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Sun Pharma: Consistency is the key - Views on News from Equitymaster
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Sun Pharma: Consistency is the key
May 18, 2007

Performance summary
Sun Pharma has reported a strong set of numbers for the fourth quarter and full year ended March 2007. For both the periods under review, the topline has grown at a robust pace, led by both its domestic and export formulations businesses. Operating margins have expanded due to a sharp fall in raw material costs (as percentage of sales) and this impact has been more pronounced in the fourth quarter. All these factors put together, along with the higher other income, have resulted in the bottomline growing at a healthy double-digit pace for both the periods under review.

Consolidated snapshot
(Rs m) 4QFY06 4QFY07 Change FY06 FY07 Change
Net sales 4,067 5,442 33.8% 16,368 21,321 30.3%
Expenditure 3,159 3,897 23.4% 11,454 14,523 26.8%
Operating profit (EBIDTA) 909 1,545 70.0% 4,914 6,798 38.3%
Operating profit margin (%) 22.3% 28.4%   30.0% 31.9%  
Other income 754 942 24.9% 1,665 2,253 35.3%
Depreciation 184 201 9.0% 610 818 34.0%
Profit before tax 1,478 2,286 54.7% 5,969 8,233 37.9%
Tax 113 (18)   239 (67)  
Minority interest (65) 183   (3) 559  
Profit after tax/ (loss) 1,429 2,121 48.4% 5,733 7,741 35.0%
Net profit margin (%) 35.1% 39.0%   35.0% 36.3%  
No. of shares (m) 190.1 193.4   190.1 193.4  
Diluted earnings per share (Rs)*         40.0  
P/E ratio (x)*         25.4  
(* on a trailing 12-month basis)

What to expect?
At the current price of Rs 1,015, the stock is trading at a multiple of 22.1 times our estimated FY09 earnings. We shall soon put up a detailed analysis of the results.

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