Sun Pharmaceutical Industries is expected to report a healthy set of earnings for October-December quarter, driven by strong US business and Halol resolution. One thing to note is numbers will be on low base for the quarter.
"The key drivers for the business in terms of ANDA pipeline, differentiated portfolio and regulatory compliance for the US market, and healthy performance in domestic formulation market remain in place," Motilal Oswal said.
The range for expected profit growth of 12-178 percent is very big compared to the same period last year.
Emkay and Motilal Oswal see 17 percent year-on-year growth in bottomline while Prabhudas Lilladher expects profit to grow 137 percent and ICICI Securities expects 178 percent.
Key reasons could be the strong growth in US business, lower tax rate and good operational performance.
Revenue growth is largely expected to be in the range of 13-17 percent YoY, according to brokerages.
"Sun Pharmaceuticals is likely to register a healthy 17 percent YoY growth in revenue, primarily on the back of growth in the US and Rest of World (RoW) markets," said Motilal Oswal that expects the US business to grow around 24 percent YoY, partly on a low base of the past year.
RoW and API businesses are likely to grow 17 percent YoY and 23 percent YoY, respectively, according to Motilal Oswal. India business is expected to grow 8 percent YoY for the quarter, it added.
ICICI Securities, which expects profit to increase 178 percent YoY mainly due to lower tax rate (18 percent versus 65.2 percent in Q3FY18), said revenues are likely to increase 14.4 percent YoY mainly due to around 22 percent expected increase in US sales on the back of volume gains in existing products and new launches after Halol resolution.
Edelweiss said market share gains Absorica, chlorthalidone and gInvega offset decline in gWelchol and Taro.
Operating income is also expected to be strong with a margin around 21-22 percent for the quarter ended December 2018.
"Margins are expected to remain stable at 21 percent despite improvement in gross margin due to higher other expenditure (increase in SG&A expense related to launch of new products). Absolute EBITDA is expected to report healthy growth of around 17 percent YoY," Motilal Oswal said.
According to ICICI Securities, EBITDA margins are expected to increase 65 bps YoY to 22.5 percent while Edelweiss said EBITDA margins may remain steady at around 22 percent.
Key issues to watch out for
> Outlook on new product launches and ANDA filings
> Launch of key products from Halol facility
> Update on traction in specialty products
> Launch of NCE and pipeline
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