Prabhudas Lilladher has come out with its earnings estimates for pharmaceuticals sector for the quarter ended December 2012. The research firm expects top-line growth of 24 percent YoY for its coverage universe (excluding one-offs), with EBITDA growth at a robust 24 percent YoY. According to them, adjusted PAT is expected to grow by 26 percent YoY.
Prabhudas Lilladher's report on Q3FY13 earnings estimates of pharma sector:
EBITDA growth is mainly led by strong performance by Ranbaxy on a low base, Dr Reddy’s on the back of favourable product mix and operating leverage and Divi's Labs due to strong order book and ramp-up in revenue from new SEZ. Adjusted PAT growth would be led by strong operational performance. For some of the companies, PAT is boosted by lower forex losses during the quarter compared to a year earlier due to lower currency movement and reduced hedges."
US is likely to be the main growth driver for the companies during the quarter
For most of the companies under our coverage universe, US is likely to be a key growth driver during the quarter. All the large cap companies are likely to witness strong growth in the US business for the quarter. Even mid-cap companies like Torrent are likely to witness strong growth in US on a small base. We believe that US remains a key growth driver for most of the Indian companies in the medium term. The table below gives our expectation of the US business growth of various companies for the quarter v/s the overall top-line growth of those companies.
Depreciation of INR on YoY basis and on QoQ basis USD and Euro to partly boost top-line growth for the sector and negatively impact earnings of companies with forex debt
Rupee has depreciated by 6 percent YoY against the USD and 3 percent YoY against Euro. This is likely to partially boost top-line growth for larger Indian players, with high exposure to the currencies. The companies with adequate hedges like Dr. Reddy's Labs and Ranbaxy will not benefit significantly; however, companies with inadequate hedges like Cipla, Cadila and Divi’s Labs are likely to benefit from INR depreciation. Further, 4 percent QoQ depreciation of INR will have a negative impact on the companies which have outstanding forex hedges and also the companies which have borrowed in USD as these companies will have MTM losses on these liabilities.
Summary Financials - Quarterly (Rs m)
| Company | Q3FY13E | Q3FY12 | YoY gr. (%) | Q2FY13 | QoQ gr. (%) |
| Sun Pharma | |||||
| Sales | 25,189 | 21,451 | 17.4 | 26,572 | -5.2 |
| EBITDA | 10,270 | 9,637 | 6.6 | 11,685 | -12.1 |
| Margins (%) | 40.8 | 44.9 | 44 | ||
| PAT | 7,023 | 6,110 | 14.9 | 7,883 | -10.9 |
| Cipla | |||||
| Sales | 20,361 | 17,580 | 15.8 | 21,918 | -10 |
| EBITDA | 5,157 | 3,915 | 31.7 | 6,770 | -33.1 |
| Margins (%) | 25.3 | 22.3 | 30.9 | ||
| PAT | 3,088 | 2,699 | 14.4 | 3,886 | -20.5 |
| Dr Reddy's | |||||
| Sales | 31,419 | 27,692 | 13.5 | 28,809 | 9.1 |
| EBITDA | 7,289 | 8,689 | -16.1 | 6,909 | 5.5 |
| Margins (%) | 23.2 | 31.4 | 24 | ||
| PAT | 4,399 | 2,846 | 54.6 | 4,074 | 8 |
| Lupin | |||||
| Sales | 22,608 | 17,917 | 26.2 | 22,249 | 1.6 |
| EBITDA | 4,367 | 3,783 | 15.5 | 4,402 | -0.8 |
| Margins (%) | 19.3 | 21.1 | 19.8 | ||
| PAT | 2,986 | 2,498 | 19.5 | 2,527 | 18.2 |
| Ranbaxy | |||||
| Sales | 29,030 | 37,923 | -23.5 | 26,910 | -2.2 |
| EBITDA | 3,872 | 8,601 | -55 | 3,495 | -12.5 |
| Margins (%) | 13.3 | 22.7 | 13 | ||
| PAT | 1,870 | 1,556 | 20.1 | 2,173 | -14 |
| Cadila Healthcare | |||||
| Sales | 16,236 | 13,832 | 17.4 | 15,460 | 5 |
| EBITDA | 3,255 | 2,640 | 23.3 | 2,930 | 11.1 |
| Margins (%) | 20 | 19.1 | 19 | ||
| PAT | 2,058 | 1,492 | 37.9 | 952 | 116.3 |
| Divi's Labs | |||||
| Sales | 5,462 | 4,147 | 31.7 | 4,726 | 15.6 |
| EBITDA | 2,032 | 1,484 | 36.9 | 1,639 | 24 |
| Margins (%) | 37.2 | 35.8 | 34.7 | ||
| PAT | 1,540 | 1,226 | 25.7 | 1,180 | 30.5 |
| IPCA | |||||
| Sales | 7,332 | 6,148 | 19.3 | 7,713 | -4.9 |
| EBITDA | 1,729 | 1,513 | 14.3 | 1,788 | -3.3 |
| Margins (%) | 23.6 | 24.6 | 23.2 | ||
| PAT | 1,120 | 639 | 75.1 | 1,251 | -10.5 |
| Torrent Pharma | |||||
| Sales | 8,212 | 6,966 | 17.9 | 7,772 | 5.7 |
| EBITDA | 1,519 | 1,215 | 25 | 1,553 | -2.2 |
| Margins (%) | 18.5 | 17.4 | 20 | ||
| PAT | 1,059 | 832 | 27.3 | 1,085 | -2.4 |
Note: PAT is adjusted for one-offs
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