Sun Pharma Q1 PAT misses estimates

Profit came lower than analysts’ consensus estimate of ₹2,164.5 crore as indicated by Bloomberg. However, the company said its adjusted net profit (excluding the exceptional items) for Q1FY24 at ₹2,345.4 crore was up 13.8% over the same quarter last year. This was better than consensus estimates. 

Notably, it was the exceptional items worth ₹322.87 crore pertaining to impairments, forex losses, relocation of acquired Alchemee operations from California to New York and certain other acquisition related expenses that impacted reported net profit. 

The company’s revenues from operations at ₹117,851.5 crore rose 10.7% over last year. These were driven by the company’s strong sales growth registered in key US markets.

The US formulation sales of the company, accounting for over a third of total consolidated sales at $471 million, grew 12% year-on-year. In rupee terms at ₹3,870.87 crore, the US formulation sales were up 19% year-on-year. Although the company’s US subsidiary Taro’s Q1FY24 sales at $159 million, could grow only 1.4% YoY, analysts feel that ramp up in the specialty products sales as that of psoriasis treatment drug Ilumya and acne treatment drug Winlevi lifted the sales. The contributions from new launches such as those of multiple myeloma treatment drug Revlimid generics are also likely to have boosted the company’s overall show.

Global specialty sales for the company at $232 million, grew 21% year-on-year and the company said it accounted for 16.2% of Q1FY24 sales.

The better product mix helped the company report improvement in gross marg-ins, said analysts. The earnings before interest tax depreciat-ion and amortisation (Ebitda) at ₹3,331.8 crore grew 15.5% year-on-year. Its Ebitda margin for Q1 at 27.9% improved over 26.8% for Q1 last year.

Meanwhile, the company’s sales of formulations in India for Q1FY24 at ₹3,560.4 crore, also grew 5.1% year-on-year. India formulation sales accounted for about 30% of total consolidated sales. The company launched 10 new products in the Indian market during the quarter.

Sun Pharma’s performance in the Emerging Markets too remained supportive. Emerging market formulations sales contributing 18% to overall sales at $261 million grew 6.5% year-on-year. In rupee terms at ₹2,145.2 crore, it was up 13.4% year-on-year.

The rest of the World formulation sales contributing 14% overall at $195 million grew 2.6% year-on-year. In rupee terms they improved 9% year-on-year.

Dilip Shanghvi, managing director o the company, said: “All our business continued to have growth this quarter and we are well positioned to meet our growth guidance for FY24. The US led the revenue growth in Q1 and Global Specialty continued to increase as a share of our revenues.”

“I am excited about the progress in our specialty pipeline and the potential for offering new treatments for patients in need”.

The company’s R&D pipeline includes at least five products at various stages of clinical trials.

The much-awaited alopecia areata treatment drug deuruxolitinib has completed phase 3 trials , while two other products indicated for pain in osteoarthritis and for psoriatic arthritis, also are in phase 3 trial or at least have completed phase 2 trials.

The company’s product pipeline for the US markets remains strong. Its filings for 98 ANDAs await US FDA approval, including 32 tentative approvals. For the quarter, 2 ANDAs were filed. Additionally, the portfolio includes 54 approved NDAs while 13 NDAs await US FDA approval.

Surya Patra, senior analyst, PhillipCapital Institutional Equity Research, in his note to clients post results said that Sun Pharma’s Q1 core earnings were 8% and 20% ahead of street and PhillipCapital estimates.

Going ahead, continued momentum in specialty, domestic formulations and ramp in generic Revlimid will drive growth.

Updated: 03 Aug 2023, 11:02 PM IST