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Sun Pharma 1QFY2015 performance highlights and results update

August 14, 2014, Thursday, 20:36 GMT | 15:36 EST | 00:06 IST | 02:36 SGT
Contributed by Angel Broking


For 1QFY2015, Sun Pharmaceuticals Industries (Sun Pharma) posted results lower than our expectations on the sales and net profit fronts, while the OPM came in higher than our expectations. Sales during the quarter came in at Rs.3,927cr (V/s an expected Rs.4,200cr), a yoy growth of 12.8%. On the operating front, the EBITDA margin stood at 43.9%, same as in 1QFY2014 and V/s an expected 41.8%). The adjusted net profit came in at Rs.1,390cr, up 10.2% yoy. We remain Neutral on the stock.

Better-than-expected results on OPM front: For 1QFY2015, the company posted results lower than our expectations on the sales and net profit fronts, while the OPM came in higher than our expectations. Sales during the quarter came in at Rs.3,927cr, a yoy growth of 12.8% and V/s our expectations of Rs.4,200cr. Branded generic sales in India, at Rs.992cr, were up by 17% yoy over the corresponding period of last year. US finished dosage sales at US$389mn grew by 7% yoy. US sales were impacted mainly by a protection charge of US$79mn, taken by Taro during the quarter. International formulation sales outside US, at US$82mn, grew by 2% (in US$ terms) over the corresponding quarter of last year. The EBITDA margin, at 43.9%, was same as 1QFY2014 and V/s an expected 41.8%. The adjusted net profit came in at Rs.1,390cr, a growth of 10.2% yoy and V/s an expected Rs.1,428cr. The reported net profit was lower than expected in spite of a higher-than-expected OPM, due to higher taxation and lower than expected sales during the period.

Outlook and valuation: Sun Pharma is one of the largest and fastest growing Indian pharmaceutical companies. We expect its net sales to post a 25.4% CAGR (including Ranbaxy Laboratories) to Rs.38,186cr and EPS to post a 5.3% CAGR to Rs.32.1 over FY2014–16. We remain Neutral on the stock.