J P M O R G A N Asia Pacific Equity Research

27 August 2024

Initiation

Indegene Neutral
INEG.NS, INDGN IN
Niche operator; Initiating at Neutral Price (26 Aug 24):Rs563.65
Price Target (Sep-25):Rs570.00

Indegene (INDGN) is a leading niche tech operations (TechOps) vendor focused Head of APAC Telecoms and India
on the global life sciences (LS) industry that has scaled rapidly during COVID. TMT Research
Overall growth slowed down post Covid from client-specific factors and Ankur Rudra, CFA AC
weakening macro from lightening drug launch cycle of its Big Pharma clients. We (65) 6801-3237
expect growth to bounce back to early teens from FY26. We expect INDGN to [email protected]
J.P. Morgan Securities Singapore Private Limited
enjoy low-teens secular growth thanks to low tech penetration in the life sciences
ops industry, strong track record and differentiated service offerings. INDGN Bhavik Mehta, CFA
(91-22) 6157-3871
trades at a premium to most TechOps firms and at the upper end of Indian midcap [email protected]
tech services peers. With full valuations, and clouded current visibility on new drug J.P. Morgan India Private Limited, J.P. Morgan
launches for its clients, we find INDGN fairly priced. Initiate at Neutral. Tower, Santacruz(E), Mumbai - 400098, SEBI
Registration: INH000001873, (91-22) 6157-3000.

• Attractive secular growth potential from under-penetrated outsourcing.

INDGN’s TechOps services enjoy solid long-term growth potential with just Style Exposure
~20% of life sciences operations spends (US$156bn in 2022) thanks to the need
for greater digitization, lack of digital talent, rising cost of R&D and SG&A at
pharma companies.
• Strong process expertise and track record in scaling top clients. INDGN’s
long track record, 22% staff background in pharma and proprietary tools drive
best-of-breed process expertise in managing efficient operations, in our view.
It enjoys strong client relationships with 19 of the 20 largest global biopharma
firms that has helped it scale its top 4 clients above $25m and top 10 clients to
$16m in average revenues.
• Sector-leading per capita revenues/profits show differentiated service
offerings. INDGN leads mid-sized IT services and BPO companies in per
capita revenue and profits, highlighting high value addition and ability to use
tech effectively in its service delivery despite a very offshore-heavy operation.
• Growth should accelerate in FY26 as client-specific issues abate. While
INDGN enjoyed very strong growth post-COVID (FY20-23 revenue CAGR
of ~40%), growth slowed sharply to 3-4% organic in FY24 due to client-
specific issues for its top 2 clients, expiry of COVID vaccine products, patent
cliff, a slowdown in new drug launches and challenges for emerging biotech
companies. We expect growth to trend back to teens in FY26 as these issues get
into the base.
• Key risks. High client concentration, insourcing from top clients, changes in
durg launch pipeline, regulations impacting the pharma sector and potential
TAM risk from more aggressive GenAI adoption are the key risks to INDGN’s
growth story.
• Initiate at N. INDGN is a high-quality ops vendor that deserves a premium to
diversified BPM players and several mid-sized services firms given higher
productivity, profitability and secular growth potential. However, we find
current valuations at 21%/12% premium to BPM /mid-sized peers already
bake in the recovery and would wait for a better entry point.

Sources for: Style Exposure – J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates.

See page 23 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.

www.jpmorganmarkets.com
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Price Performance Summary Investment Thesis and Valuation

Investment Thesis
We initiate coverage on Indegene with a Neutral rating as we
believe the growth recovery expectations from FY26 is baked
into the current stock price. The stock is up 30% since the IPO
price and bakes in all positives and we don’t see a clear positive
catalyst that can drive the stock further up from here on, in our
view. We like the structural growth story of Indegene given its
exposure to the under-penetrated life sciences outsourcing
market, however, in the near term, it faces client-specific issues
that we believe will keep FY25 growth limited to high-single-
YTD 1m 3m 12m digit level. The key risk we see is high client concentration and
Abs - 0.2% 6.6% - single vertical exposure that can significantly impact Indegene
Rel - -1.3% -1.5% -
if any of its top clients come under duress.
Company Data
Valuation
Shares O/S (mn) 239
52-week range (Rs) 660.00-468.90 Our Sep’25 PT of Rs570 is based on a 27x target P/E multiple.
Market cap ($ mn) 1,606 This is higher than 25x we use for MPHL but lower than 35x/42x
Exchange rate 83.90 we use for Coforge/PSYS and is justified by the revenue growth
Free float(%) 70.5%
3M - Avg daily vol (mn) 0.86 differential as we expect Indegene to clock revenue CAGR of
3M - Avg daily val ($ mn) 5.8 10% over FY24-26E vs. MPHL/Coforge/PSYS at
Volatility (90 Day) 59 8%/12%/18%.
Index NIFTY
BBG BUY|HOLD|SELL -

Key Metrics (FYE Mar) Performance Drivers

Rs in millions FY24A FY25E FY26E FY27E
Financial Estimates
Revenue 25,896 28,301 31,514 35,295
Adj. EBITDA 5,054 5,397 6,303 7,059
Adj. EBIT 4,293 4,556 5,437 6,167
Adj. net income 3,367 3,743 4,614 5,255
Adj. EPS 15.07 15.66 19.31 21.99
BBG EPS - - - -
Cashflow from operations 5,077 3,581 4,063 4,483
FCFF 5,333 3,631 4,039 4,456
Margins and Growth
Revenue Growth Y/Y (%) 12.3% 9.3% 11.4% 12.0%
Gross margin - - - -
EBITDA margin 19.5% 19.1% 20.0% 20.0%
EBIT margin 16.6% 16.1% 17.3% 17.5%
Adj. EPS growth 25.9% 3.9% 23.3% 13.9%
Ratios
Adj. tax rate 26.6% 25.8% 25.5% 25.5%
Interest cover 10.2 29.7 66.7 66.7
Net debt/Equity 0.2 NM NM NM
Net debt/EBITDA 0.4 NM NM NM
ROCE 19.2% 15.4% 14.5% 14.0%
ROE 27.0% 18.8% 16.5% 16.0%
Valuation
FCFF yield 4.2% 2.7% 3.0% 3.3%
Dividend yield - - - -
EV/Revenue 5.3 4.4 3.8 3.3
EV/EBITDA 27.1 23.2 19.1 16.3
Adj. P/E 37.4 36.0 29.2 25.6

Source: J.P. Morgan Quantitative and Derivatives Strategy for Performance Drivers; company data, Bloomberg Finance L.P. and J.P. Morgan estimates for all other tables. Note: Price history may not be
complete or exact.

