Taro business recovers in Q3 with better margins
News: Sun Pharma’s subsidiary Taro Pharma’s Q3FY22 numbers were skewed with sales slightly below our estimates while EBITDA margins being better than expected. Revenues de-grew 0.8% YoY to US$139 million. EBITDA margins improved 108 bps YoY to 31.3% mainly due to better gross margins while EBITDA de-grew 2.7% YoY to US$47 million. Net profit de-grew 20% YoY to US$26.3 million. Delta vis-a-vis EBITDA was mainly due to higher depreciation and tax rate.
Views: Despite the challenging market conditions, particularly in the US generic market, Taro successfully defended its market share across each business. 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 - 11% to revenue, 13% to EBITDA and 11% to PAT in Q3FY22. Although Sun continues to focus on specialty products in the US, recovery in Taro numbers bodes well for Sun Pharma.