Sun Pharmaceutical Industries Limited (SPIL)|Q2FY15 Result Update | Domestic formulation and Taro drive earning for the quarter :: IndiaNivesh

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Sun Pharmaceutical Industries Limited (SPIL)|Q2FY15 Result Update | Domestic formulation and Taro drive earning for the quarter

Sun Pharmaceuticals Industries (SUNP IN) operational performance for the quarter
was better than our estimates, led by strong performance by Taro and domestic
formulation (DF) segment. However, adjusted PAT was in line with estimates due
to lower other income. We raise our EPS estimate for FY15/FY16 by 10% to Rs33.2
and Rs34.6, respectively, to factor better performance in DF and Taro. Accordingly,
we raise our price target from Rs754 earlier to Rs831 and maintain HOLD rating
on the stock.

Y-y adjusted PAT growth less than EBITDA growth due to lower other income:
Sales and adjusted PAT of SUNP came in at Rs47.5bn and Rs15.7bn, up 13% y-y and
15.4% y-y, respectively, for the quarter. Gross margin for the quarter was up 203bps
y-y and 241bps q-q. The strong performance in terms of gross margin was driven by
superior product mix and increased traction in existing products. The limited
competition in some products like g-Doxil led to strong gross margin for the quarter.
Increased other expenditure and higher R&D cost led to relatively lower growth in
EBITDA margin, which came in at 45.5%, up 188bps y-y and 159bps q-q. Higher
other expenditure is on account of acquisition related cost and compliance related
cost. R&D cost at Rs3.1bn was up 78% y-y and was 6.6% of net sales. Management
has guided for R&D spent to be 6-8% of net sales for FY15. Other income declined
40% y-y to Rs716mn, probably due to higher forex loss. Tax rate was lower for the
quarter at 9.5% against 15% y-y. Management has guided for effective tax rate of
12% for FY15.
Ex-Taro US sales growth was subdued due to high base of past year: US sales at
US$481mn, was up 15% y-y, led by robust growth of Taro sales. Ex-Taro, US sales
showed muted growth of 8% y-y. This is mainly due to high base of past year, which
had g-Prandin exclusivity and higher sales from Doxycycline. During the quarter,
SUNP filed one ANDA, taking the cumulative ANDA filing to 493. SUNP received
four ANDA approvals for the quarter, taking the cumulative approval to 354. The
pending ANDA approval pipeline remains healthy at 130, giving us enough
confidence for sustained momentum in US sales growth, subject to receipt of
approval from USFDA.
Price hikes and controlled cost drives superior performance of Taro: Taro sales
grew by 22% y-y to US$251mn for the quarter. The strong sales growth was mainly
driven by price hikes in some of the key products. There has been y-y decrease in
volumes sold during the quarter. The price hike coupled with controlled cost led to
49% y-y growth in adjusted PAT to US$144mn for the quarter. During the quarter,
Taro received one ANDA approval. Taro awaits approval for 30 products going
forward.

http://www.indianivesh.in/Admin/Upload/635515528731692500_Sun%20Pharmaceutical%20Industries_Q2FY15%20Result%20Update.pdf