Below is the View On Sun Pharmaceutical Industries Limited 1QFY2018 Results by Ms. Sarabjit Kour Nangra (VP Research- Pharma, Angel Broking):
“Sun Pharmaceuticals posted poor set of numbers, sales came in at INR 6,167cr V/s INR 6,825cr expected V/s INR 8,007cr in 1QFY2017, a YoY de-growth of 23.0%, mainly driven by the Indian formulation sales dip and US (which was impacted on back of pricing pressures and base effect). India sales at INR 1,761cr (which accounted for 29% of sales), down by 5% YoY over 1QFY2017; mainly on back of GST implementation. Sales in the US were US$351mn for the quarter; de-growth of 42% YoY over same period last year and accounted for 37% of total sales. Sales for 1QFY2017 included the benefit of generic Imatinib exclusivity which expired in July-2016. Besides Imatinib, the overall pricing pressure in the US generics market also impacted the YoY growth.
On operating front, the EBITDA margins came in at 17.1% V/s 17.7% expected V/s 33.5% in 1QFY2017, mainly on back of lower than expected sales during the quarter and base effect. Gross margins came in at 72.8% V/s 76.9% in 1QFY2017, while R&D expenses were at 8.5% of sales, mainly on back of lower sales and a dip of 28% YoY. Net profit for the quarter was adversely impacted by settlements with certain plaintiffs related to the Modafinil antitrust litigation in the US, with the settlement amounting to INR 950cr. Excluding the Modafinil settlement, its adjusted net profit for 1QFY2018 was at INR526cr, down 74% over 1QFY2017 last year, with resulting adjusted net profit margin of 8.5%. Net profit for 1QFY2017 last year included the benefit of the 180-day exclusivity for Imatinib which expired in July-2016. We maintain our BUY rating on the stock, with a price target to be revised soon.”
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