Rating

Remains
Buy
Target price
Reduced from 988
INR 810
Closing price
24 J uly 2014
INR 727
Potential upside
+11.4%

Anchor themes
IPCA is a play on India's
domestic pharma market, Africa's
malaria market and the US
generics market. Strong
execution and low base effect
bode well for its growth
prospects.

Nomura vs consensus
Our FY15F PAT is ~21% below
consensus as we factor in the
affect of suspension of API
shipments from the Ratlam
facility to the US.

Research analysts

India Pharmaceuticals
Saion Mukherjee - NFASL
saion.mukherjee@nomura.com
+91 22 4037 4184
Lalit Kumar - NFASL
lalit.kumar@nomura.com
+91 22 4037 4511






Key company data: See page 2 for company data and detailed price/index chart
IPCA Laboratories IPCA.NS IPCA IN
EQUITY: HEALTH CARE & PHARMACEUTICALS

US FDA scare
Regulatory concerns present near-term challenges;
accumulate on weakness
Suspension of API supplies presents significant near-term challenges
IPCA has voluntarily suspended shipments of API (Active Pharmaceutical
Ingredients) from its manufacturing facility in Ratlam (MP, India) to the US
market. The step follows Form 483 observations raised after a recent FDA
inspection. The observations encompass issues of data integrity, staff training,
data keeping and lack of sufficient power back-up. In our view, the issue
concerning data integrity is the most serious. The decision to suspend
shipments of API products is likely to affect IPCAs formulation and API sales
to the US; as well as API supplies to third parties (9.3% of FY14 sales). We
think growth and EBITDA margins will be significantly hurt in the near term
due to loss of sales, high remediation costs and unabsorbed overheads.
As base case we assume resolution in FY15
Excluding the issue concerning data integrity, we believe the rest of the
inspection observations are addressable in the near term. Furthermore, IPCA
has already undertaken steps to improve automation and reduce manual
intervention to address data integrity. We factor in gradual recovery in the US
business in FY16F.
Impact on other players
We expect a negative impact on Ranbaxy (US sales impact of ~USD 50mn
annualised), which is the marketing partner for most of the products. In certain
products, IPCA supports more than 50% of US volumes (own formulation +
API supplies), which may result in a shortage situation.
Retain Buy; TP cut to INR810 (from INR988)
We reduce FY15/16/17F EPS by 21%/20%/12%. We cut our TP to INR810
based on 17x (unchanged) 1-year forward EPS of INR47.6. Concerns on
regulatory actions are likely be a near-term overhang on the stock, which we
believe is an opportunity to accumulate from a 12-month perspective.

Year-end 31 Mar FY14 FY15F FY16F FY17F
Currency (INR) Actual Old New Old New Old New
Revenue (mn) 32,818 38,526 35,354 44,672 40,639 51,338 48,528
Reported net profit (mn) 4,785 6,113 4,840 7,106 5,652 8,016 7,076
Normalised net profit (mn) 5,508 6,113 4,840 7,106 5,652 8,016 7,076
FD normalised EPS 43.64 48.44 38.35 56.31 44.79 63.52 56.07
FD norm. EPS growth (%) 42.4 11.0 -12.1 16.3 16.8 12.8 25.2
FD normalised P/E (x) 16.7 N/A 19.0 N/A 16.2 N/A 13.0
EV/EBITDA (x) 12.0 N/A 12.6 N/A 10.8 N/A 8.7
Price/book (x) 4.7 N/A 3.9 N/A 3.2 N/A 2.7
Dividend yield (%) 0.8 N/A 0.9 N/A 1.1 N/A 1.4
ROE (%) 27.2 27.6 22.4 25.8 21.8 23.7 22.7
Net debt/equity (%) 26.9 21.7 25.2 17.4 24.0 11.9 20.8
Source: Company data, Nomura estimates

Global Markets Research

25 J uly 2014
See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts.

Nomura | IPCA Laboratories 25 J uly 2014



2
Key data on IPCA Laboratories
Relative performance chart
Source: Thomson Reuters, Nomura research

Notes:


Performance
(%) 1M 3M 12M
Absolute (INR) -12.2 -11.3 15.4 M cap (USDmn) 1,526.4
Absolute (USD) -12.2 -9.9 13.5 Free float (%) 0.7
Rel to MSCI India -12.7 -22.1 -7.6 3-mth ADT (USDmn) 2.3

