Sun Pharma Q3 Results Review — Branded Markets Growth Outpace Expectations; Systematix Retains 'Buy'

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Systematix Research Report

Sun Pharmaceuticals Ltd. reported revenue at Rs 1,36,755 million in Q3 FY25, up 10.5% on a YoY basis and up 2.9% on a QoQ basis was in line with estimates. Ebitda at Rs 40,090 million was in-line with our estimates but lower than consensus estimates by ~9%. The quarter had a lower contribution from gRevlimid but the same was offset by a one-time milestone income of $45 million recorded as part of specialty revenues, which supported Ebitda performance.

Net Earnings at Rs 29,034 million was 9% lower than our estimate but in-line with consensus and was adversely impacted by extraordinary expense pertaining to litigation settlement (Rs 3,160 million). Research and development which was expected to increase in the current quarter meaningfully remained subdued as the clinical trial initiation got delayed and hence the guidance for R&D expense for the full year has been lowered to less than 7% of sales (versus guidance of 8-10% earlier).

India Branded Formulation and Emerging Market YoY growth remained strong at 13% and 10% respectively. US sales was adversely impacted by lower contribution from gRevlimid which was down 8% QoQ.

Favorable seasonality of Levulan in the specialty portfolio was not enough to offset the gRevlimid decline. We expect gRevlimid contribution to be meaningful in the next quarter.

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