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Sun Pharmaceutical Industries
Taro numbers portend strong quarter for Sun
Taro’s Q2 CY11 (Q1 FY12 for SUNP) results were
higher than our estimates – net sales and pre-tax profit
6% and 34% higher, respectively.
It reported sequential growth in operating profit aided by
higher gross margin and lower R&D spend.
Sequential increase in sales backed by four new
approvals; we expect R&D to increase under SUNP
management.
5-6% upside to our Q1 FY12 PBT estimate on a line-byline basis; post tax impact to be higher due to tax credits
in Taro.
Taro reports strong Q2. Taro (Sun Pharma’s 66% US
subsidiary) reported strong Q2 CY11 (Q1 FY12 for SUNP)
results with net sales up 14% yoy to US$112m against our
estimate of US$105m (7% yoy). More importantly, PBT
grew 44% yoy to US$32m against our estimate of US$24m.
Net profit came in at US$37m (aided by tax credits) against
our estimate of US$18m.
Profit grows sequentially aided by lower R&D expenses.
Operating profit, at US$34m (operating margin 30.6%) grew
sequentially aided by higher gross margins. R&D, contrary
to our expectation, has declined on a yoy basis, while SG&A
costs are in line. We also note that cash from operations
have more than doubled to US$58m versus US$24m in Q1
CY11, indicating strong fiscal discipline with new
management.
Second consecutive quarter of positive surprise. Taro’s
numbers have consecutively positively surprised us,
especially on the strength of margins. We believe that Taro
would need to increase R&D spend to augment its current
pipeline of 21 pending ANDAs, which we believe is relatively
weak, given the high concentration of sales within a few key
products.
Potential upside to SUNP’s Q2 FY12E results. Taro’s
performance adds potential upside to our estimated Q1
FY12 SUNP results. On a line-by-line basis, above results
add 5-6% upside to SUNP’s estimated Q1 FY12 PBT of
Rs5.6 bn. Incremental net profit is US$19m against our
estimate of Rs5bn of profits in SUNP during this quarter.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sun Pharmaceutical Industries
Taro numbers portend strong quarter for Sun
Taro’s Q2 CY11 (Q1 FY12 for SUNP) results were
higher than our estimates – net sales and pre-tax profit
6% and 34% higher, respectively.
It reported sequential growth in operating profit aided by
higher gross margin and lower R&D spend.
Sequential increase in sales backed by four new
approvals; we expect R&D to increase under SUNP
management.
5-6% upside to our Q1 FY12 PBT estimate on a line-byline basis; post tax impact to be higher due to tax credits
in Taro.
Taro reports strong Q2. Taro (Sun Pharma’s 66% US
subsidiary) reported strong Q2 CY11 (Q1 FY12 for SUNP)
results with net sales up 14% yoy to US$112m against our
estimate of US$105m (7% yoy). More importantly, PBT
grew 44% yoy to US$32m against our estimate of US$24m.
Net profit came in at US$37m (aided by tax credits) against
our estimate of US$18m.
Profit grows sequentially aided by lower R&D expenses.
Operating profit, at US$34m (operating margin 30.6%) grew
sequentially aided by higher gross margins. R&D, contrary
to our expectation, has declined on a yoy basis, while SG&A
costs are in line. We also note that cash from operations
have more than doubled to US$58m versus US$24m in Q1
CY11, indicating strong fiscal discipline with new
management.
Second consecutive quarter of positive surprise. Taro’s
numbers have consecutively positively surprised us,
especially on the strength of margins. We believe that Taro
would need to increase R&D spend to augment its current
pipeline of 21 pending ANDAs, which we believe is relatively
weak, given the high concentration of sales within a few key
products.
Potential upside to SUNP’s Q2 FY12E results. Taro’s
performance adds potential upside to our estimated Q1
FY12 SUNP results. On a line-by-line basis, above results
add 5-6% upside to SUNP’s estimated Q1 FY12 PBT of
Rs5.6 bn. Incremental net profit is US$19m against our
estimate of Rs5bn of profits in SUNP during this quarter.
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