Beximco Pharmaceuticals Ltd

Equity Valuation Report

As on 30th June 202

A Choice of Smart Investors

Fair Market Value: BDT360.34

Current Market Price: BDT119

302.80% Return Potential

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Table of Contents

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Letter of Transmittal

7th May, 2024

Farhana Zahir, CFA, FRM
BRAC Business School, BRAC University

Subject: Term Paper on “Equity Valuation of Beximco Pharmaceuticals Limited”

Dear Mam,

This is my pleasure to present the required project report for: Fin 654; Financial Modelling, Analysis and
Forecasting, “Equity Valuation of any Listed company of Bangladesh" for which we were assigned by your
instruction.

We did our best to finalize the report with the most important facts and recommendations in the most compact
and comprehensive way feasible.

We are certain that the report will fulfill your expectations.

Sincerely yours,

Md. Rajib Ahmed (20364029)

Abid Ahmed (22364045)
Rezwan Hasan (22364057)
Abeda Hossain Mim (22364034)
S.M Basirul Ahsan (22364084)

BRAC Business School BRAC University

Date: 07/05/2024

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Executive Summary

The primary objective of this equity valuation project is to determine the fair market value of Beximco
Pharmaceuticals Limited as of 30th June 2023. This assessment will aid investors in making informed decisions
regarding potential investment opportunities. Our valuation approach incorporates a comprehensive analysis
using Discounted Cash Flow model, Dividend discount model and a relative approach using P/E.

We conducted a thorough examination of Beximco Pharmaceuticals financial statements, focusing on revenue

growth, profitability, capital structure and cash flow generation. Key financial ratios and performance indicators
were analyzed to understand the company's financial health and operational efficiency. The market dynamics and
competitive landscape within the industry sector were analyzed. Factors such as Market growth, GDP growth,
Inflation movement and various other variables were used to assess their impact on valuation.

This equity valuation project provides a detailed and reliable estimate of the Beximco Pharmaceuticals limited
value, serving as a crucial tool for potential investors. The findings highlight the company's investment potential
and offer a clear direction for investment strategies.

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Methodology:

Valuation Methodology

Models & Variables

Data Data Analysis

This study takes into consideration 3 different Valuation

The purpose of this study is to This study followed a systematic
examine the residual value of model in order to arrive at a comprehensive valuation approach in understanding the
Beximco Pharmaceuticals which provide insights into the company’s worth. business, forecasting company
Limited. The cross-sectional performances, selecting the
survey research design was appropriate valuation models &
Model:
adopted in this study. This is converting forecasts to valuation
because the data used in this Free-cashflow approach applying analytical results. This
study were collected at a Dividend Discount Model(Gordon) analysis would help potential
particular point in time for DDM Relative Approach (P/E) investors to gauge and estimate
five consecutive years.The of the value of Beximco
secondary source of data was Pharmaceuticals Limited. The
employed. The data were result of this analysis is is backed
Cut-off Date: 30th June of every year
derived from DSE website, by the sue of strong data to
Annual Publications of support future operating
Bangladesh Bank, respective forecasts. The methods used to
company publications i.e. determine the true value of the
annual report, audited reports Benchmark Used: company was both absolute and
serving as the foundation for relative valuation.
DSEX (FY2014-FY2023)
the valuation models used in DSE total market Cap (FY2004-
this study. These data The calculation of the intrinsic
FY2023) value & relative value of shares is
provided us with the context Treasury Bill Rate (FY2015-FY2023)
for valuation, allowing us to essential for investors as the
GDP Growth rate result can be used as a guideline
make informed assumptions Inflation growth rate
about future performance for buying, selling, or holding
Population growth rate shares of beximco
based on past results.
Pharmaceuticals Limited

Final Report

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 Rate (%
Why invest in Bangladesh (Bangladesh’s of GDP)

Economy at a glance) National

Savings
8 % 31.42 30.79 29.35 30.22 (P)
Rate (%
Bangladesh's macroeconomic outlook characterizes of GDP)

Manufact
the nation as stable and having potential for growth, uring Sec.
9 Growth % 1.68 11.59 11.41 9.23 (P)
a definition supported by historical macroeconomic Rate of
GDP
data. Bangladesh moved up from lower income
Agricultu
country to a lower middle-income country in the last ral
13 Growth % 3.42 3.17 3.05 2.61 (P)
ten years. The Bloomberg Economic Growth Rate of
GDP
Prospect states that Out of 93 countries, Bangladesh Services
14 (% of % 52.54 51.92 51.48 51.24 (P)
is expected to have the second-best rate of economic GDP)

growth this year. Bangladesh's GDP is predicted by Exports

of goods
Bloomberg to growth rate to inch up to 6.5% by the 15
and
% 10.44 10.66 12.88 13.44 (P)
services
mid-2030s from 6.3% now, ranking it joint second (% of
GDP)
with Vietnam. The rate is the second quickest after
Imports
of goods
India, whose growth is predicted to be 7.3%. and
16 % 15.83 17.06 20.9 19.2 (P)
services
(% of
FY 2019-

FY 2020-

FY 2021-

FY 2022-

GDP)
UoM*
Sl No

Item

20

21

22

23

Total
domestic
17.42
GDP at outstandi
17 % 16.34 17.06 17.38 (July-
Current BDT 4,439,273 ng debt
1 3,170,469 3,530,184 3,971,716 May)
Market Crore (P) (% of
price GDP)

GDP Total
3.06
growth Financing
18 % 4.44 3.72 4.08 (July-
rate at (% of
May)
2 (2015/201 % 3.45 6.94 7.1 6.03 (P) GDP)
6)
constant USD
FDI
price 19 Milli 2,370.45 2,507.31 2,179.00 1,611 ( R)
Inflow
on
Annual
Per Domestic BDT 1,307,633. 1,439,899 1,671,748 1,926,769
3 USD 2,234 2,462 2,687 2657 (P) 20
Capita Credit Crore 80 .00 .80 .30 (R)
GDP
Reserve BDT 284,483.4 348,071.8 347,162.1 383,585.2
21
Investme Money Crore 0 0 0 (June)
nt Rate
4 % 31.31 31.02 32.05 31.25 (P)
(% of Inflation
GDP) Rate Perce
22 5.65 5.56 6.15 9.02 (Jun)
(weighted nt
(a) Public average)
5 % 7.29 7.32 7.53 7.61 (P)
Sector
USD 75,061.60
Value of
(b) 23 Milli 48,518.00 54,332.10 89,162.30 (up to
Import
6 Private % 24.02 23.7 24.52 23.64 (P) on June)
Sector

7 Domestic % 27.08 25.34 25.22 26.02 (P)

Savings

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 USD 5,558.77
24
Value of
Milli 33,674.12 38,758.31
52,082.66
(up to
credit was 47% higher in 2023 than it was in 2020.
Export 5
on June)
In the past four years, foreign direct investment has
USD
25
Balance
Milli
- - - - decreased due to Covid-19 pandemic & Ukraine-
of Trade 14,843.88 15,573.79 37,079.64 19,502.83
on
Russia War
Over the previous four years, Bangladesh's economy
has grown steadily, with an average GDP growth of INFLATION RATE (WEIGHTED AVERAGE)
5.83%. Furthermore, the fact that the per capita GDP 10.00% 9.02%

INFLATION RATE
8.00%
increased from $2234 to $2657 over the previous five 5.65% 5.56% 6.15%
6.00%
years shows development despite the recent political 4.00%

unrest and global financial crisis. Bangladesh's 2.00%

0.00%
economy is primarily driven by its service sector, FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23
ready-made garment industry, and agricultural FISCAL YEAR

products, all of which are bolstered by the country's

youthful population and both skilled and unskilled In addition to its opportunities, Bangladesh has
work force. Despite having easy access to affordable significant problems in the areas of political stability,
financing, Bangladesh's SME sector is expanding effective governance, combating corruption,
developing its human capital, infrastructure
GDP & Industrial Growth development, and other areas in order to seize future
Rate opportunities. There has been a partial shift in global
15.00% 11.59% 11.41%
9.23% economic activities from the west to the east
6.94% 7.10%
Growth

10.00% 6.03%
3.45% following Covid-19 Pandemic & Ukraine Russia
5.00% 1.68%
0.00% war. Furthermore, Bangladesh needs political
FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23
stability, openness, and effective governmental
Manufacturing Sec. Growth Rate of GDP
GDP growth rate
assistance and initiatives in order to fully realize its
growth.
more quickly, boosting the country's GDP, creating
jobs for human resources, and providing income for
middle-class and lower-class residents. In addition,
Bangladesh has improved its ability to manage
inflation during the past ten years.

It is noteworthy that the inflation rate increased from

5.65% in 2020 to 9.02% in 2023. Together with an
industrial growth rate of 9.23% in 2023, domestic

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 Regional: An overview of Pharmaceutical Industry in South Asia
The pharmaceutical industry has a big impact on the economy and healthcare system in South Asia. South Asia,
which comprises countries like Bangladesh, India, Nepal, Bhutan, Sri Lanka, Pakistan, and the Maldives, has
different pharmaceutical market dynamics. The following is a summary of the pharmaceutical industry in this
region:

Bangladesh: India: Pakistan: Sri Lanka: Nepal:

Pakistan's pharmaceutical In the upcoming years, It is anticipated that the

Bangladesh is the only India's pharmaceutical pharmaceuticals market
market is expected to be there is anticipated to be
least developed country market is currently in Nepal will grow
worth Rs. 300 billion by a substantial expansion
that have supplied almost estimated to be worth significantly, with
IMS (MAT June 2017), with in Sri Lanka's
98 percent of its own $50 billion. India is a revenue expected to
a five-year compound pharmaceutical market. reach US$261.80 million
domestic demand for significant
pharmaceutical exporter, annual growth rate of 12%. This market is expected by 2024. By 2028, the
these products with a $3
reaching more than 200 Local and national to generate an pharmaceutical industry
billion pharmaceutical
businesses dominate the impressive US$261.70 in Nepal is predicted to
market. Moreover, countries with its
sector, holding two thirds of million in revenue by have grown to a market
pharmaceutical exports exports. More than half volume of US$294.70
of Africa's generic needs the market share, while 2024.It is anticipated
from Bangladesh to million, demonstrating
are met by India, which multinational corporations that Sri Lanka's
roughly 150 nations the industry's potential
also supplies roughly hold the remaining one pharmaceutical market for growth.87 licensed
brought in $169 million will continue to grow in
40% of US generic third. The top 50 companies pharmaceutical
during the 2020–21 fiscal the future. Based on a
demand and 25% of UK hold approximately 90% of companies operate in
year. Pharmaceuticals projected 2.21% annual Nepal; of these, 41
pharmaceutical demand. the market, while the top ten
are produced by more growth rate between produce contemporary
companies make up
than 300 small, medium, 2024 and 2028, the medicine, 7 veterinary
approximately 46% of the
and large businesses in market volume is goods, and 37 herbal
market. preparations.
the nation; the top ten expected to reach
producers account for US$285.60 million by
roughly two thirds of the that time.
market.

