Sun Pharma’ sales in Q4FY18 declined by 2.2% yoy to Rs6,977.1cr. EBITDA grew by 8.8% yoy to Rs1,683.5cr in Q4FY18. EBITDA margins were at 24.1% in Q4FY18 vs. 21.8% in Q3FY18 and 21.7% in Q4FY17. PAT grew by 15.5% yoy to Rs1,552.3cr in Q4FY18.
The quarter includes one-off, exceptional items, tax write back of Rs258.6cr on account of difference on tax and book value on intra-group transfer of certain intangibles. Adjusted for this one-off item, PAT would have been at Rs1,294cr, still ahead of the street estimate of Rs854cr for Q4FY18.
Sun Pharma’s gross margins improved by 619bps qoq and 539bps yoy, which is better than estimates. This indicates that the US portfolio is not witnessing harsh price erosion.
Sun’s subsidiary, Taro Pharma, in its March quarter results had reported gross margin decline by 535bps yoy to 67.9% in Q4FY18 and decline in Sun’s margins is lower than that of Taro.
Sun Pharma’s gross margins are best in the past six quarters, while EBITDA margins are best in the past five quarters.
Sale of branded formulations in India for Q4FY18 was Rs1,963cr, up 2% yoy.
In the domestic business, company continues to have 8.5% market share.
Sales in the US declined 3% yoy to $368mn for Q4FY18.
Loss of exclusivity of Imatinib, overall pricing pressure in the US generics market and lower authorized generic sales impacted the growth.
Sales in emerging markets grew by 10% yoy to $199mn for Q4FY18.
Formulation sales in ROW markets grew by 6% yoy to $116mn in Q4FY18.
External API sales for Q4FY18 declined by 16% yoy to Rs332cr.
The Q4FY18 result was good due to better product mix and lower decline in gross margin of Taro.
Sun pharma has said that it will continue to focus on specialty products in the US markets.
US business and API saw pressure in the Q4FY18.
For FY19E, it expects revenue to grow in double digits and expects to sustain the margin level. It is expecting to launch three specialty products including Yonsa launch in Q1FY19E.
Company has said that it has hired people to ramp up its specialty products and expects that it can get fair market share in the specialty products.
Sun Pharmaceuticals Industries Ltd is currently trading at Rs. 466.55, up by 4.5 points or 0.97% from its previous closing of Rs. 462.05 on the BSE.
The scrip opened at Rs. 465.60 and has touched a high and low of Rs. 472 and Rs. 456.45 respectively. So far 53,40,773 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.
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