IGI Logo

Result Synopsis

Sun Pharma reported a healthy margin beat on back of lower R&D spend which offset presumed weakness in Taro revenues; additionally, management indicated specialty business grew QoQ except for Levulan. We expect Leqselvi for Alopecia Areata to drive growth over next 12-24 months and beyond looking at the large sized market and revenues of competing brands. Ramp up of Leqselvi and continued growth in Ilumya/Winlevi should drive the specialty sales supported by likely Nidlegy approval next fiscal. We expect R&D to inch up as guided on the Q1 call along with increased opex which would result in margin following a trajectory similar to that of previous year. We have increased our FY25/26 estimates primarily on back of higher other income and some bit of increased traction in domestic market and US in FY25 and FY26 respectively. Continue with our ADD rating based on revised 33x FY26 EPS (earlier 30x) as we expect US specialty momentum to sustain along with presumably favourable generic tailwinds. Our revised TP stands at Rs1,920 (earlier Rs1,570) though any slowdown in specialty or delay in Leqselvi launch would pose a risk to US sales.

Result Highlights

* US sales declined QoQ on back of seasonality in Levulan revenues

* Domestic business strong at 16% YoY while EM healthy at +8% YoY

* Margin at ~29% came in much stronger than expected in part due to lower R&D

* Company guided to higher R&D for rest of the year which would mean margin could be at highs for the year and likely follow same trajectory as PY

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632.