Income statement (INRmn)
Year-end 31 Mar FY13 FY14 FY15F FY16F FY17F
Revenue 28,131 32,818 35,354 40,639 48,528
Cost of goods sold -10,966 -11,366 -12,437 -14,407 -17,305
Gross profit 17,165 21,452 22,917 26,232 31,223
SG&A -7,882 -9,398 -10,728 -12,078 -14,171
Employee share expense -3,918 -4,980 -5,727 -6,586 -7,574
Operating profit 5,365 7,074 6,462 7,568 9,478
EBITDA 6,232 8,106 7,747 9,152 11,361
Depreciation -867 -1,031 -1,285 -1,584 -1,883
Amortisation
EBIT 5,365 7,074 6,462 7,568 9,478
Net interest expense -334 -269 -275 -304 -328
Associates & J CEs -8 3 0 0 0
Other income 143 223 223 223 223
Earnings before tax 5,166 7,032 6,410 7,486 9,372
Income tax -1,299 -1,524 -1,570 -1,834 -2,296
Net profit after tax 3,867 5,508 4,840 5,652 7,076
Minority interests 0 0 0 0 0
Other items
Preferred dividends
Normalised NPAT 3,867 5,508 4,840 5,652 7,076
Extraordinary items -631 -722 0 0 0
Reported NPAT 3,236 4,785 4,840 5,652 7,076
Dividends -589 -738 -849 -992 -1,242
Transfer to reserves 2,647 4,047 3,990 4,660 5,834
Valuations and ratios
Reported P/E (x) 28.3 19.2 19.0 16.2 13.0
Normalised P/E (x) 23.7 16.7 19.0 16.2 13.0
FD normalised P/E (x) 23.7 16.7 19.0 16.2 13.0
Dividend yield (%) 0.6 0.8 0.9 1.1 1.4
Price/cashflow (x) 26.6 17.2 17.3 14.9 13.3
Price/book (x) 5.9 4.7 3.9 3.2 2.7
EV/EBITDA (x) 15.6 12.0 12.6 10.8 8.7
EV/EBIT (x) 18.2 13.7 15.1 13.0 10.4
Gross margin (%) 61.0 65.4 64.8 64.5 64.3
EBITDA margin (%) 22.2 24.7 21.9 22.5 23.4
EBIT margin (%) 19.1 21.6 18.3 18.6 19.5
Net margin (%) 11.5 14.6 13.7 13.9 14.6
Effective tax rate (%) 25.2 21.7 24.5 24.5 24.5
Dividend payout (%) 18.2 15.4 17.5 17.5 17.5
ROE (%) 23.0 27.2 22.4 21.8 22.7
ROA (pretax %) 21.6 24.5 19.2 19.5 21.2
Growth (%)
Revenue 19.3 16.7 7.7 14.9 19.4
EBITDA 21.4 30.1 -4.4 18.1 24.1
Normalised EPS 17.2 42.4 -12.1 16.8 25.2
Normalised FDEPS 17.2 42.4 -12.1 16.8 25.2
Source: Company data, Nomura estimates
Cashflow statement (INRmn)
Year-end 31 Mar FY13 FY14 FY15F FY16F FY17F
EBITDA 6,232 8,106 7,747 9,152 11,361
Change in working capital -1,403 -1,082 -965 -2,061 -3,054
Other operating cashflow -1,385 -1,678 -1,482 -945 -1,407
Cashflow from operations 3,445 5,346 5,301 6,146 6,900
Capital expenditure -2,993 -3,924 -5,000 -5,000 -5,000
Free cashflow 452 1,422 301 1,146 1,900
Reduction in investments 264 31 0 0 0
Net acquisitions 0 0 0 0 0
Dec in other LT assets 16 11 0 0 0
Inc in other LT liabilities
Adjustments 91 69 134 134 134
CF after investing acts 822 1,533 435 1,280 2,034
Cash dividends -468 -661 -849 -992 -1,242
Equity issue 3 0 0 0 0
Debt issue 442 -282 560 0 -500
Convertible debt issue
Others -339 -409 -275 -304 -328
CF from financial acts -361 -1,352 -564 -1,296 -2,070
Net cashflow 461 181 -129 -17 -36
Beginning cash 122 582 763 634 617
Ending cash 582 763 634 617 581
Ending net debt 5,588 5,263 5,952 6,769 7,104

