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Informist, Friday, Jul 19, 2024

 

By Sunil Raghu

 

AHMEDABAD – Sun Pharmaceutical Industries Ltd's consolidated net profit for Apr-Jun is seen rising 29.1% to 26.1 bln rupees from 20.2 bln rupees a year ago, according to the average of estimates by 11 brokerages. The Street expects the company to perform better in spite of lower sales in the US, a key market, on robust growth in the speciality pharmaceuticals business. The company is slated to announce its Apr-Jun earnings on Aug 1.

 

The brokerages see Sun Pharmaceutical's consolidated revenue rising 7.7% to 128.6 bln rupees in Apr-Jun. Sequentially, net profit is expected to fall 1.7% and revenue is seen rising 7.3%.

 

The estimates for Sun Pharma's net profit are in the range of 23.9-28.9 bln rupees, with HDFC Securities Ltd giving the lowest estimate and YES Securities (India) Ltd the highest. For net sales, the estimates are in the range of 125.3-131.8 bln rupees, with YES Securities giving the lowest estimate and Motilal Oswal Financial Services Ltd the highest.

 

Kotak Institutional Equities expects Sun Pharma's Apr-Jun overall sales to grow 9% on year as well as sequentially. The brokerage also expects its operating profit, defined as earnings before interest, taxation, depreciation, and amortisation, to rise 5% on year and 13% on quarter to 35 bln rupees, with the EBITDA margin improving by 100 basis points to 26.8%.

 

"We expect Sun Pharma's Apr-Jun gross margin to decline by 210 basis points on quarter to 78%. We bake-in research and development spend at 7.9% of sales in June quarter, up 40 basis points on quarter," Kotak Institutional Equities said in its report. 

 

The research firm sees Sun Pharma's US sales at $511 mln, up 7% on quarter, in Apr-Jun, with 12% on-quarter growth for Taro sales and ex-Taro sales, particularly the generic of Revlimid and a ramp-up in supplies of the generic of Pentasa from Mohali.

 

Taro Pharmaceutical Industries Ltd, an Israeli subsidiary acquired by Sun Pharma in 2010, has been a significant revenue driver, providing the company an entry into the lucrative US generic dermatology market. Kotak Equities sees a 4% on-quarter fall in Taro’s US business for Apr-Jun.

 

As for the global speciality business, Kotak Institutional Equities sees 4% quarter-on-quarter sales growth to $282 mln, as prescription volumes rise for branded drugs Ilumya, Cequa, and Odomzo. This rise is likely to be offset by relatively lower prescriptions for Winlevi. “We build-in 11% and 9% on-year growth in India and the rest of the world, respectively, in Apr-Jun 2024-25,” the pre-earnings report of Kotak Equities on Sun Pharma read.

 

Nuvama Wealth Management Ltd said revenue could grow 7% on year, driven by 10% growth in the domestic business and 20% on-year growth in US revenue to $237 mln.

 

US growth, according to Nuvama, would be led by the $60 mln contribution of cancer drug generic Revlimid and speciality revenue. The global speciality revenue is expected to be driven by Ilumya, Cequa, and Winlevi. The research firm has also predicted Taro revenue at $163 mln and expects the rest of the world to grow by 8% on year and the company's emerging markets business by 7% on year. With the rise in R&D spending, Nuvama expects a drop of 110 basis points in EBITDA margins to 26.8%, while EBITDA growth is likely to be 3% on year.

 

Sharekhan Ltd sees the pharma major clock 13% sales due to higher traction in speciality sales. The research firm also sees Sun Pharma's EBITDA margin at 26.6%, driven by strong traction in the US speciality portfolio, where it faces less competition and can command premium prices. It also sees sales growth owing to Revlimid, speciality products in the US market, and an uptick in the domestic market. It, however, expects Sun Pharma’s margins to contract owing to higher marketing expenses. At the same time, it stated in its pre-earnings report that healthy operations and lower finance cost could lead to better profitability for Sun Pharma.

 

The average EBITDA estimate of 10 brokerages is 34.3 bln rupees. The estimates are in the range of 32.7 bln rupees and 35.5 bln rupees.

 

Today, Sun Pharma shares closed 1.6% down at 1,568.65 rupees on the National Stock Exchange.

 

Following are the Jan-Mar earnings estimates of Sun Pharmaceutical Industries, in million rupees, based on reports from 11 brokerages:

 

Brokerage	Net sales	Net profit	EBITDA
HDFC Securities Ltd	127,146	23,882	33,439
Incred Research Services Pvt Ltd	126,765	25,886	34,144
Kotak Institutional Equities	130,481	25,588	34,995
KR Choksey Research	130,638	28,224	32,660
Motilal Oswal Financial Services Ltd	131,800	26,500	32,700
Nirmal Bang Equities Pvt Ltd	129,658	26,165	35,298
Nomura Equity Research	127,917	26,136	35,284
Nuvama Wealth Management Ltd	127,583	25,248	34,198
Prabhudas Lilladher Pvt Ltd	128,191	25,506	34,406
Sharekhan Ltd	128,810	25,090	--
YES Securities (India) Ltd	125,284	28,878	35,458
Average	128,570	26,100	34,258

 

End

 

Edited by Rajeev Pai

 

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