Four-Fold Jump In Tax Expenses Drags Sun Pharma’s Profit Lower
Higher tax expenses leads to Sun Pharma missing analysts’ estimates
Sun Pharmaceutical Industries Ltd. missed analyst estimates in the October-December quarter on account of a sharp rise in tax expenses and lower operating profit.
Net profit fell 4.7 percent to Rs 1,472 crore from Rs 1,545 crore in the same period last year, according to the company’s filing on the stock exchanges. The consensus estimate of analysts tracked by Bloomberg stood at Rs 1,782 crore. The company's tax expenses soared nearly four times to Rs 372.9 crore.
Net sales increased 8.4 percent to Rs 7,683 crore from Rs 7,087 crore in the year-ago period. Total income rose to Rs 7,912.7 crore as against Rs 7,122.3 crore.
Earnings before interest, tax, depreciation and amortisation (EBITDA) remained largely unchanged at Rs 2,223.7 crore as compared to Rs 2,210.4 crore last year. EBITDA margins contracted 230 basis points to 28.9 percent from 34.4 percent in the December quarter last year. On a sequential basis, the operating margins fell 550 basis points.
The management said it will continue to enhance its specialty pipeline going forward.
While we continue to focus on growing our existing business, we are happy to invest our strong cash flows in enhancing our specialty pipeline, though currently without commensurate revenue streams.Dilip Shanghvi, Managing Director, Sun Pharma
Geographical Performance
- U.S dosage sales grew at a much slower 4 percent year-on-year to $507 million. Sales included the benefit from authorised generic sales of four Daichii brands – Olmesartan (generic version of high blood pressure treatment drug Benicar) and its combinations. Analysts had expected U.S. sales to grow at about 10 percent with lower generic Gleevec revenue after the end of its 180-day marketing exclusivity and weak Taro sales.
- India’s revenue contribution remained steady at 26 percent, with a disappointing sales growth of 5 percent.
- Sales in emerging markets grew 14 percent year-on-year to $172 million.
- Sales in Rest of the World grew 33 percent to $113 million year-on-year, driven partly by consolidation of Japanese revenue.
- API sales for the quarter fell 17 percent to Rs 1,202 crore on a yearly basis.
The company's investments in research and development (R&D) in the quarter stood at Rs 613 crore, or 8 percent of total sales.
For the quarter, the company filed a total of 8 ANDAs (Abbreviated New Drug Application) while it received approval for one. The total ANDA pipeline for the company stands at 424, of which 149 are awaiting approval from the U.S. health regulator.