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Table Of Contents
Key charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Play on the under-penetrated life sciences outsourcing market. . . . . . . . 5
Deep domain expertise that provides differentiation . . . . . . . . . . . . . . . . . 7
Strong relationships and execution with large pharmaceutical companies.
............................................................ 9
Revenue growth should accelerate from FY26 onwards . . . . . . . . . . . . . . 10
Structurally high EBIT margins thanks to high offshore mix and higher
revenue per employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Investment Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
High Client Concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Single vertical exposure means there is no hedge . . . . . . . . . . . . . . . . . . 14
Highly regulated industry increases litigation and insourcing risk.. . . . . . . 14
Risk of TAM compression and service obsolescence from rapid GenAI
adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Company Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Summary Financials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Key charts
Figure 1: Indegene has successfully scaled up its top 10 clients... Figure 2: ...over the last four years
Revenue growth from top 10 clients (Rs mn) Revenue growth from top 10 clients (Rs mn)
3,000 2,803 3000
2,605 2,622 2678
2,553 FY21 FY22 FY23 9MFY23 9MFY24
2,500 2,267 2500 2186
2,036 2086
1,861 1838 1840 1917
2,000 1,658 2000
1,595 1534
1,494 1,348 1300
1,500 1500
993 1,073 1073
859 957 939 879
1,000 837 767 1000 685 717
686
455 515 490564 533
500 274 403 488 354
310 255 212 500 293
317 97 134
58 28 39
- 0
Client 1 Client 2 Client 3 Client 4 Client 5 Client 6 Client 7 Client 8 Client 9 Client 10 Client 1 Client 2 Client 3 Client 4 Client 5 Client 6 Client 7 Client 8 Client 9 Client 10

Source: Company reports. Source: Company reports.

Figure 3: Growth in revenues of Indegene’s three largest clients (Rsmn) Figure 4: Revenue growth to accelerate from FY26

450 80%
400 70%
350 60%
300 50%
250
40%
200
150 30%
100 20%
50 10%
0 0%
FY21 FY22 FY23 FY24 FY25E FY26E FY27E
Revenues ($mn) YY growth (RHS)

Source: Company Source: Company, J.P. Morgan estimates

Figure 5: Indegene enjoys high EBIT margins vs. mid-cap peers (FY24) Figure 6: Indegene also has high revenue per employee vs. peers
(FY24, US$)
30.0% 26.7% 70,000
25.0% 60,000
50,000
20.0% 17.1% 16.6% 16.3% 16.3% 16.0% 15.7% 15.1% 14.4%
12.9% 40,000
15.0%
30,000
10.0%
20,000
5.0% 10,000
0.0% -

Source: Company data. Source: Company data.

4
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Figure 7: Indegene’s EBIT margins vs. BPO peers (FY24) Figure 8: Indegene’s rev per employee (FY24, $) vs. BPO peers
30.0% 70,000
23.9% 60,000
25.0%
50,000
20.0%
16.6%
14.6% 40,000
15.0%
11.0% 30,000
10.0%
20,000
5.0% 10,000
0.0% -
eClerx Indegene EXL Services Firstsource Indegene EXL Services Firstsource eClerx

Source: Company data. Source: Company data.

Figure 9: We expect EBIT margins to increase from 16.6% in FY24 to Figure 10: High client concentration - top clients as % of revenues
17% by FY26E
25.0% 90% 84%
80%
20.0% 66%
70%
15.0% 60%
50% 46%
10.0%
40%
5.0% 30%
20% 13%
0.0%
FY21 FY22 FY23 FY24 FY25E FY26E FY27E 10%
Ebit margins 0%
Top Client Top 5 clients Top 10 clients Top 20 clients

Source: Company, J.P. Morgan estimates Source: Company

Figure 11: Revenue growth vs. P/E for Indegene vs. BPO peers - Figure 12: Revenue growth vs. P/E for Indegene vs. mid-cap IT peers -
Indegene traded at a premium Indegene trades at the upper end
35 50
45 Persistent
30 Indegene Firstsource 40
25 35 LTIMindtree
eClerx 30 Indegene Coforge
FY26 PE
FY26 PE

20
EXL Services 25 Mphasis Zensar
15 WNS 20 Birlasoft
10 15
Genpact 10
5 5
0 0
5% 7% 9% 11% 13% 15% 17% 8% 10% 12% 14% 16% 18% 20%
FY24-26E Revenue Cagr FY24-26E Revenue Cagr

Source: Bloomberg Finance L.P. Source: Bloomberg Finance L.P.

Investment Strengths
Play on the under-penetrated life sciences outsourcing
market.
Outsourcing penetration in the life sciences operations market is ~20%, which provides
opportunities for players such as INDGN to scale their business by increasing their
wallet share of the incremental outsourced spends of the clients. Life sciences has been
a laggard at adopting technology and digital transformation compared to other
industries. The Covid-19 pandemic accelerated the tech adoption over the last four
years, which benefits INDGN’s addressable market for technology operations
(TechOps) services.

5
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Life sciences operations spends are expected to see a 7% CAGR over CY22-26 while
outsourcing spends are expected to grow at a high-single-digit/low-double-digit CAGR
during the same period, as per Everest Group (in the company prospectus). We believe
INDGN can grow faster by winning client wallet share and achieve mid-teens revenue
growth over the medium term.

Figure 13: Life sciences operations spend expected to grow at 7% CAGR over CY22-26

Life Sciences Operations Spend ($bn)

210 201
189
190 176
167
170 156
146
150 137
Maket Size ($bn)

130

110

90

70

50

30
CY20 CY21 CY22 CY23P CY24P CY25P CY26P

Source: Company data, Everest Group (2024) via company prospectus.

Note: P = projected number.

Marketing and sales comprise the biggest chunk of the operations (ops) spends for Big
Pharma companies at 35% followed by drug discovery and clinical trials (23%),
regulatory and medical affairs (16%) and Pharmacovigilance (13%) as highlighted in
Figure 2. INDGN’s largest segment is enterprise commercial solutions (59% of revenues
in FY24) which includes sales and marketing activities, followed by enterprise medical
solutions (23%) which includes regulatory and medical affairs.

