Firstcall recommend Brooks Labs for target of 53 after 31% upsurge in FY15 net profits

1. CMP 45.20
Target Price 53.00
ISIN: INE650L01011
JUNE 18th
2015
BROOKS LABORATORIES LTD
Result Update (PARENT BASIS): Q4 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Pharmaceuticals
BSE Code 533543
Face Value 10.00
52wk. High / Low (Rs.) 57.50/25.25
Volume (2wk. Avg.) 51000
Market Cap (Rs. in mn.) 731.61
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 852.13 971.43 1088.00
EBITDA 91.12 111.30 124.07
Net Profit 94.68 84.18 94.04
EPS 5.85 5.20 5.81
P/E 7.73 8.69 7.78
Shareholding Pattern (%)
1 Year Comparative Graph
BROOKS LABORATORIES LTD S&P BSE SENSEX
SYNOPSIS
Brooks Laboratories Limited operates as a
pharmaceutical contract research and
manufacturing services company in India.
During the quarter, the company’s net profit
jumps to Rs. 23.42 mn against Rs. 20.00 mn in the
corresponding quarter ending of previous year,
an increase of 17.12%.
Revenue for the quarter rose by 24.94% to Rs.
235.14 mn from Rs. 188.20 mn, when compared
with the prior year period.
During Q4 FY15, EBIDTA is Rs. 24.09 mn as
against Rs. 24.10 mn in the corresponding period
of the previous year.
During Q4 FY15, PBT increased by 25.18% to Rs.
27.16 mn from Rs. 21.70 mn in the corresponding
period of the previous year.
EPS of the company stood at Rs. 1.45 a share
during the quarter, registering 17.15% increased
over previous year period.
For the year ended 31 March, 2015, the company
reported total income of Rs. 874.65 mn compared
to Rs. 852.70 mn over a previous year.
For FY15, Net profit was Rs. 94.68 mn as
compared to Rs. 72.40 mn in FY14, grew by 31%.
Net Sales of the company are expected to grow at
a CAGR of 8% over 2014 to 2017E.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Brooks Laboratories Ltd 45.20 731.61 5.85 7.73 0.66 0.00
Bafna Pharmaceuticals Ltd 25.00 466.40 3.27 7.65 0.62 0.00
NGL Fine Chem Ltd 134.90 833.40 13.58 9.93 2.54 0.00
Hester Biosciences Ltd 588.00 5002.00 17.15 34.29 5.52 31.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q4 FY15,
Months Mar-15 Mar-14 % Change
Net Sales 235.14 188.20 24.94%
PAT 23.42 20.00 17.12%
EPS 1.45 1.24 17.15%
EBITDA 24.09 24.10 -0.04%
The company’s net profit jumps to Rs. 23.42 million against Rs. 20.00 million in the corresponding quarter
ending of previous year, an increase of 17.12%. Revenue for the quarter rose by 24.94% to Rs. 235.14 million
from Rs. 188.20 million, when compared with the prior year period. Reported earnings per share of the company
stood at Rs. 1.45 a share during the quarter, registering 17.15% increased over previous year period. Profit
before interest, depreciation and tax is Rs. 24.09 million as against Rs. 24.10 million in the corresponding period
of the previous year.
Break up of Expenditure
Break up of
Expenditure
Rs. in (millions)
Q4 FY15 Q4 FY14
%
CHNG
Cost of material
consumed
166.97 137.51 21%
Employee Benefit
Expenses
12.02 5.31 126%
Depreciation &
Amortization Expenses
2.64 2.00 32%
Other Expenses 38.31 29.77 29%

3. COMPANY PROFILE
Brooks Laboratories Ltd. was established in 2002 and maintains its strong presence in the Pharmaceutical
industry as a Contract Manufacturing Company since its inception. Brooks Laboratories Ltd is a Research and
Development driven Pharmaceutical manufacturing company, in last 6 years company has successfully
established itself as a reputed Contract Manufacturing company for latest molecules in Injectables and Clavulanic
Acid range in Tablets and Dry Syrups.
Brooks is known in Pharmaceutical corporate circles as a quality production House which is evident from its top
notch customer base of for companies like Zydus Cadilla, Alembic, Intas, Wockhardt, FDC, Alkem, Medley, Sanat
to name a few. Brooks is now expanding its business into the International markets of Africa, Middle East & Latin
America.
A stringent quality control (chemical and instrumental analyst) is being maintained under the highly qualified
and experienced team who are responsible for analyzing the manufacturing process from raw material
procurement through all operations up to final packing. A separate QA team handles all in-process quality
controls. Brooks has team of qualified professionals who are constantly working to stabilize new molecules in
niche segments, thus serving their valuable customers with stable latest products. Company has DCGI permission
for many latest injectables at present. It has world class manufacturing facility at Baddi (Himachal Pradesh) 40
km from International Airport of Chandigarh. The facility is having covered area of 75000 sq feet.

4. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31st, 2014 -2017E
FY14A FY15A FY16E FY17E
SOURCES OF FUNDS
Shareholder's Funds
Share Capital 161.86 161.86 161.86 161.86
Reserves and Surplus 961.04 952.30 1036.48 1130.52
1. Sub Total - Net worth 1122.90 1114.16 1198.34 1292.38
Non Current Liabilities
Deferred Tax Liabilities [Net] 15.96 13.29 11.96 11.00
Long Term Provisions 6.08 6.62 7.15 7.65
2. Sub Total - Non Current Liabilities 22.04 19.91 19.11 18.65
Current Liabilities
Short Term Borrowings 1.38 5.13 5.64 6.09
Trade Payables 122.95 190.67 236.43 278.99
Other Current Liabilities 44.89 17.78 19.91 21.90
Short Term Provisions 90.21 3.80 4.86 5.64
3. Sub Total - Current Liabilities 259.43 217.37 266.84 312.62
Total Liabilities (1+2+3) 1404.37 1351.44 1484.29 1623.65
APPLICATION OF FUNDS
Non-Current Assets
a) Fixed Assets 573.11 691.81 774.83 852.31
b) Non-current investments 0.20 0.20 0.21 0.22
c) Long Term loans and advances 101.40 111.61 120.54 128.98
d) Other non-current assets 32.86 0.00 0.00 0.00
1. Sub Total - Non Current Assets 707.57 803.62 895.58 981.51
Current Assets
Inventories 60.29 75.34 87.39 97.88
Trade receivables 164.64 192.95 218.03 239.83
Cash and Bank Balances 299.88 229.23 224.81 236.05
Short-terms loans & advances 7.36 35.61 42.02 47.06
Other current assets 164.63 14.70 16.46 21.31
2. Sub Total - Current Assets 696.80 547.82 588.72 642.13
Total Assets (1+2) 1404.37 1351.44 1484.29 1623.65

5. 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 852.70 852.13 971.43 1088.00
Other Income 0.00 22.52 23.87 25.06
Total Income 852.70 874.65 995.30 1113.06
Expenditure -767.50 -783.52 -884.00 -988.99
Operating Profit 85.20 91.12 111.30 124.07
Interest -1.20 -4.43 -5.14 -5.76
Gross profit 84.00 86.69 106.16 118.31
Depreciation -8.30 -11.04 -12.36 -13.60
Exceptional Items 0.00 27.85 0.00 0.00
Profit Before Tax 75.70 103.51 93.80 104.72
Tax -3.30 -8.83 -9.61 -10.68
Net Profit 72.40 94.68 84.18 94.04
Equity capital 161.86 161.86 161.86 161.86
Reserves 961.04 952.30 1036.48 1130.52
Face value 10.00 10.00 10.00 10.00
EPS 4.47 5.85 5.20 5.81
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 215.56 236.82 235.14 218.68
Other income 6.24 6.84 3.72 3.91
Total Income 221.80 243.66 238.86 222.59
Expenditure -200.18 -216.17 -214.77 -199.66
Operating profit 21.62 27.49 24.09 22.93
Interest -0.50 -2.60 -1.12 -1.18
Gross profit 21.12 24.89 22.97 21.75
Depreciation -3.24 -2.33 -2.64 -3.01
Exceptional Items 21.02 0.00 6.83 0.00
Profit Before Tax 38.90 22.56 27.16 18.74
Tax -0.87 -4.68 -3.74 -2.30
Net Profit 38.03 17.88 23.42 16.44
Equity capital 161.86 161.86 161.86 161.86
Face value 10.00 10.00 10.00 10.00
EPS 2.35 1.10 1.45 1.02

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 4.47 5.85 5.20 5.81
EBITDA Margin (%) 9.99% 10.69% 11.46% 11.40%
PBT Margin (%) 8.88% 12.15% 9.66% 9.62%
PAT Margin (%) 8.49% 11.11% 8.67% 8.64%
P/E Ratio (x) 10.11 7.73 8.69 7.78
ROE (%) 6.45% 8.50% 7.02% 7.28%
ROCE (%) 8.32% 9.13% 10.27% 10.60%
EV/EBITDA (x) 5.08 5.57 4.60 4.04
Book Value (Rs.) 69.37 68.83 74.04 79.85
P/BV 0.65 0.66 0.61 0.57
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs.45.20, the stock P/E ratio is at 8.69 x FY16E and 7.78 x FY17E respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.5.20 and Rs.5.81
respectively.
Net Sales of the company are expected to grow at a CAGR of 8% over 2014 to 2017E.
On the basis of EV/EBITDA, the stock trades at 4.60 x for FY16E and 4.04 x for FY17E.
Price to Book Value of the stock is expected to be at 0.61 x and 0.57 x for FY16E and FY17E respectively.
We recommend ‘BUY’ in this particular scrip with a target price of Rs.53.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
India is expected to be the third-largest global generic active pharmaceutical ingredient (API) merchant market
by 2016, with a 7.2 per cent market share. The country accounts for the second largest number of Abbreviated
New Drug Applications (ANDAs) and is the world’s leader in Drug Master Files (DMFs) applications with the US.
The country's pharmaceutical industry expanded at a compound annual growth rate (CAGR) of 9.4 per cent in
2013 to reach US$ 12 billion and is expected to expand at a CAGR of 23.9 per cent to US$ 55 billion by 2020. With
72 per cent of market share, generic drugs form the largest segment of the Indian pharmaceutical sector.
In terms of value, exports of pharmaceutical products from India increased at a CAGR of 26.1 per cent to US$ 10.1
billion during FY06–13. Generic drugs account for 20 per cent of global exports in terms of volume, making the
country the largest provider of generic medicines globally and expected to expand even further in coming years.
The Government of India plans to set up a US$ 640 million venture capital fund to boost drug discovery and
strengthen pharma infrastructure. Pharma Vision 2020 by the government’s Department of Pharmaceuticals
aims to make India a major hub for end-to-end drug discovery.
With 70 per cent of India’s population residing in rural areas, pharma companies have immense opportunities to
tap this market. Various companies are investing in the distribution network in rural areas. India also has the
potential to attract huge investments to its clinical trial market.

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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
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the recipients’ investment decision based on this document.

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