Sun Pharma Q2 profit likely to get a boost from healthy US business, Halol resolution

Brokerage: Axis Securities | PAT: Rs 960 crore

Axis Securities expects US business to grow 2 percent QoQ at USD 386 million. Lower interest income is likely to boost its PAT, it said.

Further, it expects domestic formulations to grow 4 percent YoY.

Meanwhile, higher staff and R&D costs could weigh on operating margins.

Brokerage: Emkay | PAT: Rs 1087.3 crore

Emkay expects US revenues to grow by 26 percent yoy on a lower base in Q2FY18. Sequentially, US revenue could remain flat owing to fewer product launches and base business erosion.

“We assume overall revenue and EBITDA of Rs 7,440 crore and Rs 1,730 crore with EBITDA margin of 23 percent (expansion of 260 bps yoy).”

Key developments to watch out for would be guidance on R&D spending and commentary on NCE launches and pipeline.

Brokerage: ICICI Securities | PAT: Rs 965 crore

Revenues are likely to increase 16 percent YoY to Rs 7,698 crore mainly due to 40 percent expected increase in US sales (ex-Taro) on the back of volume gains in existing products and new launches post Halol resolution.

EBITDA margins are expected to increase 82 bps YoY to 21.5 percent. They expect net profit to rise due to a strong operational performance, which is likely to be partly offset by higher tax rate0

Brokerage: Motilal Oswal | PAT: Rs 970 crore

Sun Pharmaceuticals is likely to register healthy 15 percent YoY growth in revenue to Rs 7,080 crore, primarily on the back of a growth in US and domestic business, the brokerage house said.

India business is expected to grow 15 percent YoY to Rs 2,030 crore, while US business is expected to grow 12 percent YoY to Rs 2,540 crore.

EBITDA is expected to increase significantly by 48 percent YoY to Rs 1,560 crore, with margin expansion to 22 percent primarily due to low base in 1QFY18 on the back of price erosion in US business.

Ramp-up of specialty products and resolution of the Halol plant will be the key growth drivers for the company.

Key issues to watch out

Outlook on new product launches and ANDA filings

Outlook for FY19E

Launch of Tildrakizumab and other key products

Brokerage: Kotak Institutional Equities | PAT: Rs 951.4 crore.

Kotak Institutional Equities expects Taro revenues to decline $5 million qoq.

“We expect EBITDA margins to decline to 21 percent (-120 bps qoq), reflecting the launch costs for Ilumya, as well as higher R&D spend (8 percent of sales). We expect base Taro EBITDA margins to decline 50 bps in the quarter, and expect ex-Taro EBITDA margin at 18.5 percent,” analysts at the firm wrote in their report.

Brokerage: Prabhudas Lilladher | PAT: Rs 984.2

Resolution on Halol plants to increase exports to US and higher USD to improve sales growth, the brokerage house said, adding that launch of specialty products in US could increase overheads.

Exposure in emerging markets could impact sequential margin in Q2FY19E.