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The Bangladesh Pharmaceutical
Growth drivers
industry ❖ Large domestic market of 169 million people
with increasing income and health awareness
One of the most technologically advanced ❖ Changing disease profile to lifestyle/non
industries in Bangladesh, the pharmaceutical communicable diseases requiring long term
industry has transformed itself from an
treatment and medication such as cancer,
import dependent industry in the 1980s to a
self-sufficient one serving the global market. diabetes, cardiovascular disease, and other
The capacity and expertise of the industry non-communicable disease.
was evident during the COVID-19 pandemic ❖ Rising healthcare costs are helping promote
where the industry quickly adapted to the generic medicine around the world. The
unprecedented challenges and has been
global generic market is projected to grow at
fulfilling not only the national demand for
a CAGR of 8% and reach USD 578 billion by
COVID related medicines but also the global
market. As a beneficiary of TRIPS patent 2023.
waiver, the Bangladesh pharmaceutical ❖ Drugs worth more than $150 billion are
industry is all set to becoming a hub for coming off patent by 2021 and another USD
generic medicines. 250 billion by 2023 giving Bangladesh the
Overview opportunity for further investment in generic
Building from strength to strength, the drugs.
pharmaceutical industry has grown from ❖ Increasing number of international
about $25 million in 1982 to about $3 billion
accreditations received by Bangladeshi firms.
as of June 2020. Driven by the increasing
purchasing power of the domestic Advantages
population, the domestic pharmaceutical ❖ Supportive government policies
market is forecasted to exceed USD 6 billion ➢ Dedicated Park for API factories to
by 2025 encourage production of API.
➢ Provision of export subsidy
At present the industry is serving 97 percent ❖ Favorable trade policies
of the domestic market and exporting to more ➢ WTO extended patent waiver from
than 100 countries around the world. The TRIPS till 2033 helping Bangladesh
Bangladeshi drug market is dominated by to produce patented drugs.
production of branded generic drugs, which ➢ Duty free access to 52 countries
account for almost 80% of the drugs ❖ Low cost of production
➢ Medicine price in Bangladesh is
produced locally, while patented drugs make
currently among the lowest in the
up the remaining. Currently, there are 271 world with production cost being 10
Allopathic, 205 Ayurvedic, 271 Unani, 32 to 15% lower than neighboring
Herbal and 79 Homeopathic drug producing India/China.
companies in the country. ❖ Qualified human resources with expertise in
manufacturing generic drugs

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Investment Potential global population has been leading to the
growing demand for drugs used for the
API Production treatment of NCDs. Such drugs for NCDs

The government of Bangladesh is strongly include anti-cancer, anti-diabetes, vaccines,

encouraging manufacturing of API through insulin, etc.

various fiscal and export subsidies. The

government formulated API Policy in 2018
Fiscal Incentives
with a goal to attract investment worth USD
❖ For 5 API molecules producers will
1 billion in API production and reduce
get 100% tax holiday.
import-dependence to 80% by 2032. The
❖ For 3 API molecules producers will
policy also aims to raise API export income
get a 75% tax holiday.
and create 500,000 jobs by 2032. A dedicated
❖ Active Pharmaceuticals Ingredients
API Park has also been established recently.
(API) and laboratory reagent
Branded generic/patented medicines producers, registered in Bangladesh

Given Bangladesh’s expertise in producing will enjoy 100% corporate tax

branded/ blockbuster generic drugs, the holiday until 2021-22.

anticipated patent-cliff will provide a huge ❖ After 2021-22, Active

opportunity for Bangladeshi producers to Pharmaceuticals Ingredients (API)
expand their production and market of and laboratory reagent producers, will
generic drugs. In addition, Bangladesh can further enjoy tax holiday (from 2023-
expand its production and exports of patented 2032) if they could produce API
drugs to LDCs and non-WTO members molecules domestically-:
benefitting from WTO’s extended patent ❖ No AIT will be applicable for API
waivers. producers on import of chemical
compounds (Technical
Grade/Chemically pure).
Drugs related non-communicable disease
❖ Firms established between July 1,
(NCDs)
2019 and June 30, 2024 are eligible
Rapid increase in non-communicable disease for phased or partial tax exemption
among the Bangladeshi population as well from 5 up to 10 years.

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 ❖ No AIT will be applicable for API The top 5 pharmaceutical companies in
producers on import of chemical Bangladesh— Square, Incepta Pharma,
compounds (Technical Beximco, Healthcare Phara & Renata, who
Grade/Chemically pure). accounts for more than 50% of the total
market share Bangladesh. Below graph
represents a pictorial representation of the
Foreign Investors in Listed
Pharmaceutical Sector market share of respective market
The Pharmaceutical sector claimed a good participants.
amount of foreign investment as of January
31, 2019. Out of 16 listed companies’ foreign MAJOR PARTICIPANTS &
MARKET SHARE
investors selected following 8 companies for
investment: SQUARE,
16.80%
★ 1. Square Pharmaceuticals Limited
INCEPTA
Others,
★ 2. Beximco Pharmaceuticals Limited
PHARMA, 11.90%
49.50%
BEXIMCO,
★ 3. Renata Limited HEALTHCAR
9.50%

E PHARMA,
★ 4. The ACME Laboratories Limited RENATA,
7.30%

★ 5. Ambee Pharmaceuticals Limited

5.00%

★ 6. Orion Pharma Ltd.

★ 7. GlaxoSmithKline (GSK)
Comparison-Beximco & Peers
Bangladesh Ltd.
In this report, we will analyze and compare the
★ 8. Orion Infusion Ltd.
financial performance of five pharmaceutical
Major Participants & Market share: companies: BEXIMCO, SQUARE, RENATA,
Currently, there are 271 Allopathic, 205 ACI, and IBNSINA. The analysis includes
Ayurvedic, 271 Unani, 32 Herbal and 79 market capitalization, financial performance,
Homeopathic drug producing companies in financial position, cash flow, market share, and
Bangladesh; of them, 30 companies are listed financial ratios. This analysis will aid investors

under Dhaka stock exchange & Chittagong and stakeholders in making informed decisions.

Exchange. The below table describes various analysis of

Beximco Pharmaceuticals Limited & respective
Since the top 10 producers hold 70% of the peers considering financial performance,
market share, many of these are rather small. Cashflow & various financial ratios.

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 1. Market Capitalization
Competitor Analysis
(Amounts in Crore)
Market capitalization reflects the total value
BEXIMC IBNSIN
Particulars SQUARE RENATA ACI of a company's outstanding shares in the
O A
stock market, indicating its size. SQUARE
Market
Capitalization 6522 18633 14000 1196 895
(in billion) leads with the highest market capitalization
Financial Performance of BDT 18633 crore, followed by RENATA
Revenue (Net) 3926.66 6,275 3,286 496 912.53 with BDT 14000 crore. BEXIMCO holds the
Gross Profit 1,900 3,098 1,268 132 387 third position with 65.22 billion. ACI and
Net Profit
(Before Tax)
599 2,110 248 31 80 IBNSINA have comparatively lower market
Net Profit
452 1,646 232 24 61
capitalizations of BDT 6522 core and BDT
(After Tax)
895 core, respectively.
Financial Position:

Total Equity 4,762 11,520 3,053 2,142 301 2. Financial Performance

Total Assets 6,916 12,182 4,873 669 481
According to revenue performance,
Total
2,154 661.96 1819.45 364 179.14
Liabilities
SQUARE is the highest at BDT 6,275 crore,
Cash Flow:
followed by BEXIMCO at BDT 3926.666
Net Cash
Generated crore. RENATA comes in second with a net
from 608 855 204 1.09 107
Operating
Activities revenue of BDT 3,286 crore. In comparison
Net Cash Used to the top three companies, ACI and
in Investing 262 82 481 132 62
Activities IBNSINA have significantly lower revenues.
Net Cash Used
in Financing 356 876 389 6.61 35 The company with the largest net profit after
Activities
taxes is SQUARE BDT1,646 crore, followed
Financial Ratios:
by BEXIMCO BDT 452 crore. With a net
Current Ratio 1.57 21.85 1.27 1.16 1.26
profit after taxes of BDT 232 crore,
Return on 139.73 21.54
82.46% 17.02% 7.64%
Equity (%) % %
RENATA comes next. In comparison to the
Net Asset
Value Per 97.91 113.39 266.22 281.09 96.68 top three companies, ACI and IBNSINA
Share
have lower net profits.
Net Operating
Cashflow Per 13.64 9.17 16.92 22.93 28.08
Share Standing at BDT 11,520 crore, SQUARE has
Earnings Per
10.34 21.41 20.21 23.05 19.38
the largest total equity. With BDT 4,762
Share
crore, BEXIMCO comes in second.
RENATA has a total equity holding of BDT

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3,053 core. Comparing the total equity of 4. Financial Ratios
ACI and IBNSINA to the top companies,
ACI's and BEXIMCO's current ratios are less
they are comparatively lower. With BDT
than 2.00. With a return on equity of
12,182 crore total assets, SQUARE is also the
139.73%, ACI has the greatest. With the
leader in this category. Finally, BEXIMCO
highest current ratio of 21.85, SQUARE is
has total assets of BDT 6,916 crore. The
the most liquid. With 1.27 and 1.26,
entire assets owned by RENATA amount to
respectively, RENATA and IBNSINA come
BDT 4,873 crore. When looking at the total
next. With 82.46% and 7.64%, respectively,
assets of the top three companies, ACI and
BEXIMCO and RENATA come next. The
IBNSINA are much smaller.
return on equity is comparatively lower for
3. Cash flow
SQUARE and IBNSINA. With 281.09 net
BEXIMCO follows with BDT 608 crore in asset value per share, ACI has the highest
net cash from operating activities. RENATA value. With 266.22, RENATA comes next.
has net cash from operating activities of BDT The net asset value per share of SQUARE is
204 crore. Compared to the top companies, 113.39. When compared to the top three
ACI and IBNSINA have lower net cash companies, IBNSINA and BEXIMCO have
generated from operating activities. With lower net asset values per share. The net
BDT 481 crore, RENATA had the most net operating cash flow per share of IBNSINA
cash used for investing activities. BEXIMCO and BEXIMCO is lower than that of the top
comes in second with BDT 262 crore. In three companies. In comparison to the top
comparison to these two companies, three companies, IBNSINA and BEXIMCO
RENATA, ACI and IBNSINA have utilized have lower earnings per share.
less net cash for investing activities.
In an attempt to understand the
SQUARE has the largest amount of net cash
pharmaceutical industry of bangladesh, we
utilized for financing activities BDT 876
have carried out SWOT, Pestel & Porter's
crore, BEXIMCO comes next with BDT 356
five forces analysis, which is attached in
crore. RENATA has BDT 389 crore in net
appendi
cash on hand that is utilized for financing
operations. When compared to the top
companies, ACI and IBNSINA have less net
cash used for financing activities.

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Beximco Pharmaceuticals Limited

Beximco Pharmaceuticals Limited is a leading manufacturer and exporter of medicines in Bangladesh.

