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Sun Pharma's results for the September quarter were way ahead of Street estimates. Net sales at Rs 4,192 crore marked a growth of 58 per cent over the same quarter last year. This was above Bloomberg's estimates of Rs 3,768 crore.
The Ebitda (earnings before interest, taxes, depreciation and amortisation) at Rs 1,843 crore also beat the expectation of Rs 1,688 crore. Thus, net profit of Rs 1,362 crore grew more than fourfold (up 426 per cent year-on-year or y-o-y) and 6.75 per cent, sequentially, which came better than the consensus estimate of Rs 1,248 crore. Adjusted for a provision of Rs 584 crore toward the generic Protonix litigation in the US in the September 2012 quarter, profits grew 51 per cent y-o-y.
A weak rupee against the dollar and sales boost from products such as Prandin, Doxil and Doxycycline led to this extraordinary performance.
The generics of the anti-diabetic brand Prandin, launched on exclusivity during the quarter by Sun Pharma, is likely to garner $30 million in sales and $15 million in profits during the first six months of the launch. Anti-bacterial doxycycline generics being marketed by Sun's subsidiary URL Pharma is seeing continued traction and was part of the drug list under shortage in the US. Sun started supplies of cancer treatment drug Doxil that was in short supply in the US and later got approval for marketing the generics and this drug, too, has seen good sales growth.
The company's domestic performance was also way ahead of peers that are being affected by implementation of the new drug-pricing policy. Sun's branded generic sales in India at Rs 949 crore grew by 17 per cent over the September quarter last year. Cipla saw a 11.6 per cent growth, while Lupin grew nine per cent in the domestic markets.
US finished dosage sale at $419 million grew by 74 per cent (in dollar terms) over the year-ago period. Looking at the performance in the first half of FY14, the company has revised its consolidated FY14 revenue growth guidance to 25 per cent (at constant exchange rate), compared to the previous guidance of 18-20 per cent.
The Street had taken some cues from the strong performance posted by Sun’s US subsidiary Taro and the stock gained 1.61 per cent to close at Rs 607.80 on Wednesday.
Taro’s results, too, were robust. Concerns on Taro had increased after its dermatology product Nystatin Triamcinolone, which contributed about 12 per cent to its US revenues, started facing competition from Sandoz that re-entered the market. The June 2013 quarter performance of Taro, too, had been subdued with adjusted sales growing just 10 per cent and adjusted profits declining 7.1 per cent. However, Hitesh Mahida at Fortune Broking says Taro’s September 2013 quarter results indicate the company has taken some price hikes in other products that led to the robust performance for the quarter. Taro’s September 2013 quarter sales at $205 million grew 27 per cent over the September 2012 quarter and 34 per cent over the June 2013 quarter. Adjusted Ebidta margins at 58.6 per cent came much better than 48 per cent in the previous quarter and 51.2 per cent in the year-ago quarter. This led adjusted profits at $96 million grow 45.7 per cent, y-o-y, and 58 per cent sequentially.
