Views on Sun Pharmaceuticals 1QFY2016 Results - Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking) on Sun Pharmaceuticals 1QFY2016 Results:

"For 1QFY2016 Sun Pharmaceuticals posted results better than expected, on sales and OPM front. The sales came in at INR 6522cr V/s INR 6200cr expected, a yoy growth of 3.3%. The sales growth was driven by the Indian formulation market (INR 1784cr), which posted a yoy growth of 11%. While the US (INR 3090cr), posted a yoy growth of 2.2%. Other regions ROW (INR 575cr) and Emerging markets (INR 845cr), posted a yoy dip of 2.0% and 10.4% respectively.

On the operating front, the gross margins came in at 73.7% V/s 74.4% expected and 73.9% in 1QFY2015. The OPM consequently has come in at 24.8% in 1QFY2016 V/s 25.8% expected and 30.3% in 1QFY2015. The yoy dip in margins is on back of the other expenditure which has moved up by 18% yoy; while staff cost inched up by 11.9% yoy. Thus margin dip is more on back of lower sales, hence adjusted for normalised sales; the OPM would have been around 30%. On the net profit front, the company posted Adj net profit of INR 1165cr V/s INR 1203cr expected and INR 1442cr in the last corresponding period, dip of 19.9% yoy. The R&D expenditure was 7.7% of sales V/s 9.3% of sales expected and 8.8% of sales in 1QFY2015. Also the other income during the quarter was INR 341cr V/s INR 210cr in 1QFY2015, mainly driven by proceeds from brand divestments as mandated by various competition authorities pertaining to the Ranbaxy acquisition.

Reported net profit for the quarter was adversely impacted by the one-time items as well as exceptional charges of INR 685cr. These exceptional charges relate to impairment of fixed assets and goodwill and other related costs and have arisen on account of integration and optimization measures. As a result, the reported net profit for the quarter was at INR 479cr V/s INR 1205cr in 1QFY2015. We recommend an ACCUMULATE on the stock."

Sun Pharmaceuticals (CMP: INR 842/ TP: INR 950 / Upside: 12.8% )

Shares of SUN PHARMACEUTICAL INDUSTRIES LTD. was last trading in BSE at Rs.866.25 as compared to the previous close of Rs. 841.8. The total number of shares traded during the day was 672710 in over 19532 trades.

The stock hit an intraday high of Rs. 884.9 and intraday low of 844. The net turnover during the day was Rs. 584818214.

Source : Equity Bulls

Keywords