Earnings Review
Sun Pharma Oct-Dec PAT growth led by India ops
This story was originally published at 17:44 IST on 31 January 2025
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By Sunil Raghu
AHMEDABAD – The India formulations business and rest-of-the-world segment provided a booster dose to Sun Pharmaceutical Industries Ltd.'s earnings for the December quarter, which saw sales from US and emerging markets record muted on-year growth and contraction on a quarterly basis. The India and rest-of-the-world operations helped Sun Pharma meet the Street's expectation for its December quarter earnings.
The drugmaker's consolidated net profit for Oct-Dec rose 15% on year to INR 29.03 billion. This was almost in line with the Street's expectation of INR 28.98 billion.
Sun Pharmaceutical's consolidated net sales rose 10.45% on year to INR 136.75 billion during the reporting quarter, a tad higher than the consensus estimate of INR 134.4 billion. Sequentially, it was up 2.89%. This is also the first above-10% sales growth for the company after two successive quarters of sub-10% sales growth that followed a 12-quarter-long double-digit sales growth streak broken in Apr-Jun.
The company saw a one-time cost of INR 3.16 bln in Oct-Dec on account of multiple events at its foreign operations.
Analysts had expected strong sales growth, especially from specialty segments of the US markets, to prop up the earnings before interest, tax, depreciation and amortisation, despite higher research and development spending. They estimated Sun Pharma's Oct-Dec EBITDA margin in the range of 26.6-29.5%. The operating margin for Oct-Dec came in at 29.3%. The company's consolidated operating profit jumped 15.3% on year to INR 40.09 billion.
For Apr-Dec, Sun Pharma recorded a consolidated net profit of INR 87.79 billion on consolidated revenue of INR 396.20 billion. For the year-ago period, the company had clocked a consolidated net profit of INR 69.22 billion on revenue of INR 365.14 billion. The company's board has announced interim dividend of INR 10.50 per share.
SEGMENTS
Growth in the high-margin market of the US underpinned the strong performance during Oct-Dec. The region makes up over 30% of the company's sales and is deemed an even bigger contributor to profitability.
Sales from the company's US formulations business declined 0.7% on year to $474 million in Oct-Dec. For the first nine months, sales were up 5.7% at $1.46 billion.
"Our performance in the quarter showed all-round improvement. Product sales in global specialty crossed one-fifth of overall sales...Emerging markets demonstrated strong performance in spite of currency challenges across geographies. All our businesses remain well positioned for future," Chairman and Managing Director Dilip Shanghvi said in a press release.
For Oct-Dec, revenues from the other key market, India, which accounts for 32% of total consolidated sales, rose 13.8% on year to INR 43 billion. For the nine months of Apr-Dec, the sales were up 13.7% at INR 127 billion.
India accounts for 32% of the company's total sales. Sun Pharmaceutical said it remains the industry leader in India's INR 2.2-trillion drug market, with a share of 8.2%, up from 7.8?rlier.
The drugmaker's emerging markets sales rose 10.1% on year to $277 million, while rest-of-the-world formulation sales jumped 21% to $259 million for Oct-Dec. Active pharmaceutical ingredient revenue rose over 21.8% from a year ago to INR 5.68 billion.
OTHER METRICS
Sun Pharmaceutical spent INR 8.45 billion, or 6.3% of sales, on research and development during the December quarter. Analysts had expected R&D investments at 7.5-8% of sales. In the year-ago period, the company had spent INR 8.25 billion on this account.
Raw material costs fell 17.63% on year to INR 14.08 billion, while total expenses increased 8.24% to INR 103.49 billion. The tax outgo for the December quarter jumped 29.27% to INR 5.59 billion.
On a quarter-on-quarter basis, the company's net profit fell 4.5% while net sales increased 2.89%. The company's shares saw gains extend a tad after the earnings. The stock opened at INR 1,742, before touching the day's high of INR 1,769.85 and then closing 0.3% higher at 1,743.95 rupees on the National Stock Exchange.
For Apr-Dec, the drugmaker's active pharmaceutical ingredient sales came in at INR 15.96 billion, up 6.2% on year. End
US$1 = INR 86.61
Edited by Avishek Dutta
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