Figure 14: Life sciences operations spend: Split by value chain segment
Life sciences operations spend: split by value chain segment (CY22,$bn)
156 55

~35% 36

~23% 24

~16% 21
~13% 21
~13%
Life Sciences Marketing Drug discovery Regulatory & Pharmacovigilance/ Manufacturing,
operations market size & sales & clinical trials medical affairs complaints supply chain
management & distribution

Source: Company reports, Everest Group (2024) via company prospectus.

Outsourcing penetration is the lowest in marketing and sales at 7-12%, which is the
biggest segment for INDGN. Hence, we see tailwinds for INDGN to benefit from this
low outsourcing ratio, and as this inches up towards 20%, it can drive sustained long-
term growth for INDGN.

6
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Figure 15: Outsourcing penetration and future potential

Source: Company data, Everest Group (2024) via company prospectus.

Deep domain expertise that provides differentiation

INDGN is a digital-first commercialization company that focusses exclusively on the
global life sciences industry. It leverages its two decades’ long healthcare domain
expertise, to provide services to its biopharma, medical device and biotech clients.
INDGN’s workforce is a combination of resources that have pharma experience
(BPharm and Mpharm) and also technical engineers. Hence, we believe the company is
better placed than traditional diversified IT and BPO service providers as it has stronger
appreciation for the nuances of the pharma industry as a pure-play firm that clear senior
management focus that drives differentiated service experience and helps gain market
share.

The pharma domain knowledge is particularly important in regulatory and medical

affairs that involves working on medical content, medical communication review, and
regulatory submissions.

7
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Figure 16: Indegene provides services across the commercialization value chain of Lifescience
clients

Source: Company data.

INDGN’s breadth of services is the highest amongst its life sciences specialist peers,
which gives it an edge in terms of winning client wallet share as it can provide the
whole gamut of services vs. peers.

Figure 17: Competitive landscape in the industry

Source: Company reports.

8
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Figure 18: Indegene’s breadth of services is higher than that of its life sciences specialist peers

Source: Company reports.

Strong relationships and execution with large pharmaceutical

companies.
INDGN has built client relationships with 19 of the 20 largest biopharmaceutical
companies globally. Hence, the focus is on mining these accounts and scale them rather
than hunting new accounts. The go-to-market strategy is focused on cross-selling and
up-selling its services to the existing clients as well as penetrating the clients’ various
different geographical business units. As an example, INDGN might be working with a
large biopharma client only on enterprise commercial solutions in the US and hence the
focus will be on cross-selling enterprise medical solutions and omni-channel activation
solutions to the same client, not only in the US but also in the client’s EU and APAC
business units.

INDGN successfully scaled up its top 10 clients over FY21-23 driven by its “land and
expand” strategy. It starts projects with its clients across different stages of the
commercialization process and subsequently up-sells and cross-sells a range of
solutions. Its wide range of service offerings covers multiple functions that help offer its
services to different business units across upstream and downstream client
organizations.

9
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Figure 19: Indegene has successfully scaled up its top 10 clients... Figure 20: ...over the last four years
Revenue growth from top 10 clients (Rs mn) Revenue growth from top 10 clients (Rs mn)
3,000 2,803 3000
2,605 2,622 2678
2,553 FY21 FY22 FY23 9MFY23 9MFY24
2,500 2,267 2500 2186
2,036 2086
1,861 1838 1840 1917
2,000 1,658 2000
1,595 1534
1,494 1,348 1300
1,500 1500
993 1,073 1073
859 957 939 879
1,000 837 767 1000 685 717
686
455 515 490564 533
500 274 403 488 354
310 255 212 500 293
317 97 134
58 28 39
- 0
Client 1 Client 2 Client 3 Client 4 Client 5 Client 6 Client 7 Client 8 Client 9 Client 10 Client 1 Client 2 Client 3 Client 4 Client 5 Client 6 Client 7 Client 8 Client 9 Client 10

Source: Company reports. Source: Company reports.

Figure 21: Growth in revenue of Indegene’s 3 largest clients (Rs mn)

Source: Company reports. (2) Represents the compound annual growth rate for the relevant data between the Financial Years 2018 and
2023

Revenue growth should accelerate from FY26 onwards

Revenue grew at a CAGR of 47% over FY20-23, led by higher adoption of digital
technologies, higher volume of new engagements, the expansion of its solutions into
new geographies, channels and functions of existing clients, and an overall increase in
the volume of projects executed. FY24 however saw growth slow down to single digits
due to patent cliff and issues in a couple of its top accounts that has continued partly in
FY25 as well. One of the top five clients has undergone restructuring of processes that
has delayed the deal ramp-ups for INDGN and it expects this to get resolved in
2HFY25. While another of its top five clients had some challenges that began in CY23
that persists in CY24. INDGN expects this to get resolved towards the end of CY24.

The top client continues to grow, and with the expected resolution of issues at the other
two clients, we believe INDGN can return to low-teens growth over FY26-27E.

10
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Figure 22: Revenue growth to accelerate from FY26

450 80%
400 70%
350 60%
300 50%
250
40%
200
150 30%
100 20%
50 10%
0 0%
FY21 FY22 FY23 FY24 FY25E FY26E FY27E
Revenues ($mn) YY growth (RHS)

Source: Company reports, J.P. Morgan estimates.

Figure 23: Indegene organic revenue growth vs. Healthcare vertical Figure 24: ...and in FY24
revenue growth of IT peers - (FY20-24 CAGR)...
35% 25%
30% 20%
25%
15%
20%
10%
15%
5%
10%

5% 0%

0% -5%
Indegene Persistent HCLT TCS Infosys Wipro Cognizant Persistent Infosys Wipro TCS HCLT Indegene Cognizant

Source: Company Source: Company

Structurally high EBIT margins thanks to high offshore mix

and higher revenue per employee
INDGN enjoys one of the highest EBIT margins within the midcap tech services sector
thanks to high offshore effort mix (~86%). We believe margins have some potential to
expand from here on driven by operating leverage benefits. We believe that, given the
focus on client mining as compared to client hunting, the sales and marketing expenses
can be kept under control. We forecast margins to increase from 16.6% in FY24 to 17%
by FY26E.

INDGN also enjoys high revenue per employee vs. mid-cap peers despite being highly
offshore-centric in terms of delivery and having an ops-heavy service portfolio. This
showcases the high quality work INDGN provides to its clients.

11
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Figure 25: Indegene enjoys high EBIT margins vs. mid-cap peers Figure 26: Indegene also has high revenue per employee vs. peers
(FY24) (FY24, US$)
30.0% 26.7% 70,000
25.0% 60,000
50,000
20.0% 17.1% 16.6% 16.3% 16.3% 16.0% 15.7% 15.1% 14.4%
12.9% 40,000
15.0%
30,000
10.0%
20,000
5.0% 10,000
0.0% -

Source: Company data. Source: Company data.