Incorporated in 1976, the Company initiated its operations by importing products from Bayer, Germany and
Upjohn, USA, and selling them in the local market. In 1980, Beximco Pharma commenced the manufacturing of
these products under licensing agreements and introduced its proprietary formulation brands in 1983. Since its
modest beginnings, the Company has consistently progressed with remarkable success. Today, Beximco Pharma
has become an emerging global generic pharma company in the region. The Company manufactures more than
300 products in different forms and strengths covering almost all therapeutic categories. Leveraging its state-of-
the-art manufacturing facilities and research capabilities the Company earned its name as an admired
manufacturer of high-quality generic medicines. The Company’s manufacturing facilities have been accredited
by the leading global regulatory authorities. Beximco Pharma exports its medicines to over 50 countries including
the highly regulated markets of USA, Europe, Canada, and Australia.

The Company holds 85.2% stake in Nuvista Pharma Limited (formerly Organon Bangladesh), a leading unlisted
pharmaceutical company in Bangladesh specializing in hormone and steroid drugs. In October 2021, it acquired
a controlling interest of 54.6% in Sanofi Bangladesh Limited from the Sanofi Group represented through May &
Baker Limited and Fisons Limited. Subsequent to this acquisition the company was renamed as Synovia Pharma
PLC.

Beximco Pharma is listed on Dhaka and Chittagong Stock Exchanges of Bangladesh and the Alternative
Investment Market (AIM) of London Stock Exchange. Beximco Pharma holds a significant position within the
pharmaceutical landscape of our countries over Taka 300 billion market. The combined efforts of the Company
and its subsidiaries have resulted in a noteworthy market share of 11.1%. Their domestic sales are the cornerstone
of our success, contributing to a substantial 93% of our consolidated revenue. This underscores the pivotal role
played by our local market in driving our growth trajectory. Alongside their strong domestic presence, the
Company remains resolute in its strategic approach to seize opportunities within the global generic drug sector.
Their dedication to this approach has led to a steady growth in our global presence. Currently, they have a presence
in more than 50 countries across all continents. This worldwide expansion showcases their determination to be a
leading exporter. Their continued success in international markets has earned them the prestigious National
Export Trophy (Gold) eight times, acknowledging their outstanding performance on the global platform.

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Governance Structure:

Shareholding Position:

As of June 30, 2023

Sponsors/Directors:
Number of Shares % of Share Capital
Products:
A S F Rahman 9,058,888 2.03% Beximco Pharma
Salman F Rahman 9,080,095 2.04% currently
produces more
Other Directors and Associates 116,305,973 26.07%
than 300 generics
Other Shareholdings:
available in well
Foreign Portfolio Investors over 500
44,433,722 9.96%
(DSE/CSE)
presentations. Its
Holders of GDRs (excluding Board
84,386,054 18.92% portfolio
Director)
encompasses
Institutions (ICB, ICB Investors’
106,355,109 23.83% wide range of
Accounts & Others)
therapeutic
Individual Shareholders 76,492,248 17.15%
categories namely
Total 446,112,089 100.00
antibiotics,
analgesics, anti-diabetics, respiratory, cardiovascular, central nervous system, dermatology, gastrointestinal, anti-
cancers etc. The Company has consistent leadership in several of its brands including Napa, Napa Extra,
Neofloxin, Atova, Azmasol, Arlin, Bexitrol F, D-Rise, Bizoran, Amdocal, Remmo, Tofen, Tyclav etc. It has
sound expertise with specialized and advanced drug delivery systems such as metered dose inhalers, dry powder
inhalers, nasal sprays, sterile ophthalmic, lyophilized injectables, oral thin films, suppositories etc. Beximco
Pharma continuously strives to focus on expanding and diversifying its product portfolio in order to ensure that

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people have access to newer and better treatment options at an affordable cost. The expanding portfolio, includes
high value, differentiated, and difficult to copy products, which contributes as a growth driver to the Company.

Manufacturing Capabilities
Company’s main manufacturing site is situated at Tongi, Gazipur spreading over an area of 23 acres which houses
a number of self-contained production units including oral solids, metered dose inhalers, intravenous fluids,
liquids, ointments, creams, suppositories, ophthalmic drops, injectables, prefilled syringes, nebulizer solutions,
insulin, dry powder inhaler, small scale API unit etc. All manufacturing units in the plant are highly automated
with equipment sourced from reputed suppliers based in Germany, USA, UK, Switzerland, China, India etc.

Production Facility:

Track I:
Oral Solid Dosage, Semi-solid, Liquid, and Tropical Products Facility (Unit 3 Plant)

This impressive complex spans three levels, encompassing a substantial 95,000 square feet on each
level. . The facility is capable of producing 5,000 million tablets & capsules and 130 million liquid
bottles (extendable up to 9,000 million and 200 million, respectively round the clock basis), 36 million
creams and ointments and 25 million suppositories.

Ophthalmic, Intravenous Fluids, Nasal Spray & Respiratory Products

The Company operates advanced production facilities specializing in various medical

products, including ophthalmic, nasal spray, intravenous fluids, insulin, non-steroidal respiratory
medications, and injectables such as liquid injectables ampoule, pre-filled syringes, and lyophilized
injectables products. The other manufacturing capabilities encompass 10 million units of intravenous
fluids (IV), 3 million units of insulin, 4.32 million ampoules, 3.6 million prefilled syringes and
lyophilized injectables, along with 0.65 million units of nasal spray

Track II:
Oral Solid Dosage (Unit 2)

The multi-story Oral Solid Dosage manufacturing facility, spanning 65,000 square feet, , specializing
in tablets and non-penicillin capsules. The facility is capable of producing 3,000 million tablets and
400 million capsules.

Inhaler Facility (MDI and DPI)

The facility is capable of producing 20 million cans of inhalers and 200 million pieces of DPI capsules.
This capacity is further being expanded. A new unit is in the phase of completion with a further
manufacturing capacity of 8 million units.

Penicillin

The facility is capable of producing 42.24 million capsules and 3 million bottles per year

Active Pharmaceutical Ingredients (APIs)

The current manufacturing capacity is around 22MT.

Liquefied Nitrogen
3 | Page The Company has a Liquefied Nitrogen plant with capacity of 1.75 million litres of gas for internal
use and external sales.
Sensitivity to the Business Cycle:
In the process of analyzing the sensitivity of a firm’s earnings to the business cycle, three factors are considered
to be crucial. The sensitivity of sales, operating leverage & financial leverage. Necessities show little sensitivity
to business conditions. Examples of industries in this group are food, drugs, and medical services. Other industries
with low sensitivity are those for which income is not a crucial determinant of demand.

Profits of firms like Beximco Pharmaceuticals with greater amounts of variables as opposed to fixed costs will be
less sensitive to business conditions. This is because in economic downturns, these firms can reduce costs as
output falls in response to falling sales.

Degree of Operating Leverage

Year FY2019 FY2020 FY2021 FY2022 FY2023

Change in EBIT 16.06% 31.60% -3.68% 0.11%

Change in Sales 12.25% 15.16% 17.55% 13.26%

Degree of Operating Leverage 1.31 2.08 -0.21 0.01

From the analysis of the Degree of Operating Leverage, this is clear that Beximco Pharma has shifted its cost
structure towards more variable costs and fewer fixed costs. This demonstrates the company's increasing ability
to adapt to changes in sales volume, reducing financial risk during periods of lower demand even though
necessities of the product show little sensitivity to business conditions. With the change of cost structure, the
company now has a less pronounced effect on earnings, leading to more stable profits over time.

Another factor that has an influence on business cycle sensitivity is financial leverage, which is the use of
borrowing. Interest payments on debt must be paid regardless of sales. They are fixed costs that also increase the
sensitivity of profits to business conditions.

Degree of Financial Leverage

Year FY2019 FY2020 FY2021 FY2022 FY2023

% Change in EBIT 16.06% 31.60% -3.68% 0.11%

% changes in EPS 15.91% 32.53% -2.52% -7.68%

4 | Page
 Degree of Financial Leverage
99% 103% 69% -6835%
(∆EPS/∆EBIT)

Degree of Financial Leverage

1.21 1.17 1.09 1.11 1.15
(EBIT/EBIT-Interest)

The company on average has a DOFL <1 , which indicates that even a small change in Beximco’s leverage may
result in a significant fluctuation in profitability, which can cause this company to be considered a risky
investment by lenders and potential investors. This can be problematic as the overall world economy is going
through tough times after covid-19 pandemic and now Ukraine Russia war, which has made the economy of
Bangladesh also stressed and this may get even worse which may lead the operating income of Beximco
Pharmaceuticals under pressure. From the analysis of DOFL, Beximco Pharmaceuticals Ltd has a decreasing
DOFL over the last five years of its operations which indicates that the company is reducing its reliance on debt
in its capital structure, this is considered to be a stable strategy considering the current economic scenario.

Business Finance Insights:

Financial
FY2019 FY2020 FY2021 FY2022 FY2023
Performances

Total Sales 22,816,629,795 25,611,947,655 29,493,573,869 34,669,172,052 39,266,662,237

Export Sales 2,502,632,517 2,751,790,244 3,124,001,260 2,685,096,151 2,763,246,905

Gross Profit 25,319,262,312 28,363,737,899 32,617,575,129 37,354,268,203 42,029,909,142

Profit after tax 3,040,402,954 3,544,483,101 5,165,749,732 4,998,628,197 4,524,468,490

Total Assets 49,214,092,360 50,118,741,940 52,246,084,026 66,148,035,742 69,156,783,247

Total Equity 29,864,323,837 32,797,449,613 37,364,864,829 44,636,004,458 47,619,665,978

Cash Dividend 15% 15% 35% 35% 35%

Stock Dividend 10%

EBIT 4,669,022,513 5,418,802,323 7,130,988,640 6,868,559,158 6,876,275,225

Figure ('000)

Authorized Capital 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000

5 | Page
 Paid up Capital 4,055,564 4,055,564 4,461,121 4,461,121 4,461,121

No of share 405,556,445 405,556,445 446,112,089 446,112,089 446,112,089

Historical Sales & Profits

50,000 42,030 Over the Previous Five years, Sales &

37,354 39,267
40,000 34,669 Profit after tax of Beximco
32,618
28,364 29,494 Pharmaceuticals Limited has increased
30,000 25,319 25,612
22,817 significantly, which shows a CAGR of
20,000
11.47% & 8.27% respectively.

10,000 3,040 5,166 4,999 4,524 This growth represents its robust supply
3,544
chain and cost management.
0
FY2019 FY2020 FY2021 FY2022 FY2023

Total Sales Gross Profit Profit after tax

Asset & Shareholders Equity

80,000 An increase of CAGR 7.04% of assets
66,148 69,157
70,000 from 2019-2023 indicates growth and
Figures in Million

60,000 49,214 50,119 52,246 expansion, which suggests that the

44,636 47,620
50,000 company acquiring more resources,
37,365
40,000 29,864 32,797 which justifies its increased production
30,000 capacity & improved efficiency and
20,000
potential for higher revenue. Where as
10,000
an CAGR of 9.78% in equity represents
0
FY2019 FY2020 FY2021 FY2022 FY2023
that company’s net worth is growing.

