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Research
Sun Pharma: 1QFY2018 Result Update - Angel Broking
Posted On : 2017-08-21 21:49:20( TIMEZONE : IST )
Sun Pharmaceuticals posted poor set of numbers for 1QFY2018. Sales came in at Rs. 6,167cr (Rs. 6,825cr expected) v/s. Rs. 8,007cr in 1QFY2017, a yoy de-growth of 23.0%, mainly driven by the Indian formulation sales dip and US (which was impacted on the back of pricing pressures and base effect). On operating front, the EBITDA margins came in at 17.1% (17.7% expected) v/s. 33.5% in 1QFY2017, mainly on the back of lower than expected sales during the quarter and base effect. Excluding the Modafinil settlement, its adjusted net profit was at Rs. 526cr, down 77% over 1QFY2017, with resulting adjusted net profit margin of 8.5%. Net profit for 1QFY2017 last year included the benefit of the 180-day exclusivity for Imatinib which expired in July-2016. We maintain our Buy.
Results lower than expectations: Sales came in at Rs. 6,167cr (Rs. 6,825cr expected) v/s. Rs. 8,007cr in 1QFY2017, a yoy de-growth of 23.0%, mainly driven by the Indian formulation sales dip and US (which was impacted on the back of pricing pressures and base effect). On operating front, the EBITDA margins came in at 17.1% (17.7% expected) v/s. 33.5% in 1QFY2017, mainly on the back of lower than expected sales during the quarter and base effect. Net profit for the quarter was adversely impacted by settlements with certain plaintiffs related to the Modafinil antitrust litigation in the US, with the settlement amounting to Rs. 950cr. Excluding the Modafinil settlement, its adjusted net profit for 1QFY2018 was at Rs. 526cr, down 77% over 1QFY2017 last year.
Outlook and valuation: Sun Pharma is one of the largest and fastest growing Indian pharmaceutical companies. We expect its net sales to post a CAGR of 2.5% (including Ranbaxy Laboratories) to Rs. 31,826cr and EPS to come in at Rs. 24.8 over FY2017-19E. We recommend a Buy on the stock with a target price of Rs. 558.
Shares of SUN PHARMACEUTICAL INDUSTRIES LTD. was last trading in BSE at Rs.460.55 as compared to the previous close of Rs. 470. The total number of shares traded during the day was 639429 in over 7312 trades.
The stock hit an intraday high of Rs. 474.9 and intraday low of 459.3. The net turnover during the day was Rs. 299186834.
