FDC Ltd - Research Report

Private Client Research




Pharmaceuticals & Drugs - Domestic



Pharmaceuticals & Drugs - Domestic

June 26, 2020

Sensex: 35171.27

CNX Nifty: 10383.00


BSE: 531599

Reco Price
Rs. 272
3 years to get optimum return


June 26, 2020



CNX Nifty








Stock Data

CMP (Rs)
Face value (Rs)
52 Week Range (Rs)
296.40 - 151.20
Market cap (Rs Crores)
Price To Book Value (x)
P/E Ratio (x)

One Year indexed Stock Performance

FDC Ltd Sensex
Return (%)


(in %)

+91 22 6639 3000



In 1940, the partnership firm was incorporated as a private limited company - Fairdeal Corporation (Private) Limited and in 1986 its name was changed to FDC Private Limited. Thereafter, FDC became a public limited company, and was listed on the Bombay and National Stock Exchanges of India in 1996.

Today, FDC carries forward the flaming spirit of its first dream, achieving accreditations from the US-FDA, UK-MHRA, MCC-RSA, and the UAE, to cite a few. FDC is a forerunner in manufacturing and marketing of Oral Rehydration Salts (ORS) and Ophthalmics. FDC has also set-up globally approved, multi-location manufacturing facilities for Active Pharmaceuticals Ingredients (APIs) as well as Finished Dosage Forms. These facilities are located at Roha, Waluj and Sinnar in Maharashtra, Verna in Goa and Baddi in Himachal Pradesh. FDC markets more than 300 products in India and exports many of these to over 50 countries.

FDC strives to explore, innovate and integrate solutions with modern technology, empowering talent and expanding healthcare horizons for a better quality of life to millions globally. FDC Ltd. engages in the business of pharmaceutical. It involves in therapeutic segments, such as, anti-infectives, gastrointestinals, ophthalmologicals, vitamins, minerals, dietary supplements, cardiac, anti-diabetes, respiratory, gynaecology, dermatology, analgesics and others. The company products are sold under brand names, Electral, Enerzal, Vitcofol, Pyrimon, Zocon, Zoxan, Zathrin, Zipod, Zefu, Cotaryl and Mycoderm. The company was founded by Anand L. Chandavarkar on December 7, 1936 and is headquartered in Mumbai, India.

It’s completely a “Fair Deal” based on high growth rates and attractive valuation.

Top brands continues to be growth driver:
FDC has strong presence in anti-infective, Oral Rehydration Salt (ORS), multivitamin, antifungal and nutraceutical segments with well-known brands in the domestic market. Three of the thirteen company’s brands grew faster than the market. These were: Zocon, Zifi-O and Simyl-MCT. The 13 major brands of the company contributed 62% to its domestic revenues. FDC’s antifungal brand Simyl-MCT grew the fastest at 13% YoY. We expect these brands to drive future growth. FDC markets Electral ORS and Enerzal nutraceutical brand in 200ml tetrapack at Rs23 and Rs30 per pack respectively. The tetrapack are outside price control and hence have higher margins. FDC promotes Enerzal as sports drink and markets the product at major sports events.

Exports to grow steadily:
The export business contributes around 17% of the revenue of FDC. The export business in FY19 delivered 30% growth mainly on account of strong formulation business growth of 154% in the US and UK markets. The API and the partner sharing business delivered growth of 30% while formulation business growth in ROW remained moderate.

Domestic formulations to continue growth trend:
The Company plans to continue focusing on growing its market share in Anti-infective, and antifungal. With some of the domestic business under price control, FDC plans to grow volumes as against competitors that are looking to achieve growth through upward price revisions.

Covid 19:
Covid-19 would have a limited impact on FDC. As medicines are essential items has they have not been instructed to shut the plants. We believe there would be minimal Impact on FDC export business.


Indian pharmaceutical sector industry supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in UK. India contributes the second largest share of pharmaceutical and biotech workforce in the world. The pharmaceutical sector in India was valued at US$ 33 billion in 2017. India’s domestic pharmaceutical market turnover reached Rs 1,29,015 crore (US$ 18.12 billion) in 2018, growing 9.4 per cent year-on-year (in Rs) from Rs 1,16,389 crore (US$ 17.87 billion) in 2017.

The Indian pharmaceuticals market stood at Rs 1.39 lakh crore (US$ 19.89 billion) for the year ending November 2019 with Sun Pharma,Lupin, Mankind Pharma, Intas Pharmaceuticals and Alkem Laboratories leading the growth. Indian pharma companies received a total of 415 product approvals in 2018 and 73 tentative approvals. Affordable medicines under the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) have led to savings of Rs 1,000 crore (US$ 143.08 million) for Indian citizens in FY19.