Figure 27: Indegene’s EBIT margins vs. BPO peers (FY24) Figure 28: Indegene’s rev per employee (FY24, $) vs. BPO peers
30.0% 70,000
23.9% 60,000
25.0%
50,000
20.0%
16.6%
14.6% 40,000
15.0%
11.0% 30,000
10.0%
20,000
5.0% 10,000
0.0% -
eClerx Indegene EXL Services Firstsource Indegene EXL Services Firstsource eClerx

Source: Company data. Source: Company data.

Figure 29: We expect EBIT margins to increase from 16.6% in FY24 to 17% by FY26E
25.0%

20.0%

15.0%

10.0%

5.0%

0.0%
FY21 FY22 FY23 FY24 FY25E FY26E FY27E
Ebit margins

Source: Company data, J.P. Morgan estimates.

Valuations
INDGN trades at a premium to most TechOps firms and at the upper end of Indian
midcap tech services peers.

12
Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Figure 30: Revenue growth vs. P/E for Indegene vs. BPO peers - Figure 31: Revenue growth vs. P/E for Indegene vs. mid-cap IT peers -
Indegene trades at a premium Indegene trades at the upper end
35 50
45 Persistent
30 Indegene Firstsource 40
25 35 LTIMindtree
eClerx 30 Indegene Coforge

FY26 PE
FY26 PE

20
EXL Services 25 Mphasis Zensar
15 WNS 20 Birlasoft
10 15
Genpact 10
5 5
0 0
5% 7% 9% 11% 13% 15% 17% 8% 10% 12% 14% 16% 18% 20%
FY24-26E Revenue Cagr FY24-26E Revenue Cagr

Source: Bloomberg Finance L.P. Source: Bloomberg Finance L.P.

Table 1: Mid-cap IT and BPO relative valuation matrix

FY24-26E PEG P/E EV/EBITDA EV/Sales

Div Yield (FY25E) EBITDA CAGR Sales CAGR EPS CAGR Earnings Revenues FY25E FY26E FY25E FY26E FY25E FY26E
BPO peers
Firstsource 1.6% 18.9% 15.2% 23.0% 1.6 2.4 35.9 28.3 20.8 17.6 3.2 2.8
eClerx 0.8% 7.4% 12.4% 9.9% 2.5 2.0 24.9 20.9 15.4 13.0 3.7 3.2
Genpact 1.5% 7.1% 5.7% 8.0% 1.5 2.2 12.4 11.6 9.5 8.7 1.7 1.6
WNS 0.0% 1.0% 5.8% 6.8% 2.0 2.3 13.2 12.1 9.3 8.5 2.2 2.0
EXL Services 0.0% 12.6% 11.9% 14.6% 1.5 1.9 22.1 19.2 14.9 13.2 3.2 2.9
Median 0.8% 7.4% 11.9% 9.9% 1.6 2.2 22.1 19.2 14.9 13.0 3.2 2.8
Mean 0.8% 9.4% 10.2% 12.5% 1.8 2.1 21.7 18.4 14.0 12.2 2.8 2.5
India midcap peers
LTIMindtree 1.2% 11.8% 9.3% 12.7% 2.7 3.7 34.1 28.6 23.4 20.0 4.3 3.8
Mphasis 1.9% 11.3% 9.4% 12.9% 2.6 3.6 34.0 29.2 21.8 19.1 4.0 3.6
Coforge 1.4% 19.4% 17.6% 18.7% 2.1 2.2 39.0 30.4 21.3 17.4 3.5 3.0
Zensar 1.3% 5.1% 10.2% 9.3% 2.9 2.7 27.0 23.5 19.8 17.2 3.1 2.8
Birlasoft 1.4% 11.5% 10.3% 15.4% 1.6 2.4 24.8 20.7 17.5 14.7 2.7 2.4
Persistent 0.8% 19.1% 17.3% 22.3% 2.5 3.3 56.9 45.4 38.4 30.9 6.6 5.6
L&T Technology Services 1.0% 10.2% 11.3% 11.3% 3.8 3.8 42.8 36.0 27.7 23.6 5.2 4.6
Tata Elxsi 1.3% 13.2% 13.5% 12.5% 4.1 3.8 51.2 43.2 37.0 31.5 10.7 9.2
Cyient 1.8% 7.9% 9.3% 12.0% 2.4 3.1 29.1 23.6 17.1 14.4 2.9 2.5
Tata Technologies 1.1% 13.9% 11.8% 13.6% 4.0 4.6 54.6 45.5 38.9 32.6 7.3 6.3
KPIT Tech 0.5% 25.1% 21.8% 29.3% 2.2 2.9 63.8 50.5 40.3 32.2 8.4 6.9
Happiest Minds 1.3% 29.9% 27.7% 22.1% 1.9 1.5 42.6 33.8 23.5 18.3 4.8 4.0
Median 1.3% 12.5% 11.6% 13.3% 2.6 3.2 40.8 32.1 23.5 19.6 4.5 3.9
Mean 1.2% 14.9% 14.1% 16.0% 2.7 3.1 41.7 34.2 27.2 22.7 5.3 4.6

Source: Bloomberg Finance L.P.

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Investment Risks
High Client Concentration
INDGN’s client concentration is high with top 5/10/20 clients contributing
46%/66%/84% revenues in FY24. However, this is the nature of the life sciences
industry given limited number of players and, hence, if any of the top clients undergo
any issues then it can impact INDGN significantly, as seen in FY24/25 where 2 of its
top 5 clients are under distress which has led to a sharp slowdown in INDGN’s growth.

Figure 32: Indegene’s Top clients as a % of revenues

90% 84%
80%
66%
70%
60%
50% 46%

40%
30%
20% 13%
10%
0%
Top Client Top 5 clients Top 10 clients Top 20 clients
Source: Company reports.

Single vertical exposure means there is no hedge

INDGN caters to only the life sciences industry and hence is a single-vertical-focused
company unlike peers that are much more diversified. Hence, any slowdown in the life
sciences industry due to patent cliff or inflation reduction act can impact INDGN
negatively and it won’t be able to offset those headwinds with growth in other verticals
like peers.