Balance sheet (INRmn)
As at 31 Mar FY13 FY14 FY15F FY16F FY17F
Cash & equivalents 582 763 634 617 581
Marketable securities
Accounts receivable 4,178 4,495 4,852 5,594 6,702
Inventories 7,410 8,476 9,148 10,548 12,638
Other current assets 2,374 3,093 3,093 3,093 3,093
Total current assets 14,545 16,827 17,725 19,851 23,014
LT investments 90 92 92 92 92
Fixed assets 12,098 14,841 18,556 21,971 25,088
Goodwill 236 344 344 344 344
Other intangible assets
Other LT assets
Total assets 26,970 32,103 36,717 42,259 48,538
Short-term debt 2,508 3,086 3,086 3,886 4,686
Accounts payable 2,684 3,413 3,413 3,413 3,414
Other current liabilities 1,145 1,434 1,498 1,580 1,723
Total current liabilities 6,337 7,933 7,997 8,878 9,822
Long-term debt 3,662 2,940 3,500 3,500 3,000
Convertible debt
Other LT liabilities 1,433 1,633 1,633 1,633 1,634
Total liabilities 11,432 12,506 13,130 14,012 14,457
Minority interest 0 0 0 0 0
Preferred stock
Common stock 252 252 252 252 252
Retained earnings 15,285 19,344 23,335 27,995 33,829
Proposed dividends
Other equity and reserves
Total shareholders' equity 15,538 19,597 23,587 28,247 34,082
Total equity & liabilities 26,970 32,103 36,717 42,259 48,538
Liquidity (x)
Current ratio 2.30 2.12 2.22 2.24 2.34
Interest cover 16.1 26.3 23.5 24.9 28.9
Leverage
Net debt/EBITDA (x) 0.90 0.65 0.77 0.74 0.63
Net debt/equity (%) 36.0 26.9 25.2 24.0 20.8
Per share
Reported EPS (INR) 25.65 37.92 38.35 44.79 56.07
Norm EPS (INR) 30.65 43.64 38.35 44.79 56.07
FD norm EPS (INR) 30.64 43.64 38.35 44.79 56.07
BVPS (INR) 123.16 155.29 186.91 223.83 270.07
DPS (INR) 4.66 5.85 6.73 7.86 9.84
Acti vity (days)
Days receivable 49.8 48.2 48.2 47.0 46.2
Days inventory 234.8 255.1 258.6 250.2 244.5
Days payable 84.1 97.9 100.2 86.7 72.0
Cash cycle 200.5 205.4 206.7 210.5 218.8
Source: Company data, Nomura estimates
Nomura | IPCA Laboratories 25 J uly 2014



3
IPCA voluntarily suspends API supplies from Ratlam API
facility
IPCA has voluntarily suspended shipments of API from its manufacturing facility situated
at Ratlam (MP, India) to the US market. The company received Form 483 observations
from the US FDA following an inspection carried out by the FDA over 14-18 J uly 2014.
The step was in response to FDA observations. As per management, the FDA raised six
observations which encompass issues of data integrity, training of staff, data keeping
and lack of sufficient power back-up. Some of the data shared by management follows:
Data Integrity Mismatch between data from HPLC/GC and recorded data.
Re-processing of batch As per the US FDA, pharma companies are required to
maintain data for a batch for 6 years. The company has destroyed data for a batch after
6 years which was later re-processed. As per the USFDA, data for the reprocessed
batch need to be maintained till the expiry of the final batch.
Employee training - an employee being in the organization for more than 100 days but
not having undergone training.
Lack of sufficient power back-up this has led to frequent shut downs.
In our view the most critical observation was related to data integrity. Management
believes voluntary suspension of operations could lead to early rectification. The time to
resolution could have been longer had the FDA issued a warning letter or an import alert.
Whats next? Management looks for resolution in 4-6 months
According to management, IPCA has engaged with an external consultant. A detailed
plan is likely to be worked out over the next few weeks. The company expects to
implement changes/rectification over the next two months. Management will also
participate in a dialogue with the FDA and if required, will await an FDA inspection before
commencement of production. In managements assessment, the facility should be able
to start production in the next 4-6 months. IPCA is enhancing automation in lab tests
across sites to reduce human intervention. Steps for increasing automation have
commenced from February 2013, as per management. The high performance liquid
chromatography (HPLC) automation is completed and gross chromatography (GC)
automation is currently in progress. As per management this should address the issues
surrounding data integrity.
Impact on IPCA and the market
As a result of the suspension of production, the following components of IPCA sales will
be impacted:
a) Formulation sales to the US. Most of the formulation procures API from the
Ratlam facility. As per management, US formulation sales linked to Ratlam
were INR 2040mn in FY14 (6.4% of FY14 sales).
b) Direct API supplies to formulators in the US. This segment recorded sales of
INR 570m in FY14 (1.8% of FY14 sales), as per management.
c) Indirect API supplies to customers which are finally consumed in manufacturing
of finished dosage for the US market. This accounted for INR350mn in sales in
FY14 (1.1% of FY14 sales).
Hence, cumulatively 9.3% of FY14 sales are impacted.
In Fig 1 we present product-wise market share and key competitors. Actual impact in the
market may be much more than implied by IPCAs market share. As per management,
IPCA is a key supplier of APIs for atenolol, hydrochlorothiazide, and hydroxychloroquine.
Due to suspension of API, product market share in excess of 50% will be affected in
these products, as per management. This could lead to some shortage in the
marketplace. Competition with its own API source can potentially benefit to an extent.
Further, IPCA sells most of its formulation through Ranbaxy. Ranbaxys sales to the
extent of USD50m (annualised) may be impacted, in our view.
Nomura | IPCA Laboratories 25 J uly 2014



