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  • 01 Aug 2022
  • ICICIdirect Research

SUN PHARMA Q1 NUMBERS BEAT ESTIMATES, OUTLOOK MAINTAINED

SUNPHARMA - 1866 Change: 19.70 (1.07 %)

News: Revenues grew 11% YoY to Rs 10762 crore (excluding Covid products sales for Q1 last year, overall sales up by 14%). Indian formulations grew 2% YoY to Rs 3387 crore, while excluding Covid sales in Q1FY22, India formulations grew by 13%. US formulations grew to Rs 3244 crore, up 16% YoY as the specialty business has grown by 29% YoY to US$191 million. Emerging Markets business grew 18% YoY to Rs 1891 crore. RoW Markets business grew 7% YoY to Rs 1468 crore. API segment posted growth of 11% YoY to Rs 654 crore. EBITDA margins declined 223 bps YoY, amid lower margins from Taro in Q1, and stood at 26.8% on back of higher employee and other expenses on a low base of Q1FY22 and Alchemee consolidation. Subsequently, EBITDA grew 2% YoY to Rs 2884 crore. Adjusted profit for exceptional items in base of Q1FY22, grew by 4% YoY to Rs 2061 crore.

Views: Sun Pharma’s Q1FY23 operational performance was better than I-direct estimates with comprehensive beat on margins front. All the business segments recorded good growth while specialty business grew by 29% YoY driven by Ilumya, Cequa, Odomzo and Winlevi. India business continued to grow faster than market, leading to increase in market share. The company’s US generics front is going through calibrated product rationalisation, the specialty segment looks promising due to robust product pipeline and steady progress. This metamorphic shift from generics to specialty and higher contribution from specialty and strong domestic franchise is likely to change the product mix towards more remunerative businesses. This would have positive implications for margins also as we expect faster absorption of frontloaded costs on the specialty front.

Impact: Positive.