TTK Healthcare: Q4FY15 net profit up 40.48% y/y to INR45.67m, Firstcall recommend 'buy'

1. CMP 1105.00
Target Price 1240.00
ISIN: INE910C01018
MAY 27th
2015
TTK HEALTHCARE LTD
Result Update (PARENT BASIS): Q4 FY15
BUY
Index Details
Stock Data
Sector Pharmaceuticals
BSE Code 507747
Face Value 10.00
52wk. High / Low (Rs.) 1259.00/550.05
Volume (2wk. Avg.) 1811
Market Cap (Rs. in mn.) 8581.43
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 4829.27 5408.78 5949.66
EBITDA 361.17 442.83 490.27
Net Profit 161.56 197.28 217.65
EPS 20.80 25.40 28.03
P/E 53.12 43.50 39.43
Shareholding Pattern (%)
1 Year Comparative Graph
TTK HEALTHCARE LTD S&P BSE SENSEX
SYNOPSIS
TTK Healthcare Limited primarily engages in
pharmaceuticals, consumer products, and medical
devices businesses.
The company’s net sales registered 11.26%
increase and stood at Rs. 1119.00 million from Rs.
1005.74 million over the corresponding quarter of
previous year.
In Q4 FY15, Net profit jumps to Rs. 45.67 million
an increase of 40.48% against Rs. 32.51 million in
the corresponding quarter of previous year.
During the quarter, operating profit is Rs. 110.24
million as against Rs. 71.00 million in the
corresponding quarter of the previous year, grew
by 55.27%.
Earnings per share of the company stood at Rs.
5.88 in Q4 FY15 as against Rs. 4.19 in Q4 FY14.
Profit before tax has shown a growth of 40.60% to
Rs. 75.88 million in the current quarter as against
Rs. 53.97 million in the corresponding quarter of
the previous year.
During the quarter, Total income has increased to
Rs. 1139.14 million from Rs. 1024.61 million in Q4
FY14.
The company has recommended a Dividend of
Rs.4.50/- per Equity Share of Rs.10/- each.
Net Sales and PAT of the company are expected to
grow at a CAGR of 12% and 11% over 2014 to
2017E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
TTK Healthcare LTD 1105.00 8581.43 20.80 53.12 7.54 45.00
Vivimed Labs Ltd 336.40 5451.00 10.99 30.61 1.47 30.00
Neuland Laboratories Ltd 365.00 3242.40 17.77 20.54 2.20 30.00
Suven Life Sciences Ltd 299.85 38165.70 9.76 30.72 14.37 250.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results Updates- Q4 FY15,
TTK Healthcare Limited primarily engages in
pharmaceuticals, consumer products, and medical devices
businesses, reported its financial results for the quarter
ended 31st March, 2015.
The company’s net profit jumps to Rs. 45.67 million against Rs. 32.51 million in the corresponding quarter
ending of previous year, an increase of 40.48%. Revenue for the quarter rose by 11.26% to Rs. 1119.00 million
from Rs. 1005.74 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs. 5.88 a share during the quarter against Rs. 4.19 in the corresponding period of the previous
year. Profit before interest, depreciation and tax is Rs 110.24 million as against Rs. 71.00 million in the
corresponding period of the previous year.
Break up of Expenditure
Months Mar-15 Mar-14 % Change
Net Sales 1119.00 1005.74 11.26
PAT 45.67 32.51 40.48
EPS 5.88 4.19 40.48
EBITDA 110.24 71.00 55.27
Break up of Expenditure
(Rs in millions)
Q4
FY15
Q4
FY14
%
CHNG
Cost of Materials Consumed 70.35 60.44 16%
Purchase of stock-in-trade 421.40 415.36 1%
Employee Benefits Expense 189.93 158.56 20%
Depreciation & Amortization
Expense
24.72 9.24 168%
Marketing Expenses 135.57 140.38 -3%
Other Expenses 210.25 193.22 9%