4


Fig. 1: Competitive landscape for IPCAs product
Unichem, Aurobindo, Zydus, Sun may benefit to a small extent
Source: IMS, Nomura Research
Financial impact: Change in estimates
We factor in the impact of discontinuation of existing formulation and API supplies to the
US market. We also assume delay in new launches (pushed back to FY16). As a base
case we factor in resolution of the issues in FY15F and a gradual ramp up in sales from
FY16F. We believe the lost sales will only be partially recouped as IPCA will lose some
share to competition. As a result, our sales, EBITDA and earnings estimates are revised
downwards (Fig 2).


Fig. 2: Sales mix
The decline In US business results in decline of generic business in FY15F
Source: Company, Nomura estimates

Product
Market si ze as per
IMS (USD m, MAT
Jun'14)
IPCA market share
(Jun'14)
Key competi tors wi th market share
(Jun'14)
No of Acti ve
DMFs
Competi tors wi th
Acti ve DMF and
hence can benefi t
from IPCA's exi t
Allopurinol 35 4%
Vintage (30%), Mylan (41%);
Northstar/Piramal (19%); Actavis (6%) 9 Mylan
Atenolol 38 21% Mylan (38%); Sandoz (15%);Teva (8%) 12 Mylan
Chloroquine 2 11% Natco (68%); Hikma (19%); Impax (2%) 1 None
Furosemide 33 29%
Vintage (27%); Sandoz (19%); Teva
(13%); Roxane (8%); Mylan (4%) 8 Teva
Hydrochlorothiazide- Caps 30 14%
Mylan (37%); Watson (16%); J ubilant
(16%); Vintage (14%); Unichem (1%) 13 Unichem
Hydrochlorothiazide- Tabs 30 12%
Teva (28%); Unichem (17%); Intas
(16%); Vintage (11%); Actavis (4%);
Aurobindo (1%) 13
Unichem, Teva,
Aurobindo
Metoclopramide 13 0%
Teva (50%); Actavis (33%);
Northstar/Piramal (17%) 3 None
Metoprolol Tartarate 68 18%
Mylan (43%); Sun (21%); Teva (8%);
Aurobindo (8%) 13 Teva, Aurobindo, Sun
Propranolol 18 29%
Teva (34%); Actavis (21%);
Northstar/Piramal (7%); Vintage (6%);
Mylan (3%) 4 None
Hydroxychloroquine 46 85% Mylan (10%); Zydus (1%); Sandoz (1%) 10 Zydus
Revenue Mix
Year ended 31 Mar (INR mn) FY12 FY13 FY14F FY15F FY16F FY17F
Domest ic f or mulat ions 7,534 8,781 9,694 11,342 13,157 15,131
Domest ic API 1,439 1,446 1,645 1,728 1,814 1,905
Expor t f or mulat ions 9,961 11,942 14,476 15,266 17,840 22,750
Branded 2,200 2,882 3,516 4,395 5,384 6,461
Generics 4,765 5,144 6,590 5,799 7,251 10,420
Institutional 2,996 3,916 4,370 5,071 5,206 5,869
Expor t API 4,058 5,219 6,002 5,992 6,771 7,651
Subsidiar y sales 340 395 177 203 234 269
Tot al gr oss sales 23,332 27,783 31,994 34,530 39,815 47,705
% growth 20.4% 19.1% 16.3% 8.0% 15.3% 19.8%
Nomura | IPCA Laboratories 25 J uly 2014



5

Fig. 3: Change in estimates

Source: Nomura estimates
Valuation and target price
As a base case we assume that IPCA will be able to address the issues raised by the
FDA. We believe resolution will lead to a gradual recovery in FY16F. Consequently, we
hesitate to reduce our estimated valuation multiple on near-term suppressed earnings.
We now forecast FY16F and FY17F earnings growth of 17% and 25%, respectively. We
retain our view that the fair value range for the stock is 15-20x. We continue to value
IPCA at 17x one-year forward EPS. We reset our TP to INR810 (from INR988) based on
17x J une 2016F EPS of INR47.6.
Where can the stock fall in the near term? Though we have a constructive view over a
12-month period, in the near term (4-6 months), concerns regarding regulatory actions
are likely to be an overhang on the stock. In a worst-case scenario, in the near term, we
estimate that the stock can trade at 15x (lower end of the fair value range) on one-year
forward estimates, which implies a price of INR600/sh. We advise investors to be
accumulate the shares in any such weakness, from a one-year perspective.