Highly regulated industry increases litigation and insourcing

risk.
INDGN operates in highly regulated industries across pharmaceuticals, biotech and
medical devices. It has to fulfill the regulatory requirements governing the promotion,
sales and marketing of life sciences products and expose it to greater litigation risk. Its
business involves the processing, storage and transmission of data that are confidential
and, hence, is subject to laws related to its use and utilization. This also increases the
risk of insourcing by clients that can negatively impact its business performance. Clients
might decide to insource functions due to regulatory reasons or to data confidentiality.

Risk of TAM compression and service obsolescence from

rapid GenAI adoption
The rapid adoption, rising accuracy and evolution of large language models threatens to
reduce the effort required for some of the Operations work Indegene takes from its
clients. This can lead clients to potentially reduce the budget for such operations spend
restricting INDGN’s TAM. Over time, rapid evolution of LLMs may also make some of
its service offerings obsolete. INDGN is working to add GenAI-based tech into its
workflow to make its processes efficient.

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Company Overview
Indegene (INDGN) is a digital-first technology ops company that works with the global
life sciences industry to commercialise their products and manage the drug delivery
lifecycle It provides solutions to biopharmaceutical, emerging biotech and medical
devices companies that help in developing products and getting them to market, while
also improving their impact over the product life cycle in a more effective and efficient
way. INDGN leverages its over two decades of healthcare domain expertise that, along
with its agile operating model, provides a range of solutions across the commercial,
medical, regulatory and R&D operations of life sciences companies.

Founded in October 1998, INDGN expanded its operations to the U.S. and Southeast
Asia in 2005, Europe in 2007, China in 2012, Japan in 2021 and Mexico in 2022.

Its solutions span different stages of the commercialization lifecycle of drugs and
medical devices. Its enterprise commercial solutions and omnichannel activation
solutions cater to the commercial functions of life sciences companies, while its
enterprise medical solutions and other solutions cater to its medical and R&D functions.

Management Team
Manish Gupta is the Founder, Chairman, Executive Director and the Chief Executive
Officer of INDGN. He founded INDGN after working in Infosys at the start of his
career. He holds a Bachelor of Technology degree in mechanical engineering from the
Indian Institute of Technology (Banaras Hindu University), Varanasi, and a post-
graduate diploma in management from the Indian Institute of Management, Ahmedabad.
He has 22 years of experience in the technology-led healthcare solutions provider
industry.

Dr. Sanjay Suresh Parikh is an Executive Director and Executive Vice President of
INDGN. He holds a Bachelor of Technology degree in electrical engineering from the
Indian Institute of Technology, Bombay, and a Master of Science degree (clinical
engineering) from the Case Western Reserve University, Ohio, USA. He also holds a
doctorate in philosophy from the Johns Hopkins University. He has 30 years of
experience, including in the pharmaceuticals industry and the technology-led healthcare
solutions provider sector.

Anand Kiran Prafula Chandra Nijegal has been Executive Vice President – Global
Operations of INDGN since 1 October 2010. He holds a Bachelor of Pharmacy degree
and a Master of Pharmacy degree, both from Birla Institute of Technology, Mesra,
Ranchi, India. He has 22 years of experience in the technology-led healthcare solutions
provider sector.

Gaurav Kapoor has been Executive Vice President of INDGN’s material subsidiary,
Indegene, Inc., since 21 August 2017. He holds a bachelor’s degree in pharmacy from
Bangalore University. He has 22 years of experience in the technology-led healthcare
solutions provider sector.

Suhas Prabhu is the Chief Financial Officer of INDGN. He holds a Bachelor of

Commerce degree from Mangalore University. He is a member of the Institute of

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Chartered Accountants of India. He has 20 years of experience in finance. Prior to

joining INDGN, he was associated with Sasken Communication Technologies Limited.

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Summary Financials

Table 2: Income statement

Rsmn FY22 FY23 FY24 FY25E FY26E FY27E
Revenues ($mn) 223.8 287.5 312.8 338.0 375.2 420.2
Growth (USD) 71.4% 28.4% 8.8% 8.1% 11.0% 12.0%
No. of employees 4,825 5,431 5,081 5,490 6,094 6,825
Revenue per employee ($) 46,385 52,928 61,563 61,563 61,563 61,563
Revenues 16,646 23,061 25,896 28,301 31,514 35,295
Growth YY 72.3% 38.5% 12.3% 9.3% 11.4% 12.0%
Employee benefit expenses 10,143 14,648 16,516 18,583 20,484 22,942
As a % of revenue 61% 64% 64% 66% 65% 65%
Other expenses 3,633 4,452 4,326 4,322 4,727 5,294
As a % of revenue 22% 19% 17% 15% 15% 15%
EBITDA 2,869 3,962 5,054 5,397 6,303 7,059
EBITDA margins 17.2% 17.2% 19.5% 19.1% 20.0% 20.0%
Depreciation and amortization expense 335 598 761 841 866 892
As a % of revenue 2.0% 2.6% 2.9% 3.0% 3.0% 3.0%
EBIT 2,535 3,364 4,293 4,556 5,437 6,167
EBIT margins 15.2% 14.6% 16.6% 16.1% 17.3% 17.5%
Other income 259 580 763 669 852 993
Finance costs 60 313 494 182 95 106
Profit before exceptional items and tax 2,734 3,630 4,562 5,043 6,194 7,054
Exceptional items (469) - 24 - - -
Profit before tax from continuing operations 2,265 3,630 4,586 5,043 6,194 7,054
Total tax expenses 637 969 1,219 1,300 1,579 1,799
Restated profit from continuing operations after tax 1,628 2,661 3,367 3,743 4,614 5,255
EPS - Continuing operations (Rs)
Basic 7.50 12.03 15.19 15.66 19.31 21.99
Diluted 7.46 11.97 15.07 15.66 19.31 21.99

Source: Company data, J.P. Morgan estimates.

