Sun Pharma - 4QFY2012 Result Update - Angel Broking

Sun Pharma reported higher-than-expected 4QFY2012 performance. Net sales reported 59.2% yoy growth. Net profit grew by 85.3% yoy, driven by higher than expected improvement in sales. However, on account of rich valuation recommend a Neutral on the stock.

Better-than-expected results: For 4QFY2012, Sun Pharma reported net sales of Rs.2,330cr, up 59.2% yoy, mainly driven by domestic and exports. The company's OPM expanded to 41.1% in 4QFY2012 from 40.6% in 4QFY2011. Also, the gross margin came in line at 78.9% from 78.6% in 4QFY2011. Net profit during the quarter reported 85.3% yoy growth to Rs.820cr, higher than expectations, mainly on back of the higher sales growth.

Outlook and valuation: Sun Pharma is one of the largest and fastest growing Indian pharmaceutical companies. Management has guided to 18-20% top-line growth for FY2013. We expect Sun Pharma's net sales to post a 17.6% CAGR to Rs.11,080cr. However, on account of pressure on the OPM's, we expect a flat EPS of Rs.22.6 over FY2012-14E. While the current declaration by the Sun with regards to the possible product damages of $1bn on Pantaprazole, as estimated by Pfizer, could act as an overhang on the stock. However, on account of rich valuations, we recommend a Neutral stance on the stock.

Source : Equity Bulls

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