Sun Pharma Sees Stronger Q4 Than Expected

Industry major Sun Pharma has beaten the market expectations by reporting a topline of Rs 3071 crore (growing by 32%) and a net profit of Rs 1011 crore (23% higher) for the fourth quarter of FY13. The company has also announced a bonus issue of one equity share in the proportion of 1:1. Following the result, the stock surged to a lifetime high of Rs 1071 apiece.

For the quarter, its India branded sales grew by 16% to Rs 780 crore. During the quarter, the company launched 3 products in the domestic market, taking its full year tally to 25.

The US finished dosage sales in the quarter grew by 63% to USD 330 million on a YoY basis. The rise in sales was due to the full consolidation of the newly acquired subsidiaries DUSA Pharma and URL Pharma. Its Israeli subsidiary Taro Pharma also posted revenues of US 165 million, up 14% YoY. In the rest of the world market, the company reported a 73% rise in sales to USD 73 million.

For the March quarter, Sun Pharma filed a total of 9 ANDAs and received 9 approvals. For the full year it filed 22 ANDAs and received 20 approvals from the US FDA. By end of FY13, Sun Pharma cumulatively holds 449 ANDA filings.

In Q4, the EBITDA margins improved by 20 basis points. Its material cost as a percentage of sales has declined by 350 basis points. The stock in trade also declined, which helped the company to increase its EBITDA margins.

Its Other Income for the quarter was at Rs 101 crore, down by 50%. The finance cost stood at Rs 7 crore.

Overall, the company saw a fantastic set of results. In the pharma pack, after Lupin and Dr Reddy's Labs, Sun Pharma is the third company to have beaten the market’s expectations. The stock is trading at a lifetime high of Rs 1071, but still there seems to be 10%-15% returns in the stock. We remain positive on this counter. Investors should add this stock to their portfolio in a staggered manner.