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Table 3: Balance Sheet

Rsmn FY22 FY23 FY24 FY25E FY26E FY27E
Property, plant and equipment 337 406 340 340 340 (446)
Right-of-use assets 462 1,050 804 804 804 804
Goodwill 409 3,261 3,330 3,330 3,330 3,330
Other intangible assets 169 1,924 1,984 1,228 456 456
Loan 0 135 135 135 135
Other financial assets 120 98 107 107 107 107
Deferred tax assets (net) 692 671 708 708 708 708
Non-current tax assets (net) 44 43 45 45 45 45
ther non-current assets 1 99 95 95 95 95
Total non-current assets 2,234 7,552 7,548 6,792 6,020 5,234
Investments 1,199 6,140 7,965 7,965 7,965 7,965
Trade receivables 4,439 6,420 6,480 6,978 7,771 8,703
Cash and cash equivalents 5,063 736 1,886 9,438 14,163 19,428
Other bank balances 110 122 24 24 24 24
Other financial assets 82 398 553 553 553 553
Other current assets 407 671 1,000 1,000 1,000 1,000
Total current assets 11,300 14,487 17,908 25,958 31,476 37,673
Total assets 13,535 22,039 25,456 32,750 37,496 42,907

Equity share capital 4 443 444 478 478 478

Other equity 7,635 10,194 13,847 25,156 29,771 35,026
Total Equity 7,639 10,637 14,291 25,634 30,248 35,504
Borrowings 109 3,943 3,334 - - -
Lease liabilities 329 852 652 652 652 652
Other financial liabilities 788 1,365 638 638 638 638
Provisions 265 350 432 432 432 432
Total non-current liabilities 1,491 6,510 5,056 1,722 1,722 1,722
Borrowings 73 - 697 - - -
Lease liabilities 146 230 213 213 213 213
Trade payables 742 733 1,181 1,163 1,295 1,450
Other financial liabilities 772 1,830 1,502 1,502 1,502 1,502
Other current liabilities 2,065 1,483 1,710 1,710 1,710 1,710
Provisions 354 495 678 678 678 678
Current tax liabilities (net) 253 120 128 128 128 128
Total current liabilities 4,404 4,891 6,109 5,394 5,526 5,681
Total liabilities 5,896 11,401 11,165 7,116 7,248 7,403
Total equity and liabilities 13,535 22,039 25,456 32,750 37,496 42,907

Source: Company data, J.P. Morgan estimates.

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Table 4: Cash flow statement

Rsmn FY22 FY23 FY24 FY25E FY26E FY27E
Profit before tax for the period/year 2,265 3,630 4,586 5,043 6,194 7,054
Depreciation and amortization expense 335 598 761 841 866 892
Finance costs 47 233 471 182 95 106
Exceptional items 469 - -
Interest income (8) (103) (296) (669) (852) (993)
Net gain on disposal / fair valuation of investments (50) (69) (165)
Liability no longer required reversed (60)
Fair value movement of contingent consideration (935)
Impairment of goodwill 911
Bad debts written off 5 -
Expected credit loss on trade receivables 22 (2) (54)
Employee stock option plan expense 75 158 213
Effect of exchange differences on restatement of monetary assets and liabilities (23) 99 (64)
Operating profit before working capital changes 3,136 4,544 5,368 5,397 6,303 7,059
(Increase)/ decrease in trade receivables (1,517) (1,153) 312 (498) (792) (932)
(Increase)/ decrease in loans and advances and other assets (153) (593) (301) - - -
Increase/ (decrease) in liabilities and provisons 2,208 (414) 947 (18) 132 155
Cash generated from operating activities 3,674 2,385 6,326 4,881 5,643 6,282
Income tax paid (net) (703) (1,082) (1,249) (1,300) (1,579) (1,799)
Net cash (used in)/ generated from operating activities 2,970 1,302 5,077 3,581 4,063 4,483
Purchase of property, plant and equipment (247) (188) (107) (85) (95) (106)
Interest received 3 66 261 669 852 993
Payment for acquisition of business, net of cash acquired (164) (3,925) (1,721) - - -
Payment towards investment in associate - - - - -
Purchase of Investments accounted for using the FVTPL (3,747) (4,874) (16,914) - - -
Redemption of Investments 2,598 - 15,246 - - -
Investment in convertible loans - (135) - - -
Investment in fixed deposit, net (110) (122) - - - -
Redemption / maturity of fixed deposit 65 110 98 - - -
Net cash (used in) investing activities (1,602) (8,933) (3,272) 584 757 887
Proceeds from issue of shares 2,629 0 - 7,600 - -
Purchase of treasury shares (10) - - - -
Transaction cost on issue of shares (25) - - -
Interest and financial charges paid (27) (176) (316)
Payment of lease liability (167) (254) (279) (182) (95) (106)
Proceeds from loans 446 3,943 - - - -
Repayment of loans (511) (182) (67) (4,031) - -
Net cash (used in)/generated from financing activities 2,335 3,331 (662) 3,387 (95) (106)
Net (decrease)/increase in cash and cash equivalents (A+B+C) 3,703 (4,300) 1,143 7,552 4,726 5,265
Cash and cash equivalents at the beginning of the year 1,334 5,063 736 1,886 9,438 14,163
Effect of exchange differences on translation of foreign currency cash 26 (27) 7 - - -
Cash and cash equivalents at the end of the period/year 5,063 736 1,886 9,438 14,163 19,428

Source: Company data, J.P. Morgan estimates.

Table 5: Return ratios

Financial Ratios FY22 FY23 FY24 FY25E FY26E FY27E
ROE 30% 29% 27% 19% 17% 16%
ROCE 35% 26% 23% 18% 17% 16%
ROIC 100% 55% 39% 41% 50% 57%

Source: Company data, J.P. Morgan estimates.

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Table 6: JPMe vs. consensus

FY25E FY26E FY27E
Rsmn JPMe Consensus % diff JPMe Consensus % diff JPMe Consensus % diff
Revenues 28,301 28,406 0% 31,514 32,026 -2% 35,295 35,867 -2%
Ebitda 5,397 5,509 -2% 6,303 6,178 2% 7,059 6,897 2%
Ebitda margins 19.1% 19.4% (32) 20.0% 19.3% 71 20.0% 19.2% 77
Ebit 4,556 4,659 -2% 5,437 5,243 4% 6,167 5,857 5%
Ebit margins 16.1% 16.4% (30) 17.3% 16.4% 88 17.5% 16.3% 114
Net profit 3,743 4,023 -7% 4,614 4,565 1% 5,255 5,087 3%
EPS (Rs) 15.7 16.9 -7% 19.3 19.1 1% 22.0 21.3 3%

Source: Bloomberg Finance L.P., J.P. Morgan estimates.

