Sun Pharma (Q3 FY13)

India Infoline News Service | Mumbai |

Revenue growth 33.6% yoy to Rs28.7bn was better than our estimates.

CMP Rs742, Target Rs842, Upside 13.5%

  • Revenue growth of 33.6% yoy and 7.6% qoq to Rs28.7bn was ~7% better than our estimates

  • The growth was primarily led by better than expected growth in its US subsidiary, Taro and niche product like Lipodex and Stalevo

  • Domestic market adjusting for base of last year grew by 19% yoy to Rs7.9bn

  • US Formulation clocked in strong revenue growth of 43.7% yoy to Rs14.9bn; US$ revenue growth at 32% yoy to US$276mn

  • EBITDA margins declined 46bps yoy and increased 37bps qoq to 44.5%

  • The company managed to maintain high operating margin even in this quarter at 44.5%, largely led by Taro performance, niche product launches and better realization of rupee

  • In line with sales, PAT accelerated by 31.8% to Rs8.8bn

  • Sun pharma decided to withdrew its offer of acquisition of residual shares of Taro

  • We believe going forward, approval of generic version of Doxil, niche launches and integration of DUSA Pharma & URL will keep the thrust on going in the US market. We upgrade our recommendation to BUY and value the company at Rs842

Result table
(Rs mn) Q3 FY13 Q3 FY12 % yoy Q2 FY13 % qoq
Operating Income 28,655 21,451 33.6 26,639 7.6
Inc/(dec) in stock 102 (1,386) (107.3) (1,043) (109.7)
Consumption of Materials (4,251) (4,678) (9.1) (4,872) (12.7)
Purchase of Traded Goods (1,241) (487) 154.9 (1,057) 17.3
Employees' Cost (3,871) (2,885) 34.2 (3,568) 8.5
Other Expenditure (6,445) (5,148) 25.2 (6,434) 0.2
Operating profit 12,745 9,640 32.2 11,751 8.5
OPM (%) 44.5 44.94 (46) bps 44.11 37 bps
Depreciation (844) (774) 9.1 (829) 1.9
Interest income 123 (13) (1,046.9) (283) (143.6)
Other income 678 (257) (363.7) 1,758 (61.4)
PBT 12,703 8,595 47.8 12,398 2.5
Tax (2,369) (634) 273.4 (2,139) 10.7
Effective tax rate (%) 18.6 7.4 1127 bps 17 139 bps
PAT 10,334 7,961 29.8 4,423 133.6
Min Interest & other Adj 1,521 1,274 19.4 1,161 31.0
Reported PAT 8,813 6,687 31.8 3,262 170.2
Adj PAT 8,813 6,687 31.8 9,098 (3.1)
PAT margin (%) 30.8 31.17 (42) bps 34.2 (340) bps
Ann. EPS (Rs) 34.0 25.8 31.8 35.1 (3.1)
Source: Company, India Infoline Research

Revenue growth of 33.6% yoy and 7.6% qoq to Rs28.7bn was ~7% better than our estimates Revenue growth 33.6% yoy to Rs28.7bn was better than our estimates. The growth in revenues was primarily led by higher than the expected growth in its US subsidiary (Taro), niche products like Lipodex and Stalevo and forex impact. Indian formulations grew by 13% yoy; Adjusted Domestic growth was 19% yoy (adjusted for the sales of last year). US formulations grew by 40.3% to Rs3.9bn. Formulation sales in rest of the world (ROW) markets outside of India and US accounted for US$73mn in Q3 FY13 registering a growth of 31% in $ terms. API business which is largely for captive purpose, also, continues to grow.  External sales of API grew by 36.1% yoy to Rs2.1bn in Q3 FY13. 


Revenue Break-up
Rsmn. Q3FY13 Q3FY12 % yoy Q2FY13 % qoq
India Formulations 7,885 6,956 13.3 8,099 (2.6)
US Formulations 14,946 10,400 43.7 13,301 12.4
ROW Formulations 3,942 2,810 40.3 3,726 5.8
Export Formulation 18,888 13,210 43.0 17,027 10.9
Total Formulations 26,773 20,166 32.8 25,125 6.6
Bulk 2,090 1,536 36.1 1,758 18.9
Others 59 17 240.3 125 (52.6)
Total Sales 28,922 21,720 33.2 27,008 7.1

US Formulation clocked in strong revenue growth of 43.7% yoy to Rs14.9bn; US$ revenue growth

 

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