Fig. 4: IPCA one year forward P/E trading multiple

Source: Bloomberg, Company, Nomura estimates





FY15F FY16F FY17F FY15F FY16F FY17F FY15F FY16F FY17F
Sales 34530 39815 47705 37703 43849 50515 8% 9% 6%
EBITDA 7747 9152 11361 9408 11032 12521 18% 17% 9%
Netprofit 4840 5652 7076 6113 7106 8016 21% 20% 12%
Capex 5000 5000 5000 5000 5000 5000 0% 0% 0%
TaxRate 24.5% 24.5% 24.5% 24.5% 24.5% 24.5%
New Old Chg
0
5
10
15
20
25
O
c
t
-
0
8
J
a
n
-
0
9
A
p
r
-
0
9
J
u
l
-
0
9
O
c
t
-
0
9
J
a
n
-
1
0
A
p
r
-
1
0
J
u
l
-
1
0
O
c
t
-
1
0
J
a
n
-
1
1
A
p
r
-
1
1
J
u
l
-
1
1
O
c
t
-
1
1
J
a
n
-
1
2
A
p
r
-
1
2
J
u
l
-
1
2
O
c
t
-
1
2
D
e
c
-
1
2
M
a
r
-
1
3
J
u
n
-
1
3
S
e
p
-
1
3
D
e
c
-
1
3
M
a
r
-
1
4
J
u
n
-
1
4
Nomura | IPCA Laboratories 25 J uly 2014



6
Appendix A-1
Analyst Certification
We, Saion Mukherjee and Lalit Kumar, hereby certify (1) that the views expressed in this Research report accurately reflect our
personal views about any or all of the subject securities or issuers referred to in this Research report, (2) no part of our
compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this
Research report and (3) no part of our compensation is tied to any specific investment banking transactions performed by
Nomura Securities International, Inc., Nomura International plc or any other Nomura Group company.

Issuer Specific Regulatory Disclosures

The term "Nomura Group" used herein refers to Nomura Holdings, Inc. or any of its affiliates or subsidiaries, and may refer to one or more
Nomura Group companies.
Materially mentioned issuers

Issuer Ticker Price Price date Stock rating Sector rating Disclosures
IPCA Laboratories IPCA IN INR 727 24-J ul-2014 Buy N/A

IPCA Laboratories (IPCA IN) INR 727 (24-Jul-2014)
Rating and target price chart (three year history)
Buy (Sector rating: N/A)
Date Rating Target price Closing price
16-J un-14 988.00 853.85
02-J un-14 954.00 788.95
29-J an-14 957.00 813.85
26-Oct-13 886.00 689.80
06-Aug-13 Buy 656.40
06-Aug-13 847.00 656.40
For explanation of ratings refer to the stock rating keys located after chart(s)

Valuation Methodology We value IPCA at 17.0x one-year forward (J une 2016) EPS of INR47.6, which gives us our target
price of INR 810/share. The benchmark index for this stock is MSCI India.

Risks that may impede the achievement of the target price Slower-than-anticipated growth in the US is a key risk. The
company has me too filings in the US (other than 505 (b) 2 filings) and relies on cost competitiveness to ramp up / gain market
share once the capacity constraints are eased. Higher-than-expected level of competition in the malaria market. Anti-malarial
sales in India are largely seasonal.

Important Disclosures
Online availability of research and conflict-of-interest disclosures
Nomura research is available on www.nomuranow.com/research, Bloomberg, Capital IQ, Factset, MarkitHub, Reuters and ThomsonOne.
Important disclosures may be read at http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx or requested
from Nomura Securities International, Inc., on 1-877-865-5752. If you have any difficulties with the website, please
email grpsupport@nomura.com for help.

The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, a
portion of which is generated by Investment Banking activities. Unless otherwise noted, the non-US analysts listed at the front of this report are
not registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of NSI, and may not be subject to
Nomura | IPCA Laboratories 25 J uly 2014



7
FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held
by a research analyst account.

Nomura Global Financial Products Inc. (NGFP) Nomura Derivative Products Inc. (NDPI) and Nomura International plc. (NIplc) are
registered with the Commodities Futures Trading Commission and the National Futures Association (NFA) as swap dealers. NGFP, NDPI, and
NIplc are generally engaged in the trading of swaps and other derivative products, any of which may be the subject of this report.

Any authors named in this report are research analysts unless otherwise indicated. Industry Specialists identified in some Nomura International
plc research reports are employees within the Firm who are responsible for the sales and trading effort in the sector for which they have
coverage. Industry Specialists do not contribute in any manner to the content of research reports in which their names appear.

