCEPTIONS AND SPECIAL CASES: UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece. Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows. UBS Securities India Private Ltd: Hemant Bakhru. Company Disclosures Company Name | Reuters | 12-month rating | Short-term rating | Price | Price date | Lupin Limited | LUPN.BO | Buy | N/A | Rs2,073.05 | 06 Oct 2015 |
Source: UBS. All prices as of local market close.
Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report. Lupin Limited (Rs) 
Source: UBS; as of 06 Oct 2015 |
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