What Analysts Made Of Sun Pharma's Q4 Earnings
Shares of Sun Pharma fall after it reports a drop in Q4 profit.
Shares of Sun Pharmaceutical Industries Ltd.’s declined a day after the drugmaker reported that its lower other income and its an operating loss at its U.S. arm dragged down fourth-quarter profit.
Consolidated net profit of the nation’s largest drugmaker fell 52% sequentially to Rs 894.15 crore in the quarter ended March, according to an exchange filing. Its revenue fell 4% and margin contracted 2.25 percentage points over the previous quarter.
Shares of Sun Pharma closed 3.84% lower after falling as much as 4.27 intra-day. The benchmark Nifty 50 ended 0.6% higher on Friday.
Here’s what brokerages had to say about Sun Pharma’s fourth quarter results:
Macquarie
Raised target price to Rs 782 apiece, implying an upside 16% from current levels.
Q4 global speciality sales dipped 6% quarter-on-quarter to $139 million.
U.S. sales fell 1.3% over a year earlier to $370 million due to lower Taro sales.
Sun Pharma expects to grow in U.S. generics in FY22.
Sun Pharma remains confident of growing its share in Cequa.
Expects field force expansion and efforts to fortify brands to lead outperformance even post Covid-19.
Sun Pharma will be developing biosimilars with an eye on the third wave of the pandemic. But it won't be easy as it's a late entrant in this segment.
ICICI Securities
Downgraded from ‘Buy’ to ‘Add’ with a target price of Rs 752, a potential upside of 12%.
India growth strong at 12.9% while global specialty revenue remained stable.
Ebitda margin dropped due to increase in selling, general and administration expenses.
Specialty product Ilumya reported sales growth 51% in FY21 to $143 million globally. Generic entry in Absorica will impact the revenue in near term.
Focus on cost control and free cash flow generation has augured well and net debt (ex-Taro) now stands at $179 million, which is expected to reduce further.
Chronic and sub-chronic growth remained strong while acute portfolio continues to face challenges.
Expects the company to continue its outperformance versus the industry growth, supported by its strong chronic portfolio.
Positive on long-term outlook considering strong India business, scale-up in specialty sales and focus on margin expansion through superior revenue mix and operational efficiency.
Raised FY22-FY23 earning estimate by 2-4% to factor in better margins.
Recent rally has capped the upside.
Nirmal Bang
Downgraded to ‘Accumulate’ with a target price of Rs 710 apiece, a potential upside of 6%.
Q4 revenue stood at Rs 8,523 crore, up 4.1% year-on-year and 3.6% lower quarter-on-quarter.
Revenue was lower than the brokerage's and consensus expectations by 2%.
Underperformance was led by weakness in emerging markets and rest of the world portfolio, which declined 7% quarter-on-quarter.
Specialty portfolio sales fell 6% sequentially.
Ramp up in sales to continue for Ilumya and Cequa.
On the generic side, Taro sales remain under pressure as patient visits to dermatologists at 70% of the normal level, impacting prescription generation.
The company’s generic business in the U.S. should deliver growth in FY22 aided by new drug approvals.
Potential resolution of warning letter at Halol should further help.
The growth should continue led by support from its expanded sales force and revival in sub-chronic and acute segment.
Currently do not factor in upside from a potential approval of complex drug filings as timing remains unpredictable.
Motilal Oswal
Maintained ‘Buy’ with a target price of Rs 830 per share, implying an upside of 23%.
Domestic formulation business growth has been strengthening for three consecutive quarters now.
Raised earnings estimate by 9%/8% for FY22/FY23, factoring in continued ramp-up in Illumya, led by the specialty portfolio; healthy growth in the base domestic formulation portfolio as well as additions to the Covid portfolio; and subsequently better operating leverage.
Sun Pharma is building a biosimilar portfolio for launch over CY28–30.
Yet to see clarity on the amount of investment needed for product development as well as building capacity.
Remains positive on Sun Pharma on its superior execution in the global specialty portfolio, branded generics and a robust ANDA pipeline.