Total Assets Total Equity

PROFITABILITY The company’s Return on asset has increased

significantly from 6.98% in 2019 to 10.03% in
12.00% 10.99% 2021 than it has decreased to 8.38% in 2022
10.03%
10.00% 8.58% and furthermore 6.61% in 2023. This
8.64% 8.38%
7.85% 7.82% declining ROA while the sales are on peak
7.66%
8.00% 6.98% 6.78% 6.61% suggest that the company needs to strike a
5.86% balance between expansion and maintaining
6.00% 4.77%
4.28% 4.49% efficient asset utilization. Sustainable growth
4.00% should lead to profitable ROA.

2.00% And This has been the case of return on equity

and return on invested capital also, which
0.00% suggests overinvestments in assets,
FY2019 FY2020 FY2021 FY2022 FY2023 operational inefficiency, increased debt and
debt expenses.
Return on Assets Return on Equity Return on Invested Capital

6 | Page
 Key Ratios
Metrics FY2019 FY2020 FY2021 FY2022 FY2023

Liquidity & Solvency

Current Ratio 7.14 5.21 4.71 4.82 4.01

Quick Ratio 3.62 2.58 2.03 1.79 1.46

Debt to Equity Ratio 0.65 0.53 0.40 0.48 0.45

Cash Ratio 0.05 0.06 0.07 0.09 0.09

Profitability

Gross Margin 49.95% 50.05% 50.29% 49.37% 48.38%

Operating Margin 20.46% 21.16% 24.18% 19.81% 17.51%

Net Profit Margin 13.33% 13.84% 17.51% 14.42% 11.52%

Average Markup 2.00 2.00 2.01 1.98 1.94

Assets Utilization

Basic Earning Power 9.49% 10.81% 13.65% 10.38% 9.94%

Asset Utilization (Asset

32.10% 34.48% 38.68% 40.63% 38.98%
Turnover)

Investment Valuation

Return on Assets 6.57% 7.30% 9.35% 8.05% 6.83%

Return on Equity 6.98% 7.66% 10.03% 8.38% 6.61%

Return on Invested Capital 9.49% 10.81% 13.65% 10.38% 9.94%

Economic Value Added 49.06% 55.91% 70.58% 53.70% 51.42%

Earnings Yield 8.96% 11.39% 6.48% 7.43% 7.07%

Dividend Yield 223.00% 385.00% 391.00% 231.00% 87.00%

Price Earning Multiple 11.16 8.78 15.43 13.47 14.14

Earnings per Share 7.48 7.88 11.49 11.48 10.34

Net Assets Value per Share 72.96 80.12 83.01 91.01 97.91
7 | Page
 Equity Ratio 0.62 0.67 0.73 0.72 0.74

Market Price Per Share 83.50 69.20 177.30 154.60 146.20

Market Capitalization (In

33863.96 28064.51 79095.67 68968.93 65221.59
Million)

Margin Ratios
The company is experiencing a decline in its
profit margins after 2021 while the company’s
60.00% 49.95% 50.05% 50.29% 49.37% 48.38% sales are increasing. Gross margin & Operating
50.00% margin decreased 50.29% to 48.38% & 24.18%
40.00% to 17.51% respectively over FY2021-2023
24.18% which is due to its increasing operating costs &
30.00% 20.46% 21.16%
17.51% 19.81% 17.51% operational inefficiency.
20.00% 13.33% 13.84% 14.42%
11.52%
Net profit Margin has also decreased over the
10.00%
last two years to 11.52% in 2023 from 17.51%
0.00% in 2021. Which also suggests that the operating
FY2019 FY2020 FY2021 FY2022 FY2023 costs are growing at a faster rate than the
revenue.
Gross Margin Operating Margin Net Profit Margin

Liquidity & Solvency

8.00 7.14 The company’s Current and Quick Ratio is 4.01

7.00 & 1.46 in 2023 indicates better liquidity
6.00 5.21
4.82
because of its stronger ability to meet short term
4.71
5.00 4.01 obligations. Which suggest the company is less
3.62
4.00 risky & this has been the case of company’s
2.58 financial leverage also, as the company is
3.00 2.03 1.79 1.46 maintaining a very low debt-quity ratio, where
2.00
0.65 0.53 0.40 0.48 0.45
1.00 the company is mainly backed by its assets
0.00 which is considered to be good as the company
FY2019 FY2020 FY2021 FY2022 FY2023 is mainly financed by its equity.

Current Ratio Quick Ratio Debt to Equity Ratio

8 | Page
Equity Valuation:

Beximco Pharmaceuticals Ltd.' has been thoroughly investigated and analyzed, with a focus on utilizing the
Discounted Cash Flows Model, Dividend Discount Model, and Relative Valuation Model(P/E) to determine the
intrinsic value of the company as on 30th June 2023. Relevant valuation assumptions are made under the valuation
methodologies based on information gathered both passively from reputable institutional sources and actively
from research output. Prospective analysis, mostly in the form of growth projections and business-related risks,
drove the company's worth. The company's historical financial statements, which cover the last five years from
June 30, 2019, to June 30, 2023, have been used to predict income and cash flows in a reasonable manner. Under
the valuation process, highest care & ethical standards have been maintained to present the analysis stand-out and
to protect shareholders interest to the company.

Valuation Toolkit

T-Bond Rate 11.60%

Risk Premium as per Moody

Cost of Equity:

CAPM 16.24%

Gordon Growth Model 16.66%

CAPM_Tax Adjusted 16.1%

Average 16.34%

Effective Interest Rate 12.38%

Tax Rate 20.00%

Post Tax Cost of Debt 10%

WACC

CAPM 15.38%

Gordon Growth Model 15.74%

CAPM_Tax Adjusted 15.29%

Average 15.47%

Terminal G. 6%

LT Real GDP Growth 6-7%

9 | Page
 LT Inflation (Trading Economics) 8.60%

Sales Growth (Average) 12.52%

The assumptions of this valuation model are based

on careful research. We have considered T-Bill rate
as Risk-free rate as it carries lowest risk. In order to
derive the Market risk premium & beta of Beximco
Pharmaceuticals Ltd, we have taken into
consideration DSEX Index data from 2015 to 2023
as well as T-bill rate of the same period. In this
valuation model, We have also considered Cost of
equity using Gordon Growth model, where we have
considered historical dividend of Beximco from
2009-2023 to estimate the growth. For the
calculation of Current market return, we have
considered DSE Market CAP Data from 2004-2023,
which is then further adjusted for the outliers and
incorporated into CAPM calculation. The WACC
used to discount forecasted cashflow here derived
from the average cost of equity of CAPM, Gordon
growth model and CAPM tax adjusted calculations
& the cost of debt is considered to be the current
lending rate by banks. Terminal growth rate is
considered to be the current long-term GDP Growth
rate of Bangladesh.

10 | Page
 Sales Forecast:
Several analyses were performed in order to forecast future Statistics
sales of the company for the period of FY2024-FY2028. The
CAGR Beximco 14.54%
average year on year sales growth of Beximco Pharmaceuticals
CAGR Pharma Market
for the period of FY2019-Fy2023 was about 14.55%. We have 6.70%
Bangladesh
basically considered the CAGR of historical sales, CAGR of
Bangladesh Pharmaceutical market and the respective market Multiple-Regression

share of Beximco Pharmaceuticals Limited and Multi variable Coefficients

Regression analysis to determine sales growth. Several Factors
Intercept -3.8154
Like GDP, Inflation & population growth were taken into
consideration in our regression analysis to determine the Sales Year 0.0020

growth of Beximco Pharmaceuticals Ltd. GDP 1.9135

Inflation -0.4761

Population -10.3812

R Square 28.99%

Sales Forecast methodology:

Multi-variable Forecasting: Total Market CAGR Forecasting:

CAGR historical Sales:
The analysis considered data from 1998-2023, The Total value of Bangladesh Pharmaceuticals
and resulted coefficients of regression analysis market is around 29,581.00 crore BDT as of last By growing the revenue of Beximco Pharma by
quarter of 2023, having a 4-year CAGR of
revealed that Sales of eximco pharmaceuticals the 5-year CAGR of 14.54% each year, the
6.70%, which we have sued to forecast market
limited is positively related with GDP & value for the respective year and sales of company’s forecasted revenue reaches
Beximco with a market share of 11.10%. BDT7739.97 Crore by the end of FY2028.
negatively related both the Inflations &
11 | Page
Population growth.
 Average

Beximco Sales Forecast

Sales Amount Growth

70,000,000,000 16.00%
60,000,000,000 14.00%
50,000,000,000 12.00%
40,000,000,000 10.00%
8.00%
30,000,000,000 6.00%
20,000,000,000 4.00%
10,000,000,000 2.00%
0 0.00%

Cost of Debt:
The corporation possesses BDT8,061,065,439 in short-term interest-bearing debt and BDT2,157,717,026 in long-
term interest-bearing debt as of 30th June 2023. The amount spent on interest is BDT883,207,883. The marginal
cost of debt for the respective year is about 7.98%. The effective after-tax cost of debt (Rd), assuming a 20% tax
rate, is 6.38%. This results from the tax shield benefit lowering the cost of debt (1.60%). Because it lowers the
total cost of capital and, in turn, the cost of funding the company's operations and investments, the lower after-
tax cost of debt is a positive indication for the business. From the analysis of historical data, the company has on
average a year on basis marginal cost of debt is about 7.06%. & Implied cost of debt is about 7.63%.

Cost of Equity:
We have collected data as on 30th June for T-Bill, DSEX & DSE market capitalization, as the reporting date of
the Financial Statement of Beximco is on 30th June of every year, in order to maintain the same cutoff date for
every consideration in this calculation of cost of equity.

Cost of Equity Represents the compensation that the Shareholders/market demands in exchange for owning the
asset and bearing the risk of ownership. In the process determining the cost equity of Beximco Pharmaceuticals,
we have considered the the current Treasury bill rate, which is around 11.6% as a risk free rate and in determining
the beta which determines the systematic risk of the company, we tried to gauge the tendency of the return of a

12 | Page
Beximco’s stock to move in parallel with the return of the DSEX Broad index. we have considered data from
FY2014-FY2023, which provided us with the following statistics:

Statistics Explanation

This positive covariance clearly demonstrates

0.0027
Covariance of Beximco & DSEX the movements of stock prices in the same
6
directions.

0.0019
Variance of DSEX
1

From the analysis of the regression, The beta of

Beximco comes around 1.44, which tells us that
the Stock Price of the Beximco Pharmaceuticals
Beta of Beximco 1.44
is more volatile than the market, if the market
moves 1%, the stock price would move in the
same direction by 1.44%

Data used to calculate beta of Beximco is 46%

R-Square 46.36% explained by the independent variable which is
DSEX Broad Index stock prices.

Beximco’s stocks performance exceeded the

benchmark index's performance by 0.007.
Alpha 0.007
Which is considered to be good.

The market return we have used as part of cost of equity calculation is derived from the data of DSE Total market
capitalization using & the analysis were performed on the data from FY2005-FY2023 giving us an average return
of 14.03%.

In determining the market risk premium, we have considered DSEX Index data from FY2015-FY2023 providing
us with an average market return of 3.21%.