3. Segment Revenue
COMPANY PROFILE
The company was incorporated in 1958 and is headquartered in Chennai, India. TTK Healthcare Limited
operates as a subsidiary of TT Krishnamachari & Co., Ltd.
TTK Healthcare Limited primarily engages in pharmaceuticals, consumer products, and medical devices
businesses. The company’s Pharmaceuticals division deals in herbal and allopathic formulations in various
therapeutic areas. It offers delivery care, female healthcare, haematinic, pain management, neurotrophic, gastro
intestinal, male and female fertility, nutrition, cardiac care, derma, urinary specialties, and respiratory care
products, as well as calcium supplements.
The company’s Consumer Products division is involved in the marketing of products under its own brands,
including Woodward's Gripe Water and Baby Soap, EVA deodorants and talc products, and the Good Home range
of homecare products; and handling the distribution of Brylcreem haircare and toiletry products. Its Medical
Devices division manufactures and distributes heart valve prosthesis; and focuses on the development of
orthopedic implants and instruments under the Altius brand name.
Product range of the company includes:
Personal care
• Eva range of women’s personal care products
Pharmaceuticals
• Calcium Supplement Range

4. • Delivery Care Range
• Women's Care Range
• Haematinic Range
• Pain Management Range
• Neurotrophic Range
• Gastro Intestinal Range
• Male Fertility Range
• Nutritional Range
• Cardiac Care Range
Baby Care
• Woodward’s Baby Bath
• Woodward’s Gripe Water
Animal Care
• Livestock- Wide range of medicines, tonics and productivity boosters.
• Poultry- High quality medicines and feed supplements for good productivity
• Medicines, tonics and supplements for Pets.
• Heart Valve - India's first indigenous heart valve prosthesis - the tilting-disc TTK Chitra Heart Valve.
Food
• TTK Ready-to-fry Snack Pellets are available in a variety of flavors, shapes, colours and designs.

5. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2014 -2017E
FY14A FY15A FY16E FY17E
SOURCES OF FUNDS
Shareholder's Funds
Share Capital 77.66 77.66 77.66 77.66
Reserves and Surplus 991.60 1105.05 1215.56 1342.04
1. Sub Total - Net worth 1069.26 1182.71 1293.22 1419.70
Non Current Liabilities
Long term Borrowings 158.66 159.84 167.83 177.90
Deferred Tax Liabilities 29.47 22.26 24.26 25.72
Other Long term Liabilities 84.18 96.56 107.18 116.83
2. Sub Total - Non Current Liabilities 272.31 278.66 299.28 320.45
Current Liabilities
Short term Borrowings 132.40 223.01 278.76 326.15
Trade Payables 299.46 300.69 318.73 331.48
Other Current Liabilities 589.53 724.73 833.44 933.45
Short Term Provisions 36.45 42.17 46.81 49.62
3. Sub Total - Current Liabilities 1057.84 1290.60 1477.74 1640.70
Total Liabilities (1+2+3) 2399.41 2751.97 3070.23 3380.85
APPLICATION OF FUNDS
Non-Current Assets
a) Fixed Assets 556.35 975.72 1114.82 1255.47
b) Long Term loans and advances 214.32 115.25 140.61 163.10
1. Sub Total - Non Current Assets 770.67 1090.97 1255.43 1418.57
Current Investment 1.34 1.34 1.54 1.76
Inventories 339.51 373.77 403.67 427.89
Trade receivables 382.99 444.13 501.87 562.09
Cash and Bank Balances 840.59 773.00 834.84 893.28
Short-terms loans & advances 64.31 68.76 72.89 77.26
2. Sub Total - Current Assets 1628.74 1661.00 1814.81 1962.28
Total Assets (1+2) 2399.41 2751.97 3070.23 3380.85

6. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 4161.80 4829.27 5408.78 5949.66
Other Income 61.24 65.68 69.62 73.80
Total Income 4223.04 4894.95 5478.40 6023.46
Expenditure -3964.76 -4533.78 -5035.58 -5533.18
Operating Profit 258.28 361.17 442.83 490.27
Interest -29.88 -36.42 -41.52 -45.26
Gross profit 228.40 324.75 401.31 445.02
Depreciation -31.74 -61.40 -77.36 -92.84
Profit Before Tax 196.66 263.35 323.94 352.18
Tax -72.77 -101.79 -126.66 -134.53
Net Profit 123.89 161.56 197.28 217.65
Equity capital 77.66 77.66 77.66 77.66
Reserves 946.46 1060.40 1198.25 1342.04
Face value 10.00 10.00 10.00 10.00
EPS 15.95 20.80 25.40 28.03
Quarterly Profit & Loss Statement for the period of 30th Sep, 2014 to 30th June, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 1204.31 1208.29 1119.00 1298.04
Other income 15.90 15.10 20.14 22.15
Total Income 1220.21 1223.39 1139.14 1320.19
Expenditure -1138.79 -1131.66 -1028.90 -1199.39
Operating profit 81.42 91.73 110.24 120.81
Interest -7.56 -9.41 -9.64 -10.99
Gross profit 73.86 82.32 100.60 109.82
Depreciation -12.24 -13.06 -24.72 -27.34
Profit Before Tax 61.62 69.26 75.88 82.48
Tax -23.81 -27.35 -30.21 -31.82
Net Profit 37.81 41.91 45.67 50.66
Equity capital 77.66 77.66 77.66 77.66
Face value 10.00 10.00 10.00 10.00
EPS 4.87 5.40 5.88 6.52

7. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 15.95 20.80 25.40 28.03
EBITDA Margin (%) 6.21 7.48 8.19 8.24
PBT Margin (%) 4.73 5.45 5.99 5.92
PAT Margin (%) 2.98 3.35 3.65 3.66
P/E Ratio (x) 69.27 53.12 43.50 39.43
ROE (%) 12.10 14.20 15.46 15.33
ROCE (%) 22.05 27.78 30.20 30.31
Debt Equity Ratio 0.28 0.34 0.35 0.36
EV/EBITDA (x) 31.09 22.68 18.50 16.71
Book Value (Rs.) 131.87 146.54 164.29 182.81
P/BV 8.38 7.54 6.73 6.04
Charts

8. OUTLOOK AND CONCLUSION
At the current market price of Rs. 1105.00, the stock P/E ratio is at 43.50 x FY16E and 39.43 x FY17E
respectively.
Earnings per share (EPS) of the company for the earnings for FY16E and FY17E are seen at Rs. 25.40 and
Rs. 28.03 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 12% and 11% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 18.50 x for FY16E and 16.71 x for FY17E.
Price to Book Value of the stock is expected to be at 6.73 x and 6.04 x for FY16E and FY17E respectively.
We recommend ‘BUY’ in this particular scrip with a target price of Rs. 1240.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
The Indian pharmaceuticals market is third largest in terms of volume and thirteen largest in terms of value, as
per a pharmaceuticals sector analysis report by equity master. The market is dominated majorly by branded
generics which constitute nearly 70 to 80 per cent of the market. Considered to be a highly fragmented industry,
consolidation has increasingly become an important feature of the Indian pharmaceutical market.
India has achieved an eminent global position in pharma sector. The country also has a huge pool of scientists
and engineers who have the potential to take the industry to a very high level. The UN-backed Medicines Patents
Pool has signed six sub-licenses with Aurobindo, Cipla, Desano, Emcure, Hetero Labs and Laurus Labs, allowing
them to make generic anti-AIDS medicine Tenofovir Alafenamide (TAF) for 112 developing countries.
The Indian pharmaceutical industry is estimated to grow at 20 per cent compound annual growth rate (CAGR)
over the next five years, as per India Ratings, a Fitch Group company. Indian pharmaceutical manufacturing
facilities registered with US Food and Drug Administration (FDA) as on March 2014 was the highest at 523 for
any country outside the US.
We expect the domestic pharma market to grow at 10-12 per cent in FY15 as compared to 9 per cent in FY14, as
per a recent report from Centrum Broking. The domestic pharma growth rate was 11.9 per cent in October 2014,
highlighted the report. Gujarat clocked the highest growth rate in pharmaceuticals market at 22.4 per cent during
November 2014, surpassing the industry growth rate, which grew by 10.9 per cent, as per data from the market
research firm AIOCD Pharma softtech AWACS.

9. Outlook
The Indian pharma market size is expected to grow to US$ 85 billion by 2020. The growth in Indian domestic
market will be on back of increasing consumer spending, rapid urbanization, raising healthcare insurance and so
on. Going forward, better growth in domestic sales will depend on the ability of companies to align their product
portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants
and anti-cancers are on the rise.
Moreover, the government has been taking several cost effective measures in order to bring down healthcare
expenses. Thus, governments are focusing on speedy introduction of generic drugs into the market. This too will
benefit Indian pharma companies. In addition, the thrust on rural health programmes, life saving drugs and
preventive vaccines also augurs well for the pharma companies.
Disclaimer:
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purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
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in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients’ investment decision based on this document.

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