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Nirmal Bang Report
Sun Pharmaceutical Industries Ltd.'s Q2 FY23 results were a beat on profitability mainly due to strong gross margin while excluding Taro, revenue was almost in line with estimate.
Revenue (excluding $10 million of milestone payment in Q2 FY22) grew by 14.7% YoY to Rs 109.5 billion (our estimate: Rs 112.2 billion) mainly due to strong growth in U.S. specialty segment.
Sun Pharma's global specialty segment grew by 27.4%/4.7% YoY/QoQ to $200 million due to continuous growth in Ilumya, Cequa and Winlevi.
Ebitda margin stood at 27% against our estimate of 26.2% mainly due to strong gross margin. Net profit grew by 14.3% YoY to Rs 22.6 billion against our estimate of Rs 19.7 billion.
We remain positive on Sun Pharma due to the following factors:
ramp-up of branded/specialty business in the U.S.,
continued growth in India business,
potential inorganic opportunity due to a strong balance sheet and
maintenance of healthy Ebitda margin at ~27% despite higher research and development spends.
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