Weighted average Cost of Capital: Represents the blended cost of capital across all sources of Beximco
Pharmaceuticals, including common share & debt. For the calculation of WACC we have considered average
Cost of equity from three different calculations of CAPM, Gordon growth & CAPM_tax adjusted which resulted
in 16.24%, 16.66% & 16.13% respectively. The company’s total equity stands at BDT 4761.96 crore and total
bank borrowings BDT1021.87 crore as of 30th June 2023. Our WACC calculation of 15.47% represents the cost
of each part of the company's capital structure.

13 | Page
Terminal Growth: Bangladesh Pharmaceutical industry is at its maturity stage, where leading companies like
Beximco pharmaceuticals normally allocate resources to defend existing market share. In such a stage valuing a
company where terminal growth rate applies here assuming minimal growth either Inflation or GDP is a sensible
factor to be considered. For the purpose of valuation of Beximco, we have considered the current GDP growth
rate, which is around 6% representing the net present value of future cash flows beyond the forecast
period(FY2024-FY2028).

Free Cashflow Method:

This model tries to determine whether investing in Beximco Pharmaceuticals limited is worthwhile based on
future cash flows. This analysis was based on the historical data of Beximco Pharmaceuticals Limited from 2019-

2023. We have used their audited financial statements of respective years in order to perform all the analysis and
derive relevant assumptions of financial line items, which is then used to forecast the data for FY2024-FY2028
in order to get the Free cash flow to the Firm for the respective years of forecast.

These Free cash flows represent the cash flow available to all capital providers both equity & debt holders of the
firm, which is then used to discount using our Average WACC rate of 15.47%. This analysis gives us a net present
value of free cash flow of the firm of BDT 237,284,523,372.00 providing an economically sound basis assessment

14 | Page
of the company's worth. This value is later adjusted for initial cash and mkt. securities, total asset value, firms’
debt position & non-controlling interest as of 30th June 2023 in order to estimate the value of common equity,
giving us a per share Price (intrinsic value) of BDT 609.24, which is 411.97% in excess of the current market
price is of BDT 119, which provides us with an interesting investment opportunity. Based on the insights of the
company's financial health and its ability to generate cash the stock is considered to be undervalued & the market
would eventually recognize the true value leading to share price appreciation in near future.

Dividend Discount Model approach (Gordon):

This model considers the future dividends that the company will pay and discounts them with shareholder required rate of
return. In the process of determining the stock price of Beximco Pharmaceuticals Ltd, we have used historical dividend
payout ratio from the FY2019-FY2023 and used 29.10% the average dividend payout ratio of Beximco pharma over the
last 5 years and used that as constant dividend payout ratio for the period of FY2024-FY2029 in order to derive future
dividend payments. As profits generated by company from its business activities are reflected in the stock prices, in this
model we have forecasted profit for our concerned forecasting period using sales as a benchmark where Beximco Sales has
a year-on-year average growth rate of 14.55%, which is then used as constant growth rate to come up with a sales range of
BDT 4,498.15 Cr. - BDT 8,873.31 Cr. over the period of our forecasting. The average position of the company's net profit
after tax from year-on-year historical analysis comes around 14.12% providing us with a EPS range of 14.24-24.52 where
total no. of share outstanding is considered to be constant for the foreseeable future as like the D/P ratio. With the assumption
of retaining 70.90% of profit every year and paying rest as dividend, our analysis using above mentioned assumptions
revealed that the company's dividend per share will grow up to BDT 8.18 per share over the next 5 years from the current
dividend payment of BDT1.15. These resulted Dividends over the next 5 years and the terminal value was discounted using
shareholders' required rate of return of 16.34% giving us a residual value of BDT57.78 per share. As currently shares of

15 | Page
Beximco pharma is trading 105.96% more than the intrinsic value that is derived from our analysis & the share is considered
to be overvalued.

Dividend Discount Model approach(P/E):

16 | Page
Under this approach of valuation, we assess the value of Beximco pharmaceutical limited by comparing it to other
similar businesses operating in the same industry. As the dividend discount model provides the intrinsic value
based on dividends and future value, using this model combined with P/E multiplier of the Bangladesh
pharmaceutical industry reflects market sentiment and expectations. There are a total of 20 pharmaceutical
companies listed in Dhaka stock exchange, the average P/E ratio of 30.46 of these companies hence is used as
industry P/E multiplier in our calculation of terminal value. For the benefit of relevance and accuracy of our
analysis we have excluded several considerations from our calculations due to their very high P/E ratio which is
considered to be outliers. The projected EPS 24.52 as of FY2028 has been considered with the peer companies
average P/E multiples of 30.46 in order to derive the terminal value of BDT746.91, which is then discounted at
the rate of 16.34% along with other projected dividend cash flows giving us a intrinsic value of BDT 367.67 per
share. Which is 208.97% in excess of the current market price and considered to be undervalued and we strongly
recommend the purchase of this share.

Sensitivity Analysis:

17 | Page
Sensitivity analysis offers insightful information about the reliability of models and facilitates better decision-
making by illuminating the effects of altering assumptions or inputs. The sensitivity analysis of Beximco
pharmaceutical concentrated on the long-term growth rate, required rate of return, and P/E multiple in the
valuation models. Specifically, the long-term growth rate was 6% and required return was 15.47%. We have
analyzed dividend discount model using intrinsic value of the firm, dividend discount Model -P/E using intrinsic
Value of the firm-P/E multiple and dividend discount model - free cash flow using share value.

This table seems to be a sensitivity Sensitivity-Free Cashflow Model analysis of

Required
Free Cash Flow (FCF) depending on rate of Long-term free cash flow growth rate various
return
combinations of long-term FCF 609.24 15% 16% 17% 18% 19% 20% growth rates
636.4 581.6 536.8 499.6 468.0
and needed return rates. It appears 6% 441.06 that the
3 7 9 0 7
required return rate, which is shown 660.7 600.6 552.0 511.9 478.2 in the first
7% 449.54
2 5 4 1 2
row, falls between 15% and 20%. A 688.0 621.7 568.7 525.3 489.2 long-term
7% 458.66
6 4 1 4 1
FCF growth rate of 6% to 9% is 719.0 645.3 587.1 540.0 501.1 shown in
8% 468.52
4 2 3 5 7
the first column. 754.4 671.8 607.6 556.2 514.2
8% 479.20
5 4 0 2 0
795.3 701.8 630.4 574.1 528.4
9% 490.80
0 9 8 1 8
842.9 736.2 656.2 593.9 544.1
9% 503.46
7 4 1 7 9
Each cell in the table represents the calculated share value that results from the long-
term free cash flow growth rate and the required return rate intersection. The share value BDT 609.244 in the
first row and column indicates the FCF when the required return rate is 15.47% and the long-term free cash flow
growth rate is 6%.

Dividend Discount Model (Gordon)

18 | Page
The Gordon model's sensitivity analysis is shown in this table, which examines how variations in the required
return and growth rate impact a stock's intrinsic value. The projected yearly growth rate of dividends is represented
by the growth rate. In this table, it falls between 6.00%
Sensitivity DDM-Gordon
and 9.00%, which is 6%. In each column, required return Growth
Required return
rate
ranges from 15% to 20%, which is 16.34%. For every
54.36 15% 16% 17% 18% 19% 20%
combination of growth rate and needed return, the values 56.3 50.8 46.3 42.5 39.2
6.00% 63.05
5 9 5 2 4
in the table show the stock's estimated intrinsic value 58.4 52.5 47.6 43.5 40.1
6.50% 65.71
based on the Gordon model. This table shows that how 0 0 4 7 1
60.6 54.2 49.0 44.7 41.0
7.00% 68.69
variations in the growth rate impact the stock's intrinsic 8 8 6 1 5
63.2 56.2 50.6 45.9 42.0
value as we proceed down each column while maintaining 7.50% 72.08
2 4 0 6 6
66.0 58.4 52.3 47.3 43.1
the necessary return constant. Higher growth rates 8.00% 75.95
9 2 1 1 5
generally translate into higher intrinsic values due to rising 69.3 60.8 54.1 48.7 44.3
8.50% 80.42
3 6 9 9 4
expected future dividends. There is observation about how 9.00% 85.63
73.0 63.6 56.2 50.4 45.6
4 0 8 2 4
variations in the required return impact the stock's
intrinsic value. Since investors want higher returns for the same amount of risk, higher required returns imply
lower intrinsic values.

Dividend Discount Model (P/E)

The Gordon model's sensitivity analysis is shown in this table, Sensitivity DDM-P/E
PE ratio Required return
with particular attention to how changes in the required return 15 16 17 18 19 20
367.67 % % % % % %
and the price-to-earnings ratio affect a stock's intrinsic value.
19.1 18.5 18.1 17.6 17.1 16.
10%
This table shows the P/E ratio varies between 10% and 45%, 0 9 1 4 9 76
19.7 19.1 18.6 18.1 17.7 17.
which is 30.46. Required return varies from 15% to 20%, 15%
1 8 7 7 0 25
20.3 19.7 19.2 18.7 18.2 17.
which is 15% to 20% which is 16.34%. The figures in the table 20%
2 6 2 1 2 74
show the intrinsic value of the stock that was determined using 20.9 20.3 19.7 19.2 18.7 18.
25%
3 4 8 5 3 24
the Gordon model for every possible combination of required 21.5 20.9 20.3 19.7 19.2 18.
30%
4 3 4 8 4 73
return and P/E ratio. Higher intrinsic values generally follow 22.1 21.5 20.9 20.3 19.7 19.
35%
5 1 0 2 6 22
higher P/E ratios, suggesting that investors are willing to pay 22.7 22.1 21.4 20.8 20.2 19.
40%
6 0 6 5 7 71
more for every taka of earnings. Since investors want higher
23.3 22.6 22.0 21.3 20.7 20.
45%
returns for the same amount of risk, higher required returns 7 8 2 9 9 21

imply lower intrinsic values.

19 | Page
Appendix

Appendix-1: Assumptions:

Pro-forma Statement Assumptions:

● Sales was taken as benchmark for the purpose of forecasting of every Line item of Financial statements
for the period of FY2024-FY2028
20 | Page
 ● The parameters used to forecast proforma statement was derived from historical analysis of the data
● Operating expenses were taken as % of sales, resulted in
o Cost of good Sold 50.39% of Sales
o Administrative Expenses 3.01% of Sales &
o Selling, Marketing & Distribution Expenses representing 21.15% of Sales
● Depreciation rate of 3.19% derived from the historical average of Depreciation expenses as % of Asset
cost at the beginning of every year.
● Current Assets to Sales ratio (49.67%) reveals the liquidity strategy.
● Current Liabilities to Sales ratio (10.42%) addresses short-term obligations.
● Net Fixed Assets to Sales ratio (138.54%) signifies long-term investments
● Interest rates on debt (7.06%) and Interest Paid on Cash and Marketable Securities (2.06%) affect
interest expenses

● The pro-forma statement resulted with negative cash Balances for the respective years of forecast, which
later adjusted increasing the long term debt amount of the company for the respective periods to balance
the Statement of financial position of Beximco Pharmaceuticals ltd.

