Views on Sun Pharma 4QFY2015 Results - Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking) on Sun Pharma 4QFY2015 Results:

For 4QFY2015, Sun Pharmaceuticals posted numbers lower than expected. The company posted sales of INR 6145cr V/s INR 7000cr expected and INR 4044cr in 4QFY2014, a yoy growth of 51.9%, driven by Ranbaxy Labs merger. The Indian, US, Emerging & ROW market, posted a yoy growth of 65.8%, 22.6%, 264.9% and 124.6% respectively. On the operating front, the EBITDA margins were depressed and came in at 14.3% V/s 35.1% expected and 44.2% in 4QFY2014.

However, the EBITDA as well as Net Profit of the company were adversely impacted by a few items relating to professional charges, harmonization of policies of erstwhile Ranbaxy with the Company etc. The impact of these items appearing above EBITDA was approximately 10% of net sales and on items appearing below EBITDA was approximately 7% of net sales. Also, the R&D expenditure during the quarter was 9.4% of sales V/s 7.1% of sales in 4QFY2014.Thus adjusted for the same; the margins were closer to ~24.3%, still lower than expected.

Inspite of the same the PAT came in at INR 888cr V/s INR 1751cr expected and INR 1587cr in 4QFY2014, a yoy de-growth of 49.3%. This was aided by the other income of INR 383.7cr V/s INR 193.8cr in 4QFY2014. Also, during the period there was a tax credit of ~INR 600cr. Thus, adjusted for the merger related expenses the Adj. PAT came in at INR 1622cr, posting a yoy growth of 2.2%. As, of now we are not revising our numbers, until more clarity on the impact of the merger on the OPM. As per our understanding the same should improve by FY2017. As of now, we have factored in an OPM of 32.4% in FY2017. As of now we maintain our price target of INR 1064.

Shares of SUN PHARMACEUTICAL INDUSTRIES LTD. was last trading in BSE at Rs.848.55 as compared to the previous close of Rs. 832.15. The total number of shares traded during the day was 492575 in over 15494 trades.

The stock hit an intraday high of Rs. 861 and intraday low of 827.5. The net turnover during the day was Rs. 420208566.

Source : Equity Bulls

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