Sun Pharma: Q2 Results Preview – Revenues to increase by ~10% and Adjusted PAT by ~8%% on a YOY basis

A report from Edelweiss Research, pegs the total revenues at 9,480 crore with a Year-Over-Year (YoY) growth of 10.8 percent and a decline of 2.5% on a Quarter on quarter (QoQ) basis.

It expects US revenue to grow 1 percent on QoQ basis to $ 383 million in cc on as good ramp up in Ilumya (+48 percent) and Cequa (+8 percent) for July and Aug 2021 is expected to be offset by decline in Absorica post genericisation (-45 percent).

“We expect domestic formulations to report growth of 15 percent YoY benefiting from lower base and recovery in acute-led therapies”, the brokerage says.

It expects EBITDA to increase 7.4 percent on an annualized basis to Rs 2,481 crore from Rs 2,310 crore. The report further adds, “We expect overall EBITDA margins at ~26.2 percent, declining ~200bps as a result of increased field force activity and R&D ramp-up.”

The brokerage expects a PAT of Rs 1,623 crore.

BOB Caps expect the revenues to grow 11.4 percent YoY to Rs 9,426 crore and decline by 3 percent on a quarterly basis. It says, “We expect 11 percent YoY growth in topline on the back of specialty sales in the US and robust growth in the domestic market.” EBITDA is expected at Rs 2,131 crore.

The brokerage opines that, “EBITDA margin could contract 360bps YoY on account of reversal of lockdown-led savings and higher spend on the specialty portfolio.” It expects the company to report a PAT of Rs 1,658 crore in this quarter.

Kotak Institutional Research expects the company to report consolidated revenues of Rs 9,556 crore. It says,

“We expect Taro revenues to remain flat QoQ and expect SUNP's ex-Taro US revenues to increase $7 million QoQ led by improvement in specialty sales. We expect global specialty business at $155 million for the quarter led by scale-up in Ilumya.” It expects domestic business to grow 18 percent YoY led by recovery in the domestic market, Rest of World (RoW) to grow 7 percent YoY and Emerging Markets (Ems) to grow 6 percent YoY.

EBITDA is expected to come in at Rs 2,411 crore, an increase of 4.4 percent on a YoY basis and a decline of 12.1 percent on a quarterly basis. EBITDA margins are likely to be at 25.2 percent and adjusted PAT at Rs 1,684 crore.

The brokerage adds, “We expect EBITDA margin to decline 300 bps QoQ led by increase in India/US promotional expenses. We expect base Taro EBITDA margin at 31 percent.”

Motilal Oswal “expects US sales to grow 15 percent YoY to $ 385 million, with ramp-up in Ilumya sales and stabilization of Taro portfolio. Domestic formulation sales to grow 15 percent YoY on strong performance in Chronic therapies”. It expects the consolidated revenues to grow by 9.6% to Rs 9,270 crore with an EBITDA of Rs 2,330 crore. EBITDA margins are expected at 25.2% and with a PAT of Rs 1,780 crore.

The stock closed at Rs 811.8 on November 1, up Rs 16.8 (2.1 percent) from its previous close. During the last 1 year the stock has moved up by 74 percent and by 37 percent in this financial year. The stock is up 5 percent in the past three month but down 2 percent in the past one month.