Sun Pharma announces Q1 results
Last updated: 31 Jul, 2020 | 02:27 pm
Sun Pharma has reported a net loss of ₹1,656 crore in Q1FY21, compared to a net profit of Rs 1,387 crore during the same period last year. Analysts had estimated a profit of about ₹1000 crore.
- Exceptional items drag: The loss in the quarter was mainly on account of exceptional items, as Sun Pharma provided for the resolution of multi-year investigations against its US subsidiary— Taro Pharmaceutical Industries Ltd. Taro has made certain provisions amounting to $60 million (₹ 455.19 crore) for related ongoing multi-jurisdiction civil antitrust matters, Sun Pharma, said, adding that the ultimate outcome of the antitrust matters cannot be predicted with certainty. Total exceptional items stood at ₹3,633 crore. “Excluding exceptional items, Sun Pharma’s adjusted net profit for Q1FY21 was at ₹1,146 crores with resulting net profit margin at 15.3%.”
- India sales rise: Sales of branded formulations in India rose 3% on-year to ₹2,388 crore. India business accounted for 32% of total sales. Sales in the U.S. stood at $282 million. The US. business accounted for 29% of the total sales. Sales in Emerging Markets (~18% of total) declined 10.5% to $173 million. Formulation sales in Rest of World (ROW) markets, were $136 million, down by 18.5% over Q1 last year and accounted for approximately 14% of total consolidated sales.
Sun Pharma’s Q1 performance was mainly impacted due to exceptional items. EBITDA margin has seen an improvement to 23.1% from 22.8% in the same period previous fiscal. While sales in India rose marginally, sales across other geographies were impacted due to lockdown in respective areas.
Pharma stocks are seeing a lot of traction as a defensive bet, as investors’ risk appetite has gone down substantially in the current times. While the profitability of all other industries has been severely impacted, pharma companies are expected to remain relatively immune. Sun Pharma shares have gained by over 72% since its March lows to touch a fresh 52-week high of ₹541 on NSE this afternoon. The stock is currently trading at a PE of 38 as compared to the sector PE of about 33.
Our VGQM model has a HOLD rating on the stock.