● The current tax rate of any pharmaceutical company in bangladesh is 20%, which is assumed to be
constant for respective years of forecast.

Sales forecast Assumptions:

● Cumulative average growth rate of historical sales was found to be 14.54%.

● The growth of sales of the Beximco Pharmaceuticals Limited has a positive relation of 1.913 with GDP
growth rate of Bangladesh, whereas inflation and Population growth showing a coefficient of -0.476 & -
10.381 respectively demonstrating a negative relation.
● The Total value of Bangladesh Pharmaceuticals market is around 29,581.00 crore BDT as of last quarter
of 2023, having a 4-year CAGR of 6.70%, which we have sued to forecast market value for the respective
year and sales of Beximco with a market share of 11.10%.

● Our multi-variable forecasting of sales considered GDP, Inflation & population growth as independent
variables & this analysis is considered to be justified as more than 28% proportion of the variation of the
dependent variable is explained by the independent variables we have used.

Valuation Assumption:

21 | Page
 ● CAPM is used to calculate cost of equity, where the measurement of systematic risk of Beximco
Pharmaceuticals ltd derived from DSEX Index, showing a beta of beximco pharmaceutical ltd is 1.44 and
the market return of 14.03% is calculated using TOtal market capitalization of dhaka stock exchange using
historical data from the year 2004-2023.

o THe calculation of risk premium derived from the average historical difference of return between
Treasury bill & DSEX index yearly return. Where a thorough analysis was carried out on the
historical data from the year 2015-2023 providing us a risk premium of 3.21%.

● Another approach was adopted in determining the cost of equity, which is Gordon growth. In determining
the growth rate of dividend we have used the historical payment of dividend from the year FY2009-
FY2023 which resulted with a CAGR of 13.94%. Using the Most recent payment of dividend BDT3.5 &
putting into it in the formula of gordon growth, where growth of the dividend assumed to be the CAGR
of past payments, the cost of equity of the company came 16.66%.

● The dividend discount model was carried out considering average historical growth of sales 14.55% to
forecast future sales and net profit calculated as % of sales which is 14.12%. THe company has an average
dividend payout ratio of 29.10%, which is assumed to be constant for the foreseeable future. The
forecasted dividend hence discounted using the required rate of return of 16.34%, which is the average of
all the different calculations for cost of equity we have made.

● THe relative approach of P/E valuation considered industry wide P/E of all the companies that is listed on
dhaka stock exchange which is 30.46.

● THe terminal value of all the different models we have used to value this company is derived considering
Bangladesh’s GDP growth rate as long term growth rate of the companies cash flows beyond its forecasted
period.

22 | Page
Appendix-2:
Historical Data Analysis:

Historical Data-Beximco Pharmaceuticals Limited

July 2018- July 2019- July 2020- July 2021- July 2022-
Year June 2019 June 2020 June 2021 June 2022 June 2023
Income statement
Sales 22,816,629,795 25,611,947,655 29,493,573,869 34,669,172,052 39,266,662,237
- - - - -
Costs of goods sold
11,419,565,788 12,792,710,148 14,659,848,124 17,552,190,392 20,270,601,799
Gross Profit 11,397,064,007 12,819,237,507 14,833,725,745 17,116,981,660 18,996,060,438
Administrative Expenses -723,046,956 -757,935,919 -861,805,772 -1,081,904,731 -1,134,504,933
Selling, Marketing &
-4,665,081,181 -5,337,855,050 -6,207,025,279 -7,473,075,943 -8,584,812,404
Distribution Expenses
Interest payments on Bank
-824,858,713 -787,650,804 -578,560,598 -678,750,473 -883,207,883
Borrowings
Interest payments on Lease
-60,109,947 -28,711,869 -36,342,986 -47,069,776 -58,059,511
Liability
Interest earned on cash and
36,457,527 20,409,291 2,377,286 3,055,358 5,529,516
marketable securities
Depreciation &
-942,762,303 -1,113,952,424 -1,114,187,346 -1,680,257,043 -2,060,503,138
Amortization
Deferred Tax expenses -101,901,936 -22,288,436 174,879,849 -497,136,316 -75,701,600
Interest on Loan from PF,
-128,075,983 -166,837,043 -190,970,118 -199,775,709 -300,393,065
WPPF & Welfare Fund
Other Bank Charges -16,717,899 -30,604,369 -52,811,444 -76,239,565 -44,037,794
Contribution to WPPF &
-200,937,234 -235,808,378 -322,749,293 -359,222,585 -314,430,512
Welfare Funds
Total Other Income 103,460,138 273,149,013 905,897,998 1,163,203,808 447,128,228
Share of loss of associates -29,325,720
Profit before tax 3,844,163,800 4,631,151,519 6,552,428,042 6,189,808,685 5,993,067,342
Taxes(current tax only) -803,760,846 -1,086,668,418 -1,386,678,310 -1,191,180,488 -1,468,598,852
Profit after tax 3,040,402,954 3,544,483,101 5,165,749,732 4,998,628,197 4,524,468,490
Dividends -1,419,447,558 -1,419,447,558 -1,561,392,312 -669,168,134 -669,168,134
Retained earnings 1,620,955,397 2,125,035,544 3,604,357,421 4,329,460,064 3,855,300,357

Historical Data Statement of Financial Position

July 2018- July 2019- July 2020- July 2021- July 2022-
Year June 2019 June 2020 June 2021 June 2022 June 2023
Balance sheet
Current assets
Cash in Hand (including
Imprest Cash) 235,292,449 170,478,822 164,562,735 279,615,091 529,669,736
(i) Current & FC Account 338,805,413 426,156,203 470,765,642 736,688,901 606,016,442
(ii) FDR & SND Account - 36,396,437 38,381,494 40,138,231 152,369,829

23 | Page
Cash and marketable
securities 610,494,299 635,016,519 675,466,608 1,168,673,821 1,135,686,178
Other Current Assets 12,653,667,243 12,414,062,400 13,095,379,571 17,250,584,461 19,740,168,062
Total Current Assets 13,264,161,542 13,049,078,919 13,770,846,179 18,419,258,282 20,875,854,240

Non Current Assets Net 35,938,280,123 37,063,225,093 38,458,645,465 47,616,780,333 48,203,443,554

Other Investments 5,329,379 3,751,551 16,592,382 23,356,899 20,973,372
Other Non-current Assets 6,321,316 2,686,377
Deferred Tax Asset 88,640,228.00 56,512,081.00
Total assets 49,214,092,360 50,118,741,940 52,246,084,026 66,148,035,742 69,156,783,247
July 2018- July 2019- July 2020- July 2021- July 2022-
June 2019 June 2020 June 2021 June 2022 June 2023
Current Liability 1,856,660,325 2,505,291,649 2,925,091,267 3,819,419,286 5,203,958,597
Borrowings (Debt) 13,237,404,406 10,295,403,301 7,397,283,606 11,913,940,050 10,218,782,465
Lease Liability 247,375,215 208,860,444 234,020,629 456,761,583 393,116,228
Liability for Gratuity,
Pension and WPPF &
Welfare Funds 1,860,904,996 2,144,053,434 2,335,257,766 2,785,072,661 3,170,764,435
Deferred Tax Liability 2,147,423,581 2,167,683,499 1,989,565,929 2,536,837,704 2,550,495,544
Issued Share Capital 4,055,564,450 4,055,564,450 4,461,120,890 4,461,120,890 4,461,120,890
Share Premium 5,269,474,690 5,269,474,690 5,269,474,690 5,269,474,690 5,269,474,690
Excess of Issue Price over
Face Value of GDRs 1,689,636,958 1,689,636,958 1,689,636,958 1,689,636,958 1,689,636,958
Capital Reserve on Merger 294,950,950 294,950,950 294,950,950 294,950,950 294,950,950
Revaluation Surplus 1,131,853,004 1,125,767,451 1,121,824,646 1,116,896,688 1,141,177,755
Unrealized Gain/Loss 2,504,203 926,375 13,767,206 20,531,723 18,148,196
Accumulated retained
earnings 17,144,333,029 20,058,799,733 24,179,782,862 27,747,885,918 30,806,194,299
Non-Controlling Interest 276,006,553 302,329,006 334,306,627 4,035,506,641 3,938,962,240
Total Equity & liability 49,214,092,360 50,118,741,940 52,246,084,026 66,148,035,742 69,156,783,247

Cash flow Statement of Beximco Pharmaceuticals Limited for the period of FY2019-FY2023
July 2022-June July 2021-June July 2020-June July 2019-June July 2028-June
Particulars
2023 2022 2021 2020 2019
Cash Flows from Operating
Activities :
Receipts from Customers and Others 39,440,236,428 36,145,521,249 30,833,168,257 25,934,454,695 22,463,550,299
Payments to Suppliers and - - - - -
Employees 30,943,666,211 28,584,815,294 22,500,770,314 18,467,458,543 17,434,690,241
Cash Generated from Operations 8,496,570,217 7,560,705,955 8,332,397,943 7,466,996,152 5,028,860,058

Interest Paid -1,272,368,534 -1,002,350,838 -861,452,888 -1,012,519,091 -1,032,409,014

Interest Received 5,529,516 3,055,358 2,377,286 20,409,291 36,457,527
Income Tax Paid -1,144,944,341 -1,347,234,025 -1,450,058,386 -932,399,131 -1,072,991,667

24 | Page
 Net Cash Generated from
6,084,786,858 5,214,176,450 6,023,263,955 5,542,487,221 2,959,916,904
Operating Activities

Cash Flows from Investing

Activities:
Acquisition of Property, Plant and
-2,410,765,411 -2,815,211,828 -2,520,682,923 -2,243,555,782 -4,416,446,385
Equipment
Intangible Assets -299,262,244 -124,286,166 -37,734,793 -31,745,002 -128,619,282
Investment in Subsidiary -4,766,635,704
Disposal of Property, Plant and
23,353,504 24,063,832 32,831,171 3,646,251 17,540,625
Equipment
Disposal of Intangible Assets 67,725,000
Dividend Received 1,931,517 2,015,444 940,700 1,427,930 1,491,901
Decrease in Short Term Investment 323,364,536 16,032,638
Net Cash Used in Investing
-2,617,017,634 -7,680,054,422 -2,524,645,845 -1,946,862,067 -4,510,000,503
Activities

Cash Flows from Financing

Activities:
Net Increase /(Decrease) in Long
-1,763,267,386 2,730,647,211 -504,636,764 -1,000,373,112 -1,412,334,115
Term Borrowings
Net Increase/(Decrease) in Short
-229,380,048 1,507,676,748 -2,375,180,232 -1,970,741,462 3,684,312,230
Term Borrowings
Share Capital 100
Dividend Paid -1,567,923,375 -1,623,098,759 -578,351,025 -601,957,017 -505,351,881
Net Cash (Used in) / from
-3,560,570,809 2,615,225,200 -3,458,168,021 -3,573,071,591 1,766,626,334
Financing Activities

