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Q2FY12 – Sun shining brightly
• Sun Pharmaceutical Industries (Sun) reported Q2FY12 numbers that were considerably
better than street estimates. Net Sales registered a 42% growth at `18,946 mn in Q2FY12
against `13,314 mn in Q2FY11 aided by growth in prescription sales in the US. However, the
sales numbers for Q2FY12 include the results of Taro and its subsidiaries and are therefore
not strictly comparable on a Y-o-Y basis.
• EBITDA grew 68% Y-o-Y and 43% Q-o-Q to `7,840 mn. This was mainly due to reduction in
cost of raw materials by 4%. Staff cost rose 87% and Other Expenses rose 40% due to
consolidation of Taro numbers.
• PAT registered growth of 19% at `5,977 mn in Q2FY12 against `5,037 mn in Q2FY11. PAT
growth was muted due to rise in Minority Interest and Tax outgo. Consequently, PAT margin
showed a decline of 628 bps to 32%.
Result Highlights
Taro steals the show
Taro reported stellar figures for the July-September, 2011 quarter. Net Sales increased 34% to
$138 mn for Q3CY11 against $103 mn for Q3CY10. Net Income grew more than three-fold to $59
mn in Q3CY11 against $19 mn in Q3CY11. Cash on books nearly doubled to $162 mn during the
quarter. Improvement in Taro’s financials was led by impressive topline growth, reduction in
SG&A expenses and lower R&D expenses.
USFDA issues getting resolved
During the quarter, company resolved the issues relating to USFDA warning at Caraco’s Cranbury
manufacturing facility. Sun is also working hard to resolve the issues at Caraco’s Detroit plant.
Company remains cash rich but refuses to comment on deployment
Sun continues to hold a huge cash balance of ` 23,112 mn on its books. The time is ripe for Sun
to make a huge acquisition and diversify its product portfolio further. Without giving any clear
cut idea of the same, the management indicated that it was looking at synergetic opportunities
across the globe and would consider any if it looked attractive.
Valuation & viewpoint
At the CMP of `510, Sun Pharma is trading at 21x its consensus FY13E earning estimates. Recent
acquisitions have begun to show positive results for the company although the issue of purchase
of remaining stake in Taro is yet to be resolved. Considering the strong presence of the company
in US and India, huge cash on books and very low debt, the company is expected to continue
with its strong performance in the quarters ahead.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q2FY12 – Sun shining brightly
• Sun Pharmaceutical Industries (Sun) reported Q2FY12 numbers that were considerably
better than street estimates. Net Sales registered a 42% growth at `18,946 mn in Q2FY12
against `13,314 mn in Q2FY11 aided by growth in prescription sales in the US. However, the
sales numbers for Q2FY12 include the results of Taro and its subsidiaries and are therefore
not strictly comparable on a Y-o-Y basis.
• EBITDA grew 68% Y-o-Y and 43% Q-o-Q to `7,840 mn. This was mainly due to reduction in
cost of raw materials by 4%. Staff cost rose 87% and Other Expenses rose 40% due to
consolidation of Taro numbers.
• PAT registered growth of 19% at `5,977 mn in Q2FY12 against `5,037 mn in Q2FY11. PAT
growth was muted due to rise in Minority Interest and Tax outgo. Consequently, PAT margin
showed a decline of 628 bps to 32%.
Result Highlights
Taro steals the show
Taro reported stellar figures for the July-September, 2011 quarter. Net Sales increased 34% to
$138 mn for Q3CY11 against $103 mn for Q3CY10. Net Income grew more than three-fold to $59
mn in Q3CY11 against $19 mn in Q3CY11. Cash on books nearly doubled to $162 mn during the
quarter. Improvement in Taro’s financials was led by impressive topline growth, reduction in
SG&A expenses and lower R&D expenses.
USFDA issues getting resolved
During the quarter, company resolved the issues relating to USFDA warning at Caraco’s Cranbury
manufacturing facility. Sun is also working hard to resolve the issues at Caraco’s Detroit plant.
Company remains cash rich but refuses to comment on deployment
Sun continues to hold a huge cash balance of ` 23,112 mn on its books. The time is ripe for Sun
to make a huge acquisition and diversify its product portfolio further. Without giving any clear
cut idea of the same, the management indicated that it was looking at synergetic opportunities
across the globe and would consider any if it looked attractive.
Valuation & viewpoint
At the CMP of `510, Sun Pharma is trading at 21x its consensus FY13E earning estimates. Recent
acquisitions have begun to show positive results for the company although the issue of purchase
of remaining stake in Taro is yet to be resolved. Considering the strong presence of the company
in US and India, huge cash on books and very low debt, the company is expected to continue
with its strong performance in the quarters ahead.
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