Sun Pharma (Q4 FY12)

India Infoline News Service | Mumbai |

Q4 Revenues up by 60% yoy and 9% qoq at Rs23.3bn; 6% higher than our expectations

CMP Rs577, Target Rs646, Upside 12.0% 
  • Q4 Revenues up by 60% yoy and 9% qoq at Rs23.3bn; 6% higher than our expectations
  • Higher than expected growth was primarily led by better than expected growth in its US subsidiary, one-off like cancer drug Doxil in US , forex impact, higher other income and one time additional sale of Rs1.8bn in domestic business
  • Domestic market grew by 49% to Rs8.7; (21% after adjusting for Rs1.8bn one-off)
  • US clocked in strong revenue growth of 84% yoy growth and -3% qoq (~30% yoy growth in constant currency basis)
  • EBIDTA margin at 41%; 300bps above our expectation; largely driven by Taro performance, business mix, one-offs and better realization of Rupee
  • PAT accelerated by 79% yoy primarily on account of one offs mentioned above and greatly by other income
  • Guidance for ~18-20% revenue growth on constant currency basis (Rs exchange rate of 51/$)
  • We maintain Buy rating with a 9-month revised target price of Rs646

Result table

(Rs m) Q4FY12 Q4FY11 % yoy Q3FY12 % qoq
Net sales 23,299 14,633 59.2 21,451 8.6
Inc/(dec) in stock (1,073) (2,879) (62.7) (1,386) (22.6)
Con of Materials (4,960) (5,616) (11.7) (4,678) 6.0
Purch of traded goods (1,022) (395) 158.5 (487) 110.0
Employees' Cost (3,480) (2,540) 37.0 (2,885) 20.6
Other Expenditure (5,346) (4,525) 18.1 (5,148) 3.8
Operating profit 9,565 4,436 115.6 9,640 (0.8)
OPM (%) 41.1 30.32 1073 bps 44.94 (389) bps
Depreciation (823) (482) 70.6 (774) 6.3
Net Interest income (112) (210) (46.7) (13) 761.5
Other income 2,181 1,318 65.5 (257) (947.7)
PBT 10,811 5,062 113.6 8,595 25.8
Tax (1,768) (22) 7,799.0 (634) 178.8
Effective tax rate (%) 16.4 0.4 1591 bps 7 898 bps
PAT 9,043 5,039 79.4 7,961 13.6
PAT margin (%) 841 612 37.4 1,274 (34.0)
Minority Interest 8,202 4,427 85.3 6,687 22.7
PAT 35.2 30.26 495 bps 31.2 403 bps
Ann. EPS (Rs) 32 17.1 85.3 26 22.7
Source: Company, India Infoline Research

Q4 Revenues up by 60% yoy and 9% qoq at Rs23.3bn; 6% higher than our expectations

Sun Pharma reported 60% growth in sales to Rs23.3bn in Q4 FY12, is 5% ahead of our expectation. Higher than expected growth in revenues is primarily led by higher than expected growth in its US subsidiary, Taro , one-off like cancer drug Doxil in US, forex impact, higher other income and one time additional sale of Rs1.8bn in domestic business. At constant dollars, rest of the world growth is 40% for the quarter four, and 34% for the year


Domestic market grew by 49% to Rs8.7bn; (21% after adjusting for Rs1.8bn one-off)

The company reported Rs1.8bn of additional sales this year in the fourth quarter. The higher base will negatively impact domestic sales in the first half of FY13. Excluding the impact of the nonrecurring sales, growth in the core business was 21% for the quarter and 20% for the year. The segment grew well above ~16% of total domestic pharmaceutical market.


Sales Breakup
Sales Breakup (Rs mn) Q4FY12 Q4FY11 % yoy Q3FY12 % qoq
India Formulations 8,767 5,887 48.9 6,956 26.0
US Formulations 10,106 5,439 85.8 10,400 (2.8)
ROW Formulations 3,226 2,322 38.9 2,810 14.8
Total Export Formulation 13,332 7,761 71.8 13,210 0.9
Total Formulations 22,099 13,648 61.9 20,166 9.6
Bulk 1,531 1,167 31.2 1,536 (0.3)
Others 8 66 (87.7) 17 (53.5)
Total Sales 23,638 14,881 58.8 21,720 8.8
 Source: Company, India Infoline Research

Cost analysis 
As a % of net sales Q4FY12 Q4FY11 bps yoy Q3FY12 bp
 

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