What Analysts Made Of Sun Pharma's Q4 Earnings

Signage is displayed at the Sun Pharmaceutical Industries Ltd. headquarters in Mumbai, India. (Photographer: Kanishka Sonthalia/Bloomberg)

What Analysts Made Of Sun Pharma's Q4 Earnings

Shares of Sun Pharmaceutical Industries Ltd.’s declined a day after the drugmaker reported that its lower other income and its an operating loss at its U.S. arm dragged down fourth-quarter profit.

Consolidated net profit of the nation’s largest drugmaker fell 52% sequentially to Rs 894.15 crore in the quarter ended March, according to an exchange filing. Its revenue fell 4% and margin contracted 2.25 percentage points over the previous quarter.

Shares of Sun Pharma closed 3.84% lower after falling as much as 4.27 intra-day. The benchmark Nifty 50 ended 0.6% higher on Friday.

Here’s what brokerages had to say about Sun Pharma’s fourth quarter results:

Macquarie

  • Raised target price to Rs 782 apiece, implying an upside 16% from current levels.

  • Q4 global speciality sales dipped 6% quarter-on-quarter to $139 million.

  • U.S. sales fell 1.3% over a year earlier to $370 million due to lower Taro sales.

  • Sun Pharma expects to grow in U.S. generics in FY22.

  • Sun Pharma remains confident of growing its share in Cequa.

  • Expects field force expansion and efforts to fortify brands to lead outperformance even post Covid-19.

  • Sun Pharma will be developing biosimilars with an eye on the third wave of the pandemic. But it won't be easy as it's a late entrant in this segment.

ICICI Securities

  • Downgraded from ‘Buy’ to ‘Add’ with a target price of Rs 752, a potential upside of 12%.

  • India growth strong at 12.9% while global specialty revenue remained stable.

  • Ebitda margin dropped due to increase in selling, general and administration expenses.

  • Specialty product Ilumya reported sales growth 51% in FY21 to $143 million globally. Generic entry in Absorica will impact the revenue in near term.

  • Focus on cost control and free cash flow generation has augured well and net debt (ex-Taro) now stands at $179 million, which is expected to reduce further.

  • Chronic and sub-chronic growth remained strong while acute portfolio continues to face challenges.

  • Expects the company to continue its outperformance versus the industry growth, supported by its strong chronic portfolio.

  • Positive on long-term outlook considering strong India business, scale-up in specialty sales and focus on margin expansion through superior revenue mix and operational efficiency.

  • Raised FY22-FY23 earning estimate by 2-4% to factor in better margins.

  • Recent rally has capped the upside.

Nirmal Bang

  • Downgraded to ‘Accumulate’ with a target price of Rs 710 apiece, a potential upside of 6%.

  • Q4 revenue stood at Rs 8,523 crore, up 4.1% year-on-year and 3.6% lower quarter-on-quarter.

  • Revenue was lower than the brokerage's and consensus expectations by 2%.

  • Underperformance was led by weakness in emerging markets and rest of the world portfolio, which declined 7% quarter-on-quarter.

  • Specialty portfolio sales fell 6% sequentially.

  • Ramp up in sales to continue for Ilumya and Cequa.

  • On the generic side, Taro sales remain under pressure as patient visits to dermatologists at 70% of the normal level, impacting prescription generation.

  • The company’s generic business in the U.S. should deliver growth in FY22 aided by new drug approvals.

  • Potential resolution of warning letter at Halol should further help.

  • The growth should continue led by support from its expanded sales force and revival in sub-chronic and acute segment.

  • Currently do not factor in upside from a potential approval of complex drug filings as timing remains unpredictable.

Motilal Oswal

  • Maintained ‘Buy’ with a target price of Rs 830 per share, implying an upside of 23%.

  • Domestic formulation business growth has been strengthening for three consecutive quarters now.

  • Raised earnings estimate by 9%/8% for FY22/FY23, factoring in continued ramp-up in Illumya, led by the specialty portfolio; healthy growth in the base domestic formulation portfolio as well as additions to the Covid portfolio; and subsequently better operating leverage.

  • Sun Pharma is building a biosimilar portfolio for launch over CY28–30.

  • Yet to see clarity on the amount of investment needed for product development as well as building capacity.

  • Remains positive on Sun Pharma on its superior execution in the global specialty portfolio, branded generics and a robust ANDA pipeline.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.