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Sun Pharma: US Segment Shows Signs of Improvement - Views on News from Equitymaster
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Sun Pharma: US Segment Shows Signs of Improvement
Sep 12, 2016

Sun Pharma has announced its 1QFY17 results. The company has reported 22.7% YoY growth in sales and a growth of 266% in the net profits. Here is our analysis of the results.

Performance summary
  • Net sales grows by 22.7% YoY. The growth was largely driven by US business. The company had launched generics of Gleevec during Feb 2016 under 180 days exclusivity. This helped in better sales growth from the US market. Over and above, there was non-recurring revenues of US$ 35 m for the quarter from the US market. Taro (Sun's US subsidiary) witnessed growth of 9% YoY, for the quarter.
  • The EBITDA margins were by 930 bps. The improvement in the margins was largely backed by sales of Gleevec generics. Since the product was launched under 180-days exclusivity, the company could benefit from better pricing and market share. This helped the margin expansion.
  • Net profits surged by 266% YOY. This was partially, on the back of one time expenses incurred in the 1QFY16. Excluding these one time expenses, net profits still witnessed healthy growth.

    Financial performance: A snapshot
    (Rs m) 1QFY16 1QFY17 Change
    Net sales 65,269 80,067 22.7%
    Other operating income 2,346 2,363 0.7%
    Expenditure 49,937 53,220 6.6%
    Operating profit (EBDITA) 17,678 29,210 65.2%
    EBDITA margin (%) 26.1% 35.4%
    Other income 1,641 1,571 -4.3%
    Interest (net) 1,345 1,346 0.1%
    Depreciation 2,402 3,160 31.5%
    Profit before tax 15,572 26,275 68.7%
    Exceptional (loss) -6,851 0
    Minority Interest 2,034 2,411 18.5%
    Tax 1,128 3,527
    Profit after tax/(loss) 5,559 20,337 265.8%
    Net profit margin (%) 8.5% 25.4%
    No. of shares (m) 2,407
    Adj Diluted earnings per share (Rs) 16.2
    Price to earnings ratio (x)* 45.4
    *based on trailing 12 months earnings

    *based on trailing 12 months earnings
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