Table 7: Mid-cap IT and BPO relative valuation matrix

FY24-26E PEG P/E EV/EBITDA EV/Sales

Div Yield (FY25E) EBITDA CAGR Sales CAGR EPS CAGR Earnings Revenues FY25E FY26E FY25E FY26E FY25E FY26E
BPO peers
Firstsource 1.6% 18.9% 15.2% 23.0% 1.6 2.4 35.9 28.3 20.8 17.6 3.2 2.8
eClerx 0.8% 7.4% 12.4% 9.9% 2.5 2.0 24.9 20.9 15.4 13.0 3.7 3.2
Genpact 1.5% 7.1% 5.7% 8.0% 1.5 2.2 12.4 11.6 9.5 8.7 1.7 1.6
WNS 0.0% 1.0% 5.8% 6.8% 2.0 2.3 13.2 12.1 9.3 8.5 2.2 2.0
EXL Services 0.0% 12.6% 11.9% 14.6% 1.5 1.9 22.1 19.2 14.9 13.2 3.2 2.9
Median 0.8% 7.4% 11.9% 9.9% 1.6 2.2 22.1 19.2 14.9 13.0 3.2 2.8
Mean 0.8% 9.4% 10.2% 12.5% 1.8 2.1 21.7 18.4 14.0 12.2 2.8 2.5
India midcap peers
LTIMindtree 1.2% 11.8% 9.3% 12.7% 2.7 3.7 34.1 28.6 23.4 20.0 4.3 3.8
Mphasis 1.9% 11.3% 9.4% 12.9% 2.6 3.6 34.0 29.2 21.8 19.1 4.0 3.6
Coforge 1.4% 19.4% 17.6% 18.7% 2.1 2.2 39.0 30.4 21.3 17.4 3.5 3.0
Zensar 1.3% 5.1% 10.2% 9.3% 2.9 2.7 27.0 23.5 19.8 17.2 3.1 2.8
Birlasoft 1.4% 11.5% 10.3% 15.4% 1.6 2.4 24.8 20.7 17.5 14.7 2.7 2.4
Persistent 0.8% 19.1% 17.3% 22.3% 2.5 3.3 56.9 45.4 38.4 30.9 6.6 5.6
L&T Technology Services 1.0% 10.2% 11.3% 11.3% 3.8 3.8 42.8 36.0 27.7 23.6 5.2 4.6
Tata Elxsi 1.3% 13.2% 13.5% 12.5% 4.1 3.8 51.2 43.2 37.0 31.5 10.7 9.2
Cyient 1.8% 7.9% 9.3% 12.0% 2.4 3.1 29.1 23.6 17.1 14.4 2.9 2.5
Tata Technologies 1.1% 13.9% 11.8% 13.6% 4.0 4.6 54.6 45.5 38.9 32.6 7.3 6.3
KPIT Tech 0.5% 25.1% 21.8% 29.3% 2.2 2.9 63.8 50.5 40.3 32.2 8.4 6.9
Happiest Minds 1.3% 29.9% 27.7% 22.1% 1.9 1.5 42.6 33.8 23.5 18.3 4.8 4.0
Median 1.3% 12.5% 11.6% 13.3% 2.6 3.2 40.8 32.1 23.5 19.6 4.5 3.9
Mean 1.2% 14.9% 14.1% 16.0% 2.7 3.1 41.7 34.2 27.2 22.7 5.3 4.6

Source: Bloomberg Finance L.P.

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Investment Thesis, Valuation and Risks

Indegene (Neutral; Price Target: Rs570.00)
Investment Thesis
We initiate coverage on Indegene with a Neutral rating as we believe the growth recovery
expectations from FY26 is baked into the current stock price. The stock is up 30% since the
IPO price and bakes in all positives and we don’t see a clear positive catalyst that can drive
the stock further up from here on, in our view. We like the structural growth story of
Indegene given its exposure to the under-penetrated life sciences outsourcing market,
however, in the near term, it faces client-specific issues that we believe will keep FY25
growth limited to high-single-digit level. The key risk we see is high client concentration
and single vertical exposure that can significantly impact Indegene if any of its top clients
come under duress.
Valuation
Our Sep’25 PT of Rs570 is based on a 27x target P/E multiple. This is higher than 25x we
use for MPHL but lower than 35x/42x we use for Coforge/PSYS and is justified by the
revenue growth differential as we expect Indegene to clock revenue CAGR of 10% over
FY24-26E vs. MPHL/Coforge/PSYS at 8%/12%/18%.
Risks to Rating and Price Target
Upside risks include: 1) faster-than-expected recovery in 2 of its top 5 clients that can drive
FY25 revenue growth to double digits, 2) faster-than-expected margin expansion from
higher revenue growth, 3) successful scaling of clients beyond top 5 that can help reduce
client concentration, 4) Strong drug launch pipeline across its top 5/10 client base.

Downside risks include: 1) slower-than-expected recovery or prolonged issues in 2 of its top

5 clients that can drive down FY25 revenue growth to mid single digits, 2) slower-than-
expected margins expansion or no expansion at all due to slower revenue growth, 3) any of
its top 5/10 clients going under duress that can impact Indegene significantly due to high
client concentration, 4) regulatory headwinds in US healthcare that can drive more
insourcing of work.

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Indegene: Summary of Financials

