Sun Pharma Q1 Results Review: Analysts Positive On Product Pipeline

Most analysts remain positive on Sun Pharmaceutical Industries Ltd. maintaining a 'buy', citing an innovative product pipeline and better execution in branded markets.

The company's net profit fell 2% year-on-year to Rs 2,023 crore in the April-June quarter, according to an exchange filing. That compares with the Rs 2,162 crore consensus estimate of analysts tracked by Bloomberg. The company had an exceptional loss of Rs 323 crore.

Sun Pharma Q1 Results FY23: Key Highlights (YoY)

• Revenue rose 11% to Rs 11,941 crore. (Bloomberg estimate: Rs 11,742 crore).

• Ebitda was up 22% at Rs 3,330 crore (Bloomberg estimate: Rs 2,991 crore).

• Margin stood at 27.9% versus 25.4% (Bloomberg estimate: 25.5%).

Shares of Sun Pharma declined 1.26% to Rs 1126.45 apiece as of 9:15 a.m., compared with 0.34% gains in the benchmark Sensex.

Of the 41 analysts tracking the company, 37 have a 'buy' rating, two suggest a 'hold,' and two recommend a 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 4.7%.

Brokerages' take on Sun Pharma's quarterly results:

Motilal Oswal

• Reiterates a 'buy' with a target price of Rs 1,310 apiece, implying an upside of 15%.

• Better-than-expected operating performance in Q1FY24.

• The steady traction in specialty sales, higher U.S. generics sales, and controlled opex led to a 12% beat on Ebidta.

• A better product mix drives margins.

• Niche portfolio driving robust sales for the U.S. segment.

• R&D expenses are likely to pick-up over the coming quarter due to progress in major clinical programme.

• Earnings estimates raised due to better off-take in the U.S. generics and improved profitability

• Remains positive due to robust innovative product franchises and superior execution in branded generics markets.

Jefferies

• Maintain 'buy' rating with a revised price target of Rs 1,310 from Rs 1,150 earlier, implying an upside of 15%.

• Revenue was in line, while Ebitda/adjusted PAT beat estimates.

• Higher-than-expected sales of gRevlimid in the U.S. and lower R&D expenses drove this beat.

• India's business growth of 5% was tepid due to the impact of price regulation and the loss of the Sitagliptin patent.

• Expects India's business to grow in-line with the market in the
  coming quarters.

• Sun Pharma's global specialty business looks well on its way to achieving $1 billion in revenue by FY25.

• This would be led by key products like Ilumya, Cequa and Winlevi.

• The company has four novel products in its R&D pipeline.

• The recent acquisition of Concert products should start contributing in FY26.

• Expect double-digit revenue growth in FY23-26 aided by leadership in India and emerging markets coupled with a global specialty ramp-up.

Systematix

• Lowered rating to 'hold' from 'buy', but revised target price to Rs 1,194 from Rs 1,125 apiece earlier, implying an upside of 5%.

• Brokerage cited limited upside to current price levels.

• Strong performance led by lower other expenses on a quarter-on-quarter basis (lower 7% quarter-on-quarter) and strong growth in North America which was up 10% quarter-on-quarter.

• U.S. performance seems to have been led by the ramp-up of the recent launch of gRevlimid in the U.S.

• Global specialty revenue declined quarter-on-quarter in low single-digit terms owing to seasonal weakness in Levulan.

• The strong growth in North America was partially offset by dull growth in India (5% year-on-year).

• One of the reasons India's business growth was impacted was the patent expiry of one of its key products (Sitagliptin).

• In emerging markets, Romania and Brazil were strong performers.