Distribution of ratings (Global)
The distribution of all ratings published by Nomura Global Equity Research is as follows:
47% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 41% of companies with this
rating are investment banking clients of the Nomura Group*.
43% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 54% of companies with
this rating are investment banking clients of the Nomura Group*.
10% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 24% of companies with
this rating are investment banking clients of the Nomura Group*.
As at 30 J une 2014. *The Nomura Group as defined in the Disclaimer section at the end of this report.

Explanation of Nomura's equity research rating system in Europe, Middle East and Africa, US and Latin America, and
Japan and Asia ex-Japan from 21 October 2013
The rating system is a relative system, indicating expected performance against a specific benchmark identified for each individual stock,
subject to limited management discretion. An analysts target price is an assessment of the current intrinsic fair value of the stock based on an
appropriate valuation methodology determined by the analyst. Valuation methodologies include, but are not limited to, discounted cash flow
analysis, expected return on equity and multiple analysis. Analysts may also indicate expected absolute upside/downside relative to the stated
target price, defined as (target price - current price)/current price.

STOCKS
A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral',
indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce', indicates that
the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating, target
price and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies
that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage. Investors should not expect continuing or
additional information from Nomura relating to such securities and/or companies. Benchmarks are as follows: United States/Europe/Asia ex-
Japan: please see valuation methodologies for explanations of relevant benchmarks for stocks, which can be accessed
at: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx; Global Emerging Markets (ex-Asia): MSCI
Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology; Japan: Russell/Nomura Large Cap.

SECTORS
A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance,
indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates that
the analyst expects the sector to underperform the Benchmark during the next 12 months. Sectors that are labelled as 'Not rated' or shown as
'N/A' are not assigned ratings. Benchmarks are as follows: United States: S&P 500; Europe: Dow J ones STOXX 600; Global Emerging
Markets (ex-Asia): MSCI Emerging Markets ex-Asia. Japan/Asia ex-Japan: Sector ratings are not assigned.

Explanation of Nomura's equity research rating system in Japan and Asia ex-Japan prior to 21 October 2013
STOCKS
Stock recommendations are based on absolute valuation upside (downside), which is defined as (Target Price - Current Price) / Current Price,
subject to limited management discretion. In most cases, the Target Price will equal the analyst's 12-month intrinsic valuation of the stock,
based on an appropriate valuation methodology such as discounted cash flow, multiple analysis, etc. A 'Buy' recommendation indicates that
potential upside is 15% or more. A 'Neutral' recommendation indicates that potential upside is less than 15% or downside is less than 5%. A
'Reduce' recommendation indicates that potential downside is 5% or more. A rating of 'Suspended' indicates that the rating and target price
have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is
acting in an advisory capacity in a merger or strategic transaction involving the subject company. Securities and/or companies that are labelled
as 'Not rated' or shown as 'No rating' are not in regular research coverage of the Nomura entity identified in the top banner. Investors should
not expect continuing or additional information from Nomura relating to such securities and/or companies.

SECTORS
A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive
absolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks
under coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average
recommendation of the stocks under coverage is) a negative absolute recommendation.

Target Price
A Target Price, if discussed, reflects in part the analyst's estimates for the company's earnings. The achievement of any target price may be
impeded by general market and macroeconomic trends, and by other risks related to the company or the market, and may not occur if the
company's earnings differ from estimates.