Increase/(Decrease) in Cash and

-92,801,585 149,347,228 40,450,089 22,553,563 216,542,735
Cash Equivalents
Cash and Cash Equivalents at
1,168,673,821 973,963,625 635,016,519 610,494,299 393,735,946
Beginning of Year
Effect of Exchange Rate Changes on
59,813,942 45,362,968 1,968,657 215,618
Cash and Cash Equivalents
Cash and Cash Equivalents at End of
1,135,686,178 1,168,673,821 675,466,608 635,016,519 610,494,299
Year

Determination of Parameters:

Operating Costs as function of Sales

July 2018-June July 2019-June July 2020-June July 2021-June July 2022-June
Year
2019 2020 2021 2022 2023
Operating costs
- -
Costs of goods sold -11,419,565,788 -12,792,710,148 -14,659,848,124
17,552,190,392 20,270,601,799
Administrative Expenses -723,046,956 -757,935,919 -861,805,772 -1,081,904,731 -1,134,504,933

25 | Page
 Selling, Marketing &
-4,665,081,181 -5,337,855,050 -6,207,025,279 -7,473,075,943 -8,584,812,404
Distribution Expenses
Depreciation &
-942,762,303 -1,113,952,424 -1,114,187,346 -1,680,257,043 -2,060,503,138
Amortization
Deferred Tax expenses -101,901,936 -22,288,436 174,879,849 -497,136,316 -75,701,600
Other Bank Charges -16,717,899 -30,604,369 -52,811,444 -76,239,565 -44,037,794
- -
Total Operating Costs -17,869,076,063 -20,055,346,346 -22,720,798,116
28,360,803,990 32,170,161,668
Less Depriciation 942,762,303 1,113,952,424 1,114,187,346 1,680,257,043 2,060,503,138
Operating costs Net of - -
-16,926,313,760 -18,941,393,922 -21,606,610,770
Depriciation 26,680,546,947 30,109,658,530
Sales 22,816,629,795 25,611,947,655 29,493,573,869 34,669,172,052 39,266,662,237
Parameters
Operating Cost/Sales 74.18% 73.96% 73.26% 76.96% 76.68%
Average 75.01%
Cost of goods Sold as % of
-50.05% -49.95% -49.71% -50.63% -51.62%
Sales
Average (COGS % of
-50.39%
Sales)
Administrative Expenses as
-3.17% -2.96% -2.92% -3.12% -2.89%
% of Sales
Average(Admin Exp as %
-3.01%
of Sales)
Selling, Marketing &
Distribution Expenses as % -20.45% -20.84% -21.05% -21.56% -21.86%
of Sales
Average -21.15%
Deferred Tax expenses as %
-0.45% -0.09% 0.59% -1.43% -0.19%
of Sales
Average -0.31%
Other bank Charges as % of
-0.07% -0.12% -0.18% -0.22% -0.11%
Sales
Average -0.14%

Interest payments on
-824858713 -787650804 -578560598 -678750473 -883207883
Bank Borrowings
As % of Sales -3.62% -3.08% -1.96% -1.96% -2.25%
Average -2.57%

Interest payments on
-60109947 -28711869 -36342986 -47069776 -58059511
Lease Liability
As % of Sales -0.26% -0.11% -0.12% -0.14% -0.15%
Average -0.16%

Interest on Loan from PF,

-128075983 -166837043 -190970118 -199775709 -300393065
WPPF & Welfare Fund
As % of Sales -0.56% -0.65% -0.65% -0.58% -0.77%
Average -0.64%

26 | Page
 Contribution to WPPF &
-200937234 -235808378 -322749293 -359222585 -314430512
Welfare Funds
As % of Sales -0.88% -0.92% -1.09% -1.04% -0.80%
Average -0.95%

Total Other Income 103460138 273149013 905897998 1163203808 447128228

As % of Sales 0.45% 1.07% 3.07% 3.36% 1.14%
Average 1.82%

Assets & Liability Side Items as a function of Sales

(Parameters)
July 2018-June July 2019-June July 2020-June July 2021-June July 2022-June
Year
2019 2020 2021 2022 2023
Sales 22,816,629,795 25,611,947,655 29,493,573,869 34,669,172,052 39,266,662,237

Other Current Assets 12,653,667,243 12,414,062,400 13,095,379,571 17,250,584,461 19,740,168,062

CA/Sales 55.46% 48.47% 44.40% 49.76% 50.27%
Average 49.67%

Current Liability 1,856,660,325 2,505,291,649 2,925,091,267 3,819,419,286 5,203,958,597

CL/Sales 8.14% 9.78% 9.92% 11.02% 13.25%
Average 10.42%

Lease Liability 247,375,215 208,860,444 234,020,629 456,761,583 393,116,228

Lease Liability/Sales 1.08% 0.82% 0.79% 1.32% 1.00%
Average 1.00%

Liability for Gratuity, Pension

1,860,904,996 2,144,053,434 2,335,257,766 2,785,072,661 3,170,764,435
and WPPF & Welfare Funds
as % of Sales 8.16% 8.37% 7.92% 8.03% 8.07%
Average 8.11%

Deferred Tax Liability 2,147,423,581 2,167,683,499 1,989,565,929 2,536,837,704 2,550,495,544

as % of Sales 9.41% 8.46% 6.75% 7.32% 6.50%
Average 7.69%

Revaluation Surplus 1,131,853,004 1,125,767,451 1,121,824,646 1,116,896,688 1,141,177,755

as % of Sales 4.96% 4.40% 3.80% 3.22% 2.91%
Average 3.86%

Unrealized Gain/Loss 2,504,203 926,375 13,767,206 20,531,723 18,148,196

27 | Page
 as % of Sales 0.01% 0.00% 0.05% 0.06% 0.05%
Average 0.03%

Non Controlling Interest 276,006,553 302,329,006 334,306,627 4,035,506,641 3,938,962,240

as % of Sales 1.21% 1.18% 1.13% 11.64% 10.03%
Average 5.04%

Other Investments 5,329,379 3,751,551 16,592,382 23,356,899 20,973,372

As % of Sales 0.02% 0.01% 0.06% 0.07% 0.05%
Average 0.04%

Unrealized Gain/Loss 2,504,203 926,375 13,767,206 20,531,723 18,148,196

As % of Sales 0.01% 0.00% 0.05% 0.06% 0.05%
Average 0.03%

Non Controlling Interest 276,006,553 302,329,006 334,306,627 4,035,506,641 3,938,962,240

As % of Sales 1.21% 1.18% 1.13% 11.64% 10.03%
Average 5.04%

Net fixed assets 35,938,280,123 37,063,225,093 38,458,645,465 47,616,780,333 48,203,443,554

As % of Sales 157.51% 144.71% 130.40% 137.35% 122.76%
Average 138.54%

Calculation of Interest Rate on cash and marketable securities

July 2018- July 2019- July 2020- July 2021- July 2022-
Year
June 2019 June 2020 June 2021 June 2022 June 2023
Cash and marketable securities 610,494,299 635,016,519 675,466,608 1,168,673,821 1,135,686,178
Interest earned on cash and
36,457,527 20,409,291 2,377,286 3,055,358 5,529,516
marketable securities
Interest rate 5.97% 3.21% 0.35% 0.26% 0.49%
Average 2.06%

Non-Current Assets Schedule of Beximco Pharmaceuticals Ltd

July 2018-June July 2019-June July 2020-June July 2021-June July 2022-June
Non Current Assets
2019 2020 2021 2022 2023
At cost (PPE) 29,700,913,106 29,431,687,814 30,859,580,471 55,332,564,017 56,328,758,559
Capital Work-in Progress 13,753,114,031 15,789,469,910 16,507,437,036 834,682,172 1,847,064,113
Accumulated Depreciation (PPE) -9,397,359,925 -10,220,348,093 -11,155,641,913 -14,406,915,462 -15,930,207,334
Right of use Assets 394,467,696 520,397,410 868,647,225 865,365,829

28 | Page
 Accumulated Depreciation (ROU) -154,303,777 -200,512,561 -249,755,849 -303,142,431
Intangible assets 1,541,055,749 1,572,800,751 1,775,637,840 5,312,093,482 5,337,463,270
Capital Work-in Progress 359,315,441
Amortization -206,134,051 -297,240,421 -394,944,031 -749,105,437 -975,744,078
Depreciation Rate Calculation
Total Non-Current Assets at the beginning of
31,241,968,855 31,398,956,261 33,155,615,721 61,513,304,724 62,531,587,658
the year
Total Depreciation and amortization
-942,762,303 -1,113,952,424 -1,114,187,346 -1,680,257,043 -2,060,503,138
expenses for the year
Average Depreciation rate for the year -3.02% -3.55% -3.36% -2.73% -3.30%
Average -3.19%

Calculation of Interest Cost

July 2018- July 2019- July 2020- July 2021- July 2022-
Particulars
June 2019 June 2020 June 2021 June 2022 June 2023
Cash and marketable
610,494,299 635,016,519 675,466,608 1,168,673,821 1,135,686,178
securities
Debt (Bank Borrowings) 2,348,232,577 1,442,729,946 972,696,465 2,997,427,260 2,157,717,026
Debt (Bank Borrowings)
10,889,171,829 8,852,673,355 6,424,587,141 8,916,512,790 8,061,065,439
Short Term
Net Debt 12,626,910,107 9,660,386,782 6,721,816,998 10,745,266,229 9,083,096,287
Interest payments on
824,858,713 787,650,804 578,560,598 678,750,473 883,207,883
Bank Borrowings
Net Interest cost 788,401,186 767,241,513 576,183,312 675,695,115 877,678,367
Implied cost of debt 6.89% 7.03% 7.74% 8.85%
Marginal cost of
6.69% 6.54% 7.03% 7.98%
borrowing
Average cost of debt 7.06%

Appendix-3: Sales Forecast

Sales Forecast-Total Market CAGR
Rank Manufacturer Value (Crore BDT) Market Share (%) Growth (%) CAGR% (4 Years)
Total Market 29,581.00 99.90% 2.00% 6.70%
1 SQUARE 5,039.00 16.80% -8.50% 7.30%
2 INCEPTA PHARMA 3,575.00 11.90% 3.10% 8.40%
3 BEXIMCO 2,867.00 11.10% 1.80% 10.80%
4 HEALTHCARE PHARMA 2,181.00 7.30% 2.90% 13.00%
5 RENATA 1,504.00 5.00% 4.20% 4.90%
6 OPSONIN PHARMA 1,391.00 4.60% 3.50% 3.50%
7 ARISTOPHARMA 1,265.00 4.20% 7.80% 7.70%
8 ESKAYEF 1,211.00 4.00% 1.50% 6.00%
9 RADIANT PHARMA 1,150.00 3.80% 5.90% 6.30%
10 ACME 1,134.00 3.80% 4.20% 13.40%
11 A.C.I 1,125.00 3.70% 7.80% 4.60%

