Margins weigh on numbers in Q1 for Taro
News: Sun Pharma’s Subsidiary Taro Pharma’s Q1FY23 revenues grew 6.5% YoY to US$156.7 million. EBITDA margins declined 1865 bps YoY to 13.4% mainly due to higher selling and administration expenses. EBITDA de-grew 56% YoY to US$21 million. Net profit for the quarter was at US$14.1 million.
Views: Taro continues to face challenging market dynamics in terms of price deflation and higher input cost, particularly in US. Company continues to allocate increasing amounts of capital including R&D effort towards new business opportunities. Taro's performance has a substantial bearing on Sun's consolidated numbers albeit on a reducing scale. Taro's estimated contribution to Sun Pharma is - 12% to revenue, 6% to EBITDA and 6% to PAT in Q1FY23. Although Sun continues to focus on specialty products in the US, recovery in Taro numbers is important for Sun Pharma.