Sun Pharmaceuticals - 1QFY2017 Result Update - Angel Broking

The company's sales for 1QFY2017 came in higher than expected at Rs. 8,007cr V/s Rs. 7,414cr expected and V/s Rs. 6,526cr in 1QFY2016, a yoy growth of 22.7%, mainly driven by exports. On the operating front, the EBITDA margin came in at 33.5% V/s 29.5% expected and V/s 23.5% in 1QFY2016, mainly driven by gross margin expansion (76.9% in 1QFY2017 V/s 74.1% in 1QFY2016). Thus, the Adj. net profit came in at Rs. 2,034cr V/s Rs. 1,602cr expected and V/s Rs. 1,070cr in 1QFY2016. We maintain our Buy rating.

Results outperform: Company's sales for 1QFY2017 came in higher than expected at Rs. 8,007cr V/s Rs. 7,414cr expected and V/s Rs. 6,526cr in 1QFY2016, a yoy growth of 22.7%, mainly driven by exports. Export formulations (Rs. 5,664cr) grew 25.6% yoy, while Indian formulations (Rs. 1,854cr) grew 7.6% yoy. API sales (Rs. 470cr) grew 73.1% yoy. On the operating front, the EBITDA margin came in at 33.5% V/s 29.5% expected and V/s 23.5% in 1QFY2016, mainly driven by gross margin expansion (76.9% in 1QFY2017 V/s 74.1% in 1QFY2016). R&D expenditure during the quarter was 9.1% of sales V/s 5.5% of sales in 1QFY2016. Thus, the Adj. net profit came in at Rs. 2,034cr V/s Rs. 1,602cr expected and V/s Rs. 1,070cr in 1QFY2016.

Outlook and valuation: Sun Pharma is one of the largest and fastest growing Indian pharmaceutical companies. We expect its net sales to post a 12.7% CAGR (including Ranbaxy Laboratories) to Rs. 35,258cr and EPS to post a 22.0% CAGR to Rs. 32.8 over FY2016-18E. We recommend a Buy on the stock.

Shares of SUN PHARMACEUTICAL INDUSTRIES LTD. was last trading in BSE at Rs.788.75 as compared to the previous close of Rs. 784.9. The total number of shares traded during the day was 376315 in over 3974 trades.

The stock hit an intraday high of Rs. 794.7 and intraday low of 786. The net turnover during the day was Rs. 297510101.

Source : Equity Bulls

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