29 | Page
 12 DRUG INTERNATIONAL 1,024.00 3.40% 13.30% -0.70%
13 POPULAR PHARMA 996.00 3.30% 19.60% 18.30%
14 UNITED & UNIHEALTH 747.00 2.50% 6.60% 9.00%
15 NOVO NORDISK 470.00 1.60% -1.30% 1.50%
16 GENERAL 428.00 1.40% -2.50% -4.00%
17 BEACON POHARMA 414.00 1.40% 7.60% 13.30%
18 ZISKA 349.00 1.20% 9.50% 13.00%
19 NIPRO JMI PHARMA 326.00 1.10% 12.40% 2.70%
20 IBN SINA 309.00 1.00% -3.60% 3.30%
21 SUN PHARMA 269.00 0.90% -0.40% -0.20%
22 NOVARTIS 254.00 0.80% 0.5 3.60%
23 SYNOVIA PHARMA PLC 251.00 0.80% 3.40% -4.60%
24 NAVANA 239.00 0.80% 6.30% 18.40%
25 NUVISTA PHARMA 236.00 0.80% 0.6 9.80%
26 ROCHE 222.00 0.70% -4.20% 7.90%
27 ORION PHARMA LTD 213.00 0.70% 5.10% 1.20%
28 SERVIER 158.00 0.50% 28.30% 19.40%
29 ELI LILLY 155.00 0.50% 8.70% 8.30%
30 SANDOZ 79.00 0.30% -8.00% -7.60%

Forecast of Beximco Pharma Sale using Industry wise CAGR

Year Total Market Value Beximco's % of share Sale Amount (in Crore)
06/30/2024 31562.93 11.10% 3503.484897
06/30/2025 33677.64 11.10% 3738.218385
06/30/2026 35934.05 11.10% 3988.679017
06/30/2027 38341.63 11.10% 4255.920511
06/30/2028 40910.52 11.10% 4541.067185

Sales Forecast-Multi-variable Analysis:

SUMMARY OUTPUT- GDP,
Inflation & Population
Regression Statistics
Multiple R 0.538418638
R Square 0.28989463
Adjusted R Square 0.132093437
Standard Error 0.110147851
Observations 23
ANOVA
Significa
df SS MS F
nce F
0.089154 0.02228 1.83708 0.165690
Regression 4
23 856 7691 75
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 0.218385 0.01213
Residual 18
885 2549
0.307540
Total 22
112
Standard Lower Upper Lower Upper
Coefficients t Stat P-value
Error 95% 95% 95% 95%
- - -
9.703111 0.69878 16.5701 16.5701
Intercept -3.81535866 0.39320 24.20083 24.2008
687 2779 223 223
9806 961 3961
- -
0.004794 0.41188 0.68528 0.01204 0.01204
Year 0.001974903 0.008098 0.00809
786 5587 6673 8375 8375
568 8568
- -
2.492438 0.76774 0.45259 7.14996 7.14996
GDP 1.913544715 3.322873 3.32287
399 0023 6101 3417 3417
988 3988
- - -
1.052952 0.65657 1.73610 1.73610
Inflation -0.476066352 0.45212 2.688236 2.68823
124 9817 3946 3946
5354 651 6651
- - -
10.40182 0.33149 11.4722 11.4722
Population -10.3812141 0.99801 32.23464 32.2346
715 8838 1355 1355
8324 175 4175
Forecast (Multi-variable Regression)
Year Sales Growth Sales Amount
2024 15.07% 45,183,364,315
2025 15.27% 52,080,828,050
2026 15.46% 60,134,078,291
2027 15.66% 69,551,360,338
2028 15.86% 80,580,790,657
2029 16.06%

Sales Forecast-Average of all the various methods:

Forecast 2
Forecast 1 (Multiple- Forecast 3

Growth
Actual Data (CAGR Regression) (CAGR-Total Average
Beximco) GDP & Market)
Inflation
Fiscal Year Sales Amount Sales Amount Sales Amount Sales Amount Sales Amount
06/30/2019 22,816,629,795
06/30/2020 25,611,947,655
06/30/2021 29,493,573,869
06/30/2022 34,669,172,052
06/30/2023 39,266,662,237
06/30/2024 44,974,579,287 45,183,364,315 35,034,848,970 42,039,444,621 7.06%
06/30/2025 51,512,215,879 52,080,828,050 37,382,183,851 47,033,353,667 11.88%
06/30/2026 59,000,182,478 60,134,078,291 39,886,790,169 52,593,109,701 11.82%
06/30/2027 67,576,621,836 69,551,360,338 42,559,205,110 58,807,944,031 11.82%
06/30/2028 77,399,757,544 80,580,790,657 45,410,671,853 65,785,124,523 11.86%
31 | Page
 Average Growth Rate 10.89%

Appendix-3: Weighted average Cost of Capital

Calculation of WACC:
WACC Calculation using Market Value
Total Share Outstanding as on 30th June 2023 446,112,089
Share price as on 30th June 2023 146.44
TOtal Equity value as on 30th June 2023 65,330,222,238
Total Debt as on 30th June 2023 10,218,782,465
Average Cost of debt 7.06%
Average Market Return (DSEX) 14.03%
T-Bill Rate (365Days) 11.6%
Current Lending rate By BDBanks 12.38%
Current Tax Rate(pharma Co.) 20.00%

WACC-CAPM (if Current lending rate is used):

Cost of equity 16.24%
Weighted average cost of capital 15.38%

WACC- Gordon Growth Model:

Cost of equity 16.66%
Weighted average cost of capital 15.74%

WACC-CAPM (Tax adjusted):

Cost of Equity (Tax Adjusted) 16.13%
Weighted average cost of capital 15.29%

Average WACC 15.47%

Beta Calculation(Measurement of Systematic Risk):

Statistics Beximco & DSEX Index Data (2013-2023)

Covariance of Beximco &
0.00276
DSEX
Variance of DSEX 0.00191
Beta of Beximco 1.44
Slope 1.44

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 Rsquare 46.36%
Alpha 0.007

Beta calculation using Regression:

REGRESSION SUMMARY
OUTPUTH15:L39A1H15:K36H15:L44A1H15:K36H15:LH15:O3
1

Regression Statistics
Multiple R 0.68
R Square 0.46
Adjusted R Square 0.46
Standard Error 0.07
Observations 120.00

ANOVA
Significa
df SS MS F nce F
102.004
Regression 1.00 0.472859198 0.472859198 2746 0
Residual 118.00 0.547010266 0.46%
Total 119.00 1.019869464

Coefficien Lower Upper Lower Upper

Standard Error t Stat P-value
ts 95% 95% 95% 95%
- -
0.27370 0.01919 0.01919
Intercept 0.01 0.006231889 1.099702462 0.005487 0.005487
0285 4061 4061
613 613
1.16278 1.159406 1.72494 1.159406 1.72494
Beximco 1.44 0.142793814 1009.97%
E-17 427 766 427 766

Calculation of Risk Premium:

Calculation of Market Risk Premium
T-Bill Rate as of June 30th DSEX Return Risk
Date Rate(June) Date Return Premium
26/06/2023 8.30% FY23 3.11% -5.19%
27/06/2022 6.66% FY22 -4.53% -11.19%
27/06/2021 1.07% FY21 52.46% 51.39%
27/06/2019 7.39% FY19 -3.09% -10.48%
19/06/2018 4.99% FY18 -9.52% -14.51%
22/06/2017 4.49% FY17 29.51% 25.02%
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 20/06/2016 5.29% FY16 -5.57% -10.86%
29/06/2015 6.70% FY15 8.25% 1.55%

Risk Premium (Average) 3.21%

Calculation of cost of Equity-CAPM

Calculation of Cost of Equity
T-bill rate As on 11th March 2024 11.6%
Risk Premium (Average) 3.21%
Current Tax Rate (pharma Co.) 20.00%
Average Market Return 14.03%

Ke(CAPM) 16.24%
Ke-CAPM(Tax-Adjusted) 16.13%

Calculation of cost of Equity-Gordon Growth

Cost of Equity (Gordon Growth Model)
Dividend History Beximco
Calculation of Cost of Equity (Gordon growth model)
Pharma
Ex-Div Date Dividend No. of observation 12
Nov 14, 2023 3.50 Dividend Growth 13.94%
Nov 22, 2022 3.50 Dividend Yield FY2023 2.39%
Nov 23, 2021 3.50 Stock Price as of 30th June 2023 146.44
Nov 26, 2020 1.50 Dividend FY2023 3.50
Nov 26, 2019 1.50 Cost of equity 16.66%
Nov 27, 2018 1.25
Nov 16, 2017 1.25
Nov 02, 2016 0.50
May 15, 2016 1.00
May 24, 2015 1.00
May 19, 2014 1.00
May 26, 2009 0.83

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Calculation of Market Return:

DSE Market Cap Data Return of DSE Returns Excluding Outliers

Date (Market
Total Market Cap in DSE
Opening & Fiscal year Fiscal year Return/HPR
Taka Return/HPR
Closing)
26-06-2023 7,720,780,404,000.00 2023 49.27% 2023 49.27%
03-07-2022 5,172,428,708,000.00 2022 0.07% 2022 0.07%
30-06-2022 5,177,816,911,000.00 2021 64.95% 2021 64.95%
05-07-2021 5,173,985,266,000.00 2020 -21.63% 2020 -21.63%
30-06-2021 5,142,821,304,000.00 2019 4.47% 2019 4.47%
02-07-2020 3,117,751,977,000.00 2018 0.96% 2018 0.96%
30-06-2020 3,119,669,823,000.00 2017 19.90% 2016 -1.66%
02-07-2019 3,980,801,927,000.00 2016 -1.66% 2015 10.90%
30-06-2019 3,998,163,762,000.00 2015 10.90% 2014 13.72%
02-07-2018 3,827,061,798,000.00 2014 13.72% 2013 3.77%
28-06-2018 3,847,347,789,000.00 2013 3.77% 2012 -13.36%
02-07-2017 3,810,685,584,000.00 2012 -13.36% 2011 5.59%
29-06-2017 3,801,000,958,000.00 2011 5.59% 2009 31.51%
10-07-2016 3,170,012,334,000.00 2010 112.85% 2006 -1.75%
30-06-2016 3,185,749,345,000.00 2009 31.51% 2005 63.63%
02-07-2015 3,239,494,585,000.00 2008 92.70%
30-06-2015 3,247,306,316,000.00 2007 120.87%
02-07-2014 2,928,259,041,000.00 2006 -1.75%
30-06-2014 2,943,202,318,000.00 2005 63.63%
02-07-2013 2,588,158,321,000.00
30-06-2013 2,530,245,993,000.00
02-07-2012 2,438,394,359,000.00
28-06-2012 2,491,612,943,000.00
03-07-2011 2,875,956,145,000.00
30-06-2011 2,853,892,240,000.00
04-07-2010 2,702,931,119,000.00
30-06-2010 2,700,744,561,000.00
02-07-2009 1,268,852,563,000.00
30-06-2009 1,241,338,962,000.00
02-07-2008 943,908,366,000.00
30-06-2008 931,025,238,000.00
02-07-2007 483,157,849,000.00
28-06-2007 475,855,370,000.00
02-07-2006 215,445,599,000.00
29-06-2006 215,421,866,000.00
02-07-2005 219,256,070,000.00

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 29-06-2005 222,045,576,000.00
04-07-2004 135,703,513,000.00

Market Return (DSE)

FY05-23 (without
Particulars FY05-23
outliers)

Average Return DSE 29.30% 14.03%

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