Income Statement FY23A FY24A FY25E FY26E FY27E Cash Flow Statement FY23A FY24A FY25E FY26E FY27E
Revenue 23,061 25,896 28,301 31,514 35,295 Cash flow from operating activities 1,302 5,077 3,581 4,063 4,483
COGS - - - - - o/w Depreciation & amortization 598 761 841 866 892
Gross profit - - - - - o/w Changes in working capital (2,160) 958 (516) (660) (777)
SG&A (14,648) (16,516) (18,583) (20,484) (22,942)
Adj. EBITDA 3,962 5,054 5,397 6,303 7,059 Cash flow from investing activities (8,933) (3,272) 584 757 887
D&A (598) (761) (841) (866) (892) o/w Capital expenditure (188) (107) (85) (95) (106)
Adj. EBIT 3,364 4,293 4,556 5,437 6,167 as % of sales 0.8% 0.4% 0.3% 0.3% 0.3%
Net Interest (313) (494) (182) (95) (106)
Adj. PBT 3,630 4,586 5,043 6,194 7,054 Cash flow from financing activities 3,331 (662) 3,387 (95) (106)
Tax (969) (1,219) (1,300) (1,579) (1,799) o/w Dividends paid - - - - -
Minority Interest 0 0 0 0 0 o/w Shares issued/(repurchased) 0 0 7,600 0 0
Adj. Net Income 2,661 3,367 3,743 4,614 5,255 o/w Net debt issued/(repaid) 3,761 (67) (4,031) 0 0
Reported EPS 11.97 15.07 15.66 19.31 21.99 Net change in cash (4,327) 1,150 7,552 4,726 5,265
Adj. EPS 11.97 15.07 15.66 19.31 21.99
Adj. Free cash flow to firm 1,343 5,333 3,631 4,039 4,456
DPS - - - - - y/y Growth (51.4%) 296.9% (31.9%) 11.3% 10.3%
Payout ratio - - - - -
Shares outstanding 222 223 239 239 239
Balance Sheet FY23A FY24A FY25E FY26E FY27E Ratio Analysis FY23A FY24A FY25E FY26E FY27E
Cash and cash equivalents 736 1,886 9,438 14,163 19,428 Gross margin - - - - -
Accounts receivable 6,420 6,480 6,978 7,771 8,703 EBITDA margin 17.2% 19.5% 19.1% 20.0% 20.0%
Inventories - - - - - EBIT margin 14.6% 16.6% 16.1% 17.3% 17.5%
Other current assets 7,331 9,542 9,542 9,542 9,542 Net profit margin 11.5% 13.0% 13.2% 14.6% 14.9%
Current assets 14,487 17,908 25,958 31,476 37,673
PP&E 1,456 1,144 1,144 1,144 358 ROE 29.1% 27.0% 18.8% 16.5% 16.0%
LT investments 0 0 0 0 0 ROA 15.0% 14.2% 12.9% 13.1% 13.1%
Other non current assets 6,095 6,404 5,648 4,876 4,876 ROCE 22.0% 19.2% 15.4% 14.5% 14.0%
Total assets 22,039 25,456 32,750 37,496 42,907 SG&A/Sales 63.5% 63.8% 65.7% 65.0% 65.0%
Net debt/Equity 0.3 0.2 NM NM NM
Short term borrowings 0 697 0 0 0 Net debt/EBITDA 0.8 0.4 NM NM NM
Payables 733 1,181 1,163 1,295 1,450
Other short term liabilities 4,159 4,231 4,231 4,231 4,231 Sales/Assets (x) 1.3 1.1 1.0 0.9 0.9
Current liabilities 4,891 6,109 5,394 5,526 5,681 Assets/Equity (x) 1.9 1.9 1.5 1.3 1.2
Long-term debt 3,943 3,334 0 0 0 Interest cover (x) 12.6 10.2 29.7 66.7 66.7
Other long term liabilities 2,567 1,722 1,722 1,722 1,722 Operating leverage 84.9% 224.6% 66.0% 170.2% 111.9%
Total liabilities 11,401 11,165 7,116 7,248 7,403 Tax rate 26.7% 26.6% 25.8% 25.5% 25.5%
Shareholders' equity 10,637 14,291 25,634 30,248 35,504 Revenue y/y Growth 38.5% 12.3% 9.3% 11.4% 12.0%
Minority interests 0 0 0 0 0 EBITDA y/y Growth 38.1% 27.6% 6.8% 16.8% 12.0%
Total liabilities & equity 22,039 25,456 32,750 37,496 42,907 EPS y/y Growth 60.3% 25.9% 3.9% 23.3% 13.9%
Valuation FY23A FY24A FY25E FY26E FY27E
BVPS - - - - -
P/E (x) 47.1 37.4 36.0 29.2 25.6
y/y Growth - - - - -
P/BV (x) - - - - -
EV/EBITDA (x) 34.8 27.1 23.2 19.1 16.3
Net debt/(cash) 3,207 2,145 (9,438) (14,163) (19,428)
Dividend Yield - - - - -
Source: Company reports and J.P. Morgan estimates.
Note: Rs in millions (except per-share data).Fiscal year ends Mar. o/w - out of which

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Analyst Certification: The Research Analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple Research Analysts
are primarily responsible for this report, the Research Analyst denoted by an “AC” on the cover or within the document individually certifies,
with respect to each security or issuer that the Research Analyst covers in this research) that: (1) all of the views expressed in this report
accurately reflect the Research Analyst’s personal views about any and all of the subject securities or issuers; and (2) no part of any of the
Research Analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the
Research Analyst(s) in this report. For all Korea-based Research Analysts listed on the front cover, if applicable, they also certify, as per KOFIA
requirements, that the Research Analyst’s analysis was made in good faith and that the views reflect the Research Analyst’s own opinion,
without undue influence or intervention.
All authors named within this report are Research Analysts who produce independent research unless otherwise specified. In Europe, Sector
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J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:

J.P. Morgan uses the following rating system: Overweight (over the duration of the price target indicated in this report, we expect this stock will
outperform the average total return of the stocks in the Research Analyst’s, or the Research Analyst’s team’s, coverage universe); Neutral (over
the duration of the price target indicated in this report, we expect this stock will perform in line with the average total return of the stocks in the
Research Analyst’s, or the Research Analyst’s team’s, coverage universe); and Underweight (over the duration of the price target indicated in
this report, we expect this stock will underperform the average total return of the stocks in the Research Analyst’s, or the Research Analyst’s
team’s, coverage universe. NR is Not Rated. In this case, J.P. Morgan has removed the rating and, if applicable, the price target, for this stock
because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the
price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia and ex-India)
and U.K. small- and mid-cap Equity Research, each stock’s expected total return is compared to the expected total return of a benchmark
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the certifying Research Analyst’s coverage universe can be found on J.P. Morgan’s Research website, https://www.jpmorganmarkets.com .
Coverage Universe: Rudra, Ankur: Bharti Airtel Limited (BRTI.NS), Bharti Hexacom (BHAX.NS), Coforge (COFO.NS), HCL Technologies
(HCLT.NS), Indus Towers Ltd (INUS.NS), Info Edge (INED.NS), Infosys (INFY.NS), Infosys ADR (INFY), LTIMindtree Ltd (LTIM.NS),
MakeMyTrip (MMYT), Mphasis (MBFL.NS), One 97 Communications Ltd. (PAYT.NS), Tata Consultancy Services (TCS.NS), Tech Mahindra
Ltd. (TEML.NS), Vodafone Idea Limited (VODA.NS), WIPRO LTD-ADR (WIT), Wipro Ltd. (WIPR.NS), Zomato (ZOMT.NS)

J.P. Morgan Equity Research Ratings Distribution, as of July 06, 2024

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage* 49% 38% 13%
IB clients** 49% 46% 34%
JPMS Equity Research Coverage* 48% 41% 11%
IB clients** 69% 66% 50%

*Please note that the percentages may not add to 100% because of rounding.
**Percentage of subject companies within each of the "buy," "hold" and "sell" categories for which J.P. Morgan has provided
investment banking services within the previous 12 months.
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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

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Ankur Rudra, CFA AC Asia Pacific Equity Research
(65) 6801-3237 27 August 2024 JPMORGAN
[email protected]

"Other Disclosures" last revised August 24, 2024.

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