Disclaimers
Nomura | IPCA Laboratories 25 J uly 2014



8
This document contains material that has been prepared by the Nomura entity identified at the top or bottom of page 1 herein, if any, and/or,
with the sole or joint contributions of one or more Nomura entities whose employees and their respective affiliations are specified on page 1
herein or identified elsewhere in the document. The term "Nomura Group" used herein refers to Nomura Holdings, Inc. or any of its affiliates or
subsidiaries and may refer to one or more Nomura Group companies including: Nomura Securities Co., Ltd. ('NSC') Tokyo, J apan; Nomura
International plc ('NIplc'), UK; Nomura Securities International, Inc. ('NSI'), New York, US; Nomura International (Hong Kong) Ltd. (NIHK), Hong
Kong; Nomura Financial Investment (Korea) Co., Ltd. (NFIK), Korea (Information on Nomura analysts registered with the Korea Financial
Investment Association ('KOFIA') can be found on the KOFIA Intranet at http://dis.kofia.or.kr); Nomura Singapore Ltd. (NSL), Singapore
(Registration number 197201440E, regulated by the Monetary Authority of Singapore); Nomura Australia Ltd. (NAL), Australia (ABN 48 003
032 513), regulated by the Australian Securities and Investment Commission ('ASIC') and holder of an Australian financial services licence
number 246412; P.T. Nomura Indonesia (PTNI), Indonesia; Nomura Securities Malaysia Sdn. Bhd. (NSM), Malaysia; NIHK, Taipei Branch
(NITB), Taiwan; Nomura Financial Advisory and Securities (India) Private Limited (NFASL), Mumbai, India (Registered Address: Ceejay
House, Level 11, Plot F, Shivsagar Estate, Dr. Annie Besant Road, Worli, Mumbai- 400 018, India; Tel: +91 22 4037 4037, Fax: +91 22 4037
4111; CIN No : U74140MH2007PTC169116, SEBI Registration No: BSE INB011299030, NSE INB231299034, INF231299034, INE 231299034,
MCX: INE261299034) and NIplc, Madrid Branch (NIplc, Madrid). CNS Thailand next to an analysts name on the front page of a research
report indicates that the analyst is employed by Capital Nomura Securities Public Company Limited (CNS) to provide research assistance
services to NSL under a Research Assistance Agreement. CNS is not a Nomura entity.
THIS MATERIAL IS: (I) FOR YOUR PRIVATE INFORMATION, AND WE ARE NOT SOLICITING ANY ACTION BASED UPON IT; (II) NOT TO
BE CONSTRUED AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY IN ANY J URISDICTION WHERE
SUCH OFFER OR SOLICITATION WOULD BE ILLEGAL; AND (III) BASED UPON INFORMATION FROM SOURCES THAT WE CONSIDER
RELIABLE, BUT HAS NOT BEEN INDEPENDENTLY VERIFIED BY NOMURA GROUP.
Nomura Group does not warrant or represent that the document is accurate, complete, reliable, fit for any particular purpose or merchantable
and does not accept liability for any act (or decision not to act) resulting from use of this document and related data. To the maximum extent
permissible all warranties and other assurances by Nomura group are hereby excluded and Nomura Group shall have no liability for the use,
misuse, or distribution of this information.
Opinions or estimates expressed are current opinions as of the original publication date appearing on this material and the information, including
the opinions and estimates contained herein, are subject to change without notice. Nomura Group is under no duty to update this document.
Any comments or statements made herein are those of the author(s) and may differ from views held by other parties within Nomura Group.
Clients should consider whether any advice or recommendation in this report is suitable for their particular circumstances and, if appropriate,
seek professional advice, including tax advice. Nomura Group does not provide tax advice.
Nomura Group, and/or its officers, directors and employees, may, to the extent permitted by applicable law and/or regulation, deal as principal,
agent, or otherwise, or have long or short positions in, or buy or sell, the securities, commodities or instruments, or options or other derivative
instruments based thereon, of issuers or securities mentioned herein. Nomura Group companies may also act as market maker or liquidity
provider (within the meaning of applicable regulations in the UK) in the financial instruments of the issuer. Where the activity of market maker is
carried out in accordance with the definition given to it by specific laws and regulations of the US or other jurisdictions, this will be separately
disclosed within the specific issuer disclosures.
This document may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poors.
Reproduction and distribution of third party content in any form is prohibited except with the prior written permission of the related third party.
Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and
are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such
content. Third party content providers give no express or implied warranties, including, but not limited to, any warranties of merchantability or
fitness for a particular purpose or use. Third party content providers shall not be liable for any direct, indirect, incidental, exemplary,
compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or profits and
opportunity costs) in connection with any use of their content, including ratings. Credit ratings are statements of opinions and are not statements
of fact or recommendations to purchase hold or sell securities. They do not address the suitability of securities or the suitability of securities for
investment purposes, and should not be relied on as investment advice.
Any MSCI sourced information in this document is the exclusive property of MSCI Inc. (MSCI). Without prior written permission of MSCI, this
information and any other MSCI intellectual property may not be reproduced, re-disseminated or used to create any financial products, including
any indices. This information is provided on an "as is" basis. The user assumes the entire risk of any use made of this information. MSCI, its
affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of
originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any
of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the information
have any liability for any damages of any kind. MSCI and the MSCI indexes are services marks of MSCI and its affiliates.
Russell/Nomura J apan Equity Indexes are protected by certain intellectual property rights of Nomura Securities Co., Ltd. and Russell
Investments. Nomura Securities Co., Ltd. and Russell Investments do not guarantee the accuracy, completeness, reliability, or usefulness
thereof and do not account for business activities and services that any index user and its affiliates undertake with the use of the Indexes.
Investors should consider this document as only a single factor in making their investment decision and, as such, the report should not be
viewed as identifying or suggesting all risks, direct or indirect, that may be associated with any investment decision. Nomura Group produces a
number of different types of research product including, among others, fundamental analysis, quantitative analysis and short term trading ideas;
recommendations contained in one type of research product may differ from recommendations contained in other types of research product,
whether as a result of differing time horizons, methodologies or otherwise. Nomura Group publishes research product in a number of different
ways including the posting of product on Nomura Group portals and/or distribution directly to clients. Different groups of clients may receive
different products and services from the research department depending on their individual requirements. Clients outside of the US may access
the Nomura Research Trading Ideas platform (Retina) at http://go.nomuranow.com/equities/tradingideas/retina/
Figures presented herein may refer to past performance or simulations based on past performance which are not reliable indicators of future
performance. Where the information contains an indication of future performance, such forecasts may not be a reliable indicator of future
performance. Moreover, simulations are based on models and simplifying assumptions which may oversimplify and not reflect the future
distribution of returns.
Certain securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of, or income derived
from, the investment.
The securities described herein may not have been registered under the US Securities Act of 1933 (the 1933 Act), and, in such case, may not
be offered or sold in the US or to US persons unless they have been registered under the 1933 Act, or except in compliance with an exemption
from the registration requirements of the 1933 Act. Unless governing law permits otherwise, any transaction should be executed via a Nomura
entity in your home jurisdiction.
This document has been approved for distribution in the UK and European Economic Area as investment research by NIplc. NIplc is authorised
by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. NIplc is a
member of the London Stock Exchange. This document does not constitute a personal recommendation within the meaning of applicable
regulations in the UK, or take into account the particular investment objectives, financial situations, or needs of individual investors. This
Nomura | IPCA Laboratories 25 J uly 2014



