Sun Pharma demonstrates strong performance on all fronts: ICICI Direct

Sun Pharma’s Q3FY22 operational performance was in line with I-direct estimates with sustained momentum and good growth across businesses

Q3FY22 Results: Robust quarterly performance

Revenues grew 11.6% YoY to Rs 9863.1 crore. Indian formulations grew 15.1% YoY to Rs 3167.6 crore. US formulations grew to Rs 2971.8 crore, up 7.6% YoY. Emerging markets business grew 18.8% YoY to Rs 1789.9 crore while RoW markets business grew 4.2% YoY to Rs 1353.2 crore. API segment grew 9.2% YoY to Rs 531.8 crore. EBITDA margins declined just 80 bps and stood at 26.4% on back of marginal dip in gross margins and higher other expenditure. Subsequently, EBITDA grew 8.3% YoY to Rs 2606.3 crore. Adjusted profit grew 11.1% YoY to Rs 2058.8 crore. Delta vis-à-vis EBITDA was mainly due to higher other income and lower interest expense being partially offset by higher tax expense

Sun Pharma’s Q3FY22 operational performance was in line with I-direct estimates with sustained momentum and good growth across businesses. India business continues to grow faster than market, leading to increase in market share. The company’s US generics front is going through calibrated product rationalisation, the specialty segment looks promising due to robust product pipeline, steady progress and for 9MFY22 has already crossed the previous full-year revenues. This metamorphic shift from generics to specialty and strong domestic franchise is likely to change the product mix towards more remunerative businesses by FY22. This would have positive implications for margins also as we expect faster absorption of frontloaded costs on the specialty front

Q3FY22: Earnings conference call highlights 

Global speciality revenue was at US $ 183 million in Q3FY22 mainly on back of demand uptick for Cequa, Ilumya, Levulan and Absorica. Recently lauched Winlevi has been well received in US and management expects significant traction to be visible from Q4.

In the US, launched five generics. US pipeline: 88 ANDAs and 13 NDAs. No timeline on Halol re-inspection by USFDA.

Speciality R&D is 22% of total R&D.

In India, growth in chronic and sub-chronic segment on back of improving patient inflow and normalisation in marketing activity. New field force in 70% of territory performing in-line with expectations, management expecting rest to improve going forward

Growth in key therapies: CNS (up 7.8% YoY), CVS (up 12% YoY), GI: (up 10.8% YoY). Sun pharma launched 25 products in India during Q3FY22.