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UBS Investment Research
Sun Pharma
Q3FY11: Protonix shelf stock adjustment
Q3FY11 Sales: 16.0bn (+57%yoy), UBS-e: Rs 15.1bn
Sales grew sharply by 57% YoY due to consolidation of Taro. Taro revenues grew
strongly, up 23%YoY to US$102mn. Domestic formulations grew 20%YoY to
Rs6.4bn. However, Caraco revenues declined 22%YoY to US$40mn, likely due to
lower sales of Effexor XR. Implied RoW revenues are high due to reversal of
chargeback provisions made in H1FY11 on Protonix. However, there is no impact
on 9MFY11 basis according to co., which implies RoW growth of 31%YoY.
EBITDA: Rs 4.4bn (+20% YoY), Net profit: Rs3.5bn(+3%YoY)
Q3FY11 EBITDA margin declined to 27.5% vs our estimate of 34.5% due to high
Protonix shelf stock adjustment charges taken during the qtr. Other expenses
increased 80%YoY as a result of the same and Taro consolidation. Staff cost
increased 89%QoQ due to Taro consolidation. Raw material cost (%age of sales)
declined 70bps qoq to 27%, while R&D cost stood at only 5.6%. Net profit at Rs
3.5bn was impacted by impairment charge and higher tax expense at Taro for the
qtr. Tax rate was 13% for the qtr vs 3.3% for Q2FY11.
Taxotere launch remains the key driver for FY12 growth
Mgmt. didn’t provide any timelines for potential approval of Taxotere. Taxotere
accounts for 12% of our FY12E EPS. We believe given high potential inventory in
the channel a favourable judgement on Eloxatin is unlikely to impact FY12 est.
Valuation: Maintain Neutral, PT Rs 510
We derive our price target using DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool with a WACC of 11%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Sun Pharma
Q3FY11: Protonix shelf stock adjustment
Q3FY11 Sales: 16.0bn (+57%yoy), UBS-e: Rs 15.1bn
Sales grew sharply by 57% YoY due to consolidation of Taro. Taro revenues grew
strongly, up 23%YoY to US$102mn. Domestic formulations grew 20%YoY to
Rs6.4bn. However, Caraco revenues declined 22%YoY to US$40mn, likely due to
lower sales of Effexor XR. Implied RoW revenues are high due to reversal of
chargeback provisions made in H1FY11 on Protonix. However, there is no impact
on 9MFY11 basis according to co., which implies RoW growth of 31%YoY.
EBITDA: Rs 4.4bn (+20% YoY), Net profit: Rs3.5bn(+3%YoY)
Q3FY11 EBITDA margin declined to 27.5% vs our estimate of 34.5% due to high
Protonix shelf stock adjustment charges taken during the qtr. Other expenses
increased 80%YoY as a result of the same and Taro consolidation. Staff cost
increased 89%QoQ due to Taro consolidation. Raw material cost (%age of sales)
declined 70bps qoq to 27%, while R&D cost stood at only 5.6%. Net profit at Rs
3.5bn was impacted by impairment charge and higher tax expense at Taro for the
qtr. Tax rate was 13% for the qtr vs 3.3% for Q2FY11.
Taxotere launch remains the key driver for FY12 growth
Mgmt. didn’t provide any timelines for potential approval of Taxotere. Taxotere
accounts for 12% of our FY12E EPS. We believe given high potential inventory in
the channel a favourable judgement on Eloxatin is unlikely to impact FY12 est.
Valuation: Maintain Neutral, PT Rs 510
We derive our price target using DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool with a WACC of 11%.
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