Sun Pharma’s 4QFY2009 numbers were above our expectations. The company posted a 9.8% y-o-y decline in net sales to Rs1,134 crore for the quarter mainly on account of a very high base in the corresponding period of last quarter (contributed by the launch of Protonix generic).
The domestic segment grew a healthy 76.1% to Rs674 crore and constituted 58.3% of the company’s total sales for the period.
For FY2009, the company posted net sales of Rs4,272 crore, a y-o-y rise of 27.3%, with exports registering 21.9% y-o-y growth and contributing 52.8% of overall sales.
The Domestic market, on the other hand, grew by 31.9% during the period. For FY2010, the company has guided for 13-15% topline growth.
During FY2009, the company’s performance was driven by sales of the generic version of Protonix and robust growth in the Domestic Formulation Segment.
However, in FY2010, owing to subdued sales from the said product, we expect moderation in the company’s overall topline growth and also its impact on overall Profitability.
Without considering one-off opportunities, management has guided towards 13-15% growth in topline.
However, we expect the company to clock Sales growth of 8.8% during the period. We have also introduced our FY2011 numbers and expect the company to post 11.6% and 11.4% growth in Sales and Net Profit, respectively.
On the valuation front, at Rs1,219, the stock is trading at 16.0x FY2010E and 14.4x FY2011E earnings, respectively.
We maintain a BUY on the stock, with a target price of Rs1,526.