Q3FY21 Result Update - Sun Pharmaceutical Industries - ICICI Direct

Q3 revenues grew 8.4% YoY to Rs. 8837 crore (I-direct estimate: Rs. 8636 crore). US formulations grew 10.8% YoY to Rs. 2761 crore. Indian formulations grew 9.4% YoY to Rs. 2753 crore. Emerging markets business grew 8.4% YoY to Rs. 1507 crore. RoW markets business grew 15.6% YoY to Rs. 1276 crore. API segment de-grew 9.4% YoY to Rs. 485 crore. EBITDA margins expanded 465 bps YoY to 27.2% (I-direct estimate: 23.0%) due to lower other expenditure and better gross margins. Delta vis-à-vis I-direct estimates was mainly due to significantly lower other expenditure. EBITDA grew 30.7% YoY to Rs. 2406 crore (I-direct estimate: Rs. 1986 crore). PAT more than doubled to Rs. 1852 crore (I-direct estimate: Rs. 1319 crore) vs. Rs. 914 crore in Q3FY20. Delta vis-a-vis EBITDA was due to higher other income, lower interest expense and lower tax rate.

Valuation & Outlook

Q3FY21 revenues were in line with I-direct estimates whereas profitability was better on account of lower-than-expected other expenditure, higher other income and lower interest expense. While the company's US generics front is going through calibrated product rationalisation, specialty segment looks promising due to robust product pipeline, steady progress. This metamorphic shift from generics to specialty, however, is likely to weigh on US growth in the near term. That said, higher contribution from specialty and strong domestic franchise is likely to change the product mix towards more remunerative businesses by FY23. This would have positive implications for margins also as we expect faster absorption of frontloaded costs on the specialty front. We maintain BUY and arrive at our new target price of Rs. 675 (vs. earlier Rs. 585) based on 25x FY23E EPS of Rs. 27.0.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_SunPharma_Q3FY21.pdf

Shares of SUN PHARMACEUTICAL INDUSTRIES LTD. was last trading in BSE at Rs.586.45 as compared to the previous close of Rs. 564.4. The total number of shares traded during the day was 944430 in over 25167 trades.

The stock hit an intraday high of Rs. 599.9 and intraday low of 554.05. The net turnover during the day was Rs. 545798187.

Source : Equity Bulls

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