Sun Pharmaceutical Industries on November 3 is expected to report marginal growth in profit for the quarter ended September 2020 due to moderate-to-flat revenue growth, impacted by Taro and higher base in domestic business.
"The reduced Taro sales will keep YoY US sales in check to $329 million for Q2FY21, while domestic sales will decline on high base of past year," said Motilal Oswal which expects 1.3 percent rise YoY (up 7.9 percent QoQ) in Q2 revenue.
Prabhudas Lilladher also feels Taro may continue underperform due to pricing pressure in derma products, while specialty products ramp-up may also to be lower-than-expected and India formulation could decline in lower single-digit YoY. The brokerage sees 0.2 percent decline in revenue YoY.
Sun Pharma's key facility Halol continues to be under FDA issue which has slowed down new approvals.
At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) in September quarter may grow more than 10 percent and margin could expand around 200 bps compared to year-ago period, driven by operational cost saving due to COVID-19.
The stock gained 8.5 percent year-to-date 2020 and 5.8 percent in the quarter ended September, while it shot up 45 percent from its March lows.
Key things to watch out for would be prescription trends in specialty portfolio, and outlook on Ilumya sales in Japan market and traction in global specialty business.
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