9
document is intended only for investors who are 'eligible counterparties' or 'professional clients' for the purposes of applicable regulations in the
UK, and may not, therefore, be redistributed to persons who are 'retail clients' for such purposes. This document has been approved by NIHK,
which is regulated by the Hong Kong Securities and Futures Commission, for distribution in Hong Kong by NIHK. This document has been
approved for distribution in Australia by NAL, which is authorized and regulated in Australia by the ASIC. This document has also been
approved for distribution in Malaysia by NSM. In Singapore, this document has been distributed by NSL. NSL accepts legal responsibility for the
content of this document, where it concerns securities, futures and foreign exchange, issued by their foreign affiliates in respect of recipients
who are not accredited, expert or institutional investors as defined by the Securities and Futures Act (Chapter 289). Recipients of this document
in Singapore should contact NSL in respect of matters arising from, or in connection with, this document. Unless prohibited by the provisions of
Regulation S of the 1933 Act, this material is distributed in the US, by NSI, a US-registered broker-dealer, which accepts responsibility for its
contents in accordance with the provisions of Rule 15a-6, under the US Securities Exchange Act of 1934. The entity that prepared this
document permits its separately operated affiliates within the Nomura Group to make copies of such documents available to their clients.
This document has not been approved for distribution to persons other than Authorised Persons, Exempt Persons or Institutions (as defined
by the Capital Markets Authority) in the Kingdom of Saudi Arabia (Saudi Arabia) or 'professional clients' (as defined by the Dubai Financial
Services Authority) in the United Arab Emirates (UAE) or a Market Counterparty or Business Customers (as defined by the Qatar Financial
Centre Regulatory Authority) in the State of Qatar (Qatar) by Nomura Saudi Arabia, NIplc or any other member of Nomura Group, as the case
may be. Neither this document nor any copy thereof may be taken or transmitted or distributed, directly or indirectly, by any person other than
those authorised to do so into Saudi Arabia or in the UAE or in Qatar or to any person other than Authorised Persons, Exempt Persons or
Institutions located in Saudi Arabia or 'professional clients' in the UAE or a Market Counterparty or Business Customers in Qatar . By
accepting to receive this document, you represent that you are not located in Saudi Arabia or that you are an Authorised Person, an Exempt
Person or an Institution in Saudi Arabia or that you are a 'professional client' in the UAE or a Market Counterparty or Business Customers in
Qatar and agree to comply with these restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the UAE
or Saudi Arabia or Qatar.
NO PART OF THIS MATERIAL MAY BE (I) COPIED, PHOTOCOPIED, OR DUPLICATED IN ANY FORM, BY ANY MEANS; OR (II)
REDISTRIBUTED WITHOUT THE PRIOR WRITTEN CONSENT OF A MEMBER OF NOMURA GROUP. If this document has been distributed
by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be
intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does not accept liability for any errors
or omissions in the contents of this document, which may arise as a result of electronic transmission. If verification is required, please request a
hard-copy version.

Nomura Group manages conflicts with respect to the production of research through its compliance policies and procedures (including, but not
limited to, Conflicts of Interest, Chinese Wall and Confidentiality policies) as well as through the maintenance of Chinese walls and employee
training.
Additional information is available upon request and disclosure information is available at the Nomura Disclosure web
page: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx
Copyright 2014 Nomura International (Hong Kong) Ltd. All rights reserved.