Billionaire Shanghvi’s Sun Jumps as Profit Beats All Estimates

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India’s largest drugmaker reported a doubling in quarterly profit that beat estimates thanks to a continued uptick in the number of doctor visits and prescriptions during the coronavirus pandemic.

Sun Pharmaceutical Industries Ltd. posted net income of 18.5 billion rupees ($254 million) for the quarter ended Dec. 31, higher than the 13.8 billion-rupee average estimate in a Bloomberg survey of analysts. Revenue rose to 88.4 billion rupees versus the estimated 87.8 billion rupees, according to an exchange filing on Friday. Shares rose the most since Dec. 1.

Billionaire owner Dilip Shanghvi has invested heavily in specialty treatments in the U.S. over recent years, Sun’s top market along with India. The Mumbai-based firm reported sales growth in the quarter across all regions as patients sought out treatments even as many countries continued to be hit by further waves of the coronavirus.

Sun’s shares advanced about 4% after the results, erasing the day’s losses, to close at 586.20 rupees in Mumbai.

Open Clinics

The “performance reflects continued profitable business growth in a market that is gradually recovering from the impact of the global pandemic,” Shanghvi said in a statement. “Most of our businesses have done well -- our global specialty sales have continued to show an improving trend and have crossed pre-Covid levels.”

The Covid-19 outbreak has also helped drive gains in sector stocks in 2020 after two years of muted returns, with investors betting on the possibility of India emerging as a key player in vaccine development and global supply.

The S&P BSE Healthcare Index advanced 61% last year, the most among the nation’s sector sub-indexes and the best for the gauge since 2009. However, it’s down more than 4% so far this year, compared with Sun’s 1.8% decline in the same period.

In India, with “clinics now open across the country and medical reps on the ground, we expect Sun Pharma to go back to its growth trajectory of outperforming the market by 100-200 basis points on the back of their leadership across therapies,” Nithya Balasubramanian, the Mumbai-based head of health-care research at Bernstein India, wrote in a report this month.

©2021 Bloomberg L.P.

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