With 71 per cent market share, generic drugs form the largest segment of the Indian pharmaceutical sector. Based on moving annual turnover, Anti-Infectives (13.6 per cent), Cardiac (12.4 per cent), Gastro Intestinals (11.5 per cent) had the biggest market share in the Indian pharma market in 2018.

Indian drugs are exported to more than 200 countries in the world, with the US as the key market. 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. Pharmaceutical exports from India, which include bulk drugs, intermediates, drug formulations, biologicals, Ayush & herbal products and surgicals reached US$ 19.14 billion in FY19 and US$ 10.8 billion in FY20 (up to November 2019). The exports are expected to reach US$ 20 billion by 2020. In FY18, 31 per cent of these exports from India went to the US. Healthcare sector witnessed private equity investment of US$ 1.1 billion with 27 deals in first half of 2019.

Medical devices industry in India has been growing 15.2 per cent annually and was valued at US$ 5.2 billion in 2018 and expected to grow US$ 8.16 billion by 2020 and reach US$ 25 billion by 2025.

The ‘Pharma Vision 2020’ by the government’s Department of Pharmaceuticals aims to make India a major hub for end-to-end drug discovery. The sector has received cumulative FDI worth US$ 16.27 billion between April 2000 and September 2019. Under Budget 2019-20, total allocation to the Ministry of Health and Family Welfare is Rs 62,599 crore (US$ 8.96 billion). Rs 6,400 crore (US$ 915 million) has been allocated to health insurance scheme Ayushman Bharat- Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). As per Union Budget 2019-20, Rs 1,900 crore (US$ 0.27 billion) have been set aside for research of the total amount and Rs 62,659 crore (US$ 8.96 billion) allocated for Ministry of Health and Family Welfare. In November 2019, Cabinet approved the extension/renewal of the extant Pharmaceuticals Purchase Policy (PPP) with the same terms and conditions while adding one additional product namely, Alcoholic Hand Disinfectant (AHD) to the existing list of 103 medicines till the final closure/strategic disinvestment of the Pharma CPSUs.

As per Economic Survey 2018-19, government expenditure (as a percentage of GDP) increased to 1.5 per cent in 2018-19 from 1.2 per cent in 2014-15 for health. Indian pharmaceutical sector is expected to grow at a CAGR of 22.4 per cent and medical devices market is expected to grow to US$ 55 billion by 2020. FDI increased to 74 per cent in existing pharmaceutical companies and 100 per cent for new projects.

Source: IBEF, Company, Market research

Profit & Loss Statement:- (Consolidated)

(Rs Crores)

Year End Mar-18 Mar-19 Mar-20 Mar-21 E Mar-22 E
Net Sales 1075.07 1090.70 1344.19 1411.40 1580.77
Growth(%) 6.04% 1.45% 23.24% 5.00% 12.00%
COGS 352.08 345.14 425.71 451.65 497.94
Gross Profit 722.99 745.56 918.48 959.75 1082.83
Growth(%) 7.14% 3.12% 23.19% 4.49% 12.82%
Employee Cost 216.67 225.57 277.47 296.39 316.15
Other Expenses 279.63 288.96 348.03 352.85 395.19
Total Expenditure 848.38 859.68 1051.21 1100.89 1209.29
EBITDA 226.69 231.01 292.98 310.51 371.48
Growth(%) -6.89% 1.91% 26.83% 5.98% 19.64%
EBITDAM(%) 21.09% 21.18% 21.80% 22.00% 23.50%
Depreciation 35.14 33.24 37.45 35.28 36.88
EBIT 191.55 197.77 255.53 275.23 334.60
Other Income 50.96 43.47 68.89 70.00 70.00
Interest 1.40 1.44 3.41 3.80 3.60
Profit Before Taxation & Exceptional Items 241.11 239.80 321.01 341.43 401.00
Exceptional Income / Expenses 0.00 -1.11 0.00 0.00 0.00
Profit Before Tax 241.11 238.69 321.01 341.43 401.00
Provision for Tax 67.12 66.85 80.08 86.04 101.05
Tax rate(%) 28.00% 28.00% 25.00% 25.00% 25.00%
PAT 173.99 171.85 240.93 255.39 299.95
Share of Associate -0.48 -2.06 -1.01 -1.01 -1.01
Consolidated Net Profit 173.51 169.79 239.92 254.38 298.94
EPS 9.95 9.74 13.94 15.39 18.10
Adjusted EPS 9.95 9.74 13.94 15.39 18.10
Source: Stockaxis Research, Company Data


FDC’s key brands are continue to grow at good rates. We expect the same momentum to be continued in future. FDC has recently received ANDA approval gCospot (Opthalmic solution) and the product was launched in Q3 FY20 and the product has received good response in the market. We expect the export business to drive growth in next two years. Company’s export business has registered high double digit growth in recent quarters. We expect the stock to give a potential return of 80-100% in long term.