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Business News/ Companies / Company Results/  Sun Pharma net up 16.5% at 2,524 crore on robust sales

Sun Pharma net up 16.5% at ₹2,524 crore on robust sales

Sun Pharmaceutical Industries Ltd reported a consolidated net profit of ₹2,523.75 crore, up 16.5% y-o-y, supported by robust sales, volume growth, and new product launches.

Sun Pharmaceutical's corporate office and lab shots at Andheri in Mumbai (Mint)Premium
Sun Pharmaceutical's corporate office and lab shots at Andheri in Mumbai (Mint)

New Delhi: Sun Pharmaceutical Industries Ltd on Wednesday posted a consolidated net profit of 2,523.75 crore, an increase of 16.5% year-on-year (y-o-y), on the back of robust sales, volume growth, and new product launches in key regions.

It reported a consolidated revenue of 12,380.7 crore in the December quarter, against 11,240.97 crore a year ago. Analysts polled by Bloomberg had estimated revenues of 12,339.9 crore and a net profit of 2,464.8 crore.

“We are pleased by our continued broad-based growth including in global specialty. We are keenly looking forward to the EMA filing of Nidlegy in the coming months. Once approved, Nidlegy will significantly expand our oncoderm franchise in Europe," said Dilip Shanghvi, managing director of Sun Pharmaceutical Industries Ltd, in an exchange filing.

Earnings before interest, taxes, depreciation, and amortization (Ebitda) stood at 3,476.8 crore, which is up 15.8% y-o-y, with an Ebitda margin of 28.1% during the quarter. The company’s expenditure on research and development (R&D) for the third quarter was 824.5 crore.

“Our R&D efforts span across both specialty and generic businesses, and we continue to invest in strengthening product pipeline for various markets. Our specialty R&D pipeline comprises six molecules undergoing clinical studies," the company added.

The Mumbai-based company that specializes in specialty, generics, and consumer healthcare products, reported a revenue of 3,778.5 crore from the sales of formulations in India, up 11.4% from the year-ago period. Sales from the Indian formulations segment accounted for 31% of the total sales of the company in the quarter.

Global specialty sales stood at $296 million, including the $20 million milestone received in the quarter, which means a growth of 24.2% y-o-y, ex-milestones. The global specialty sales accounted for 19.1% of the total sales, it added.

“The phase two study for GL0034, being developed for diabetes indication, will start in the second half of 2024, the candidate is also being evaluated for its potential use in multiple indications," the company said in the post-earnings call, in response to whether GL0034 will be used for obesity indications. The company also said that its product Nidlegyä will be filed with the European authorities during the first half of the current year. “Once approved, it will enhance our offerings in skin cancer and synergize. We also expect to start phase three trials for MM-II, by the second half of 2024, while the focus remains to look at opportunities for GLP-1 which we can license from the innovator companies. Our own GLP-1 is in the early stage of development and just completed phase one trials," the management said in the earnings call.

US formulations reported revenue of $477 million, a growth of 13.2% y-o-y. This includes revenues from the recently-acquired Taro Pharmaceuticals as well. Sales from formulation in the US accounted for 33% of total sales in Q3FY24. Taro reported a revenue of $157 million in Q3, up 12.9% year-on-year, with a net profit of $20.2 million, against $7.3 million in the corresponding quarter a year ago.

The company earlier in the month had signed a definitive merger agreement with Taro to acquire the remaining stake that it doesn’t already own for approximately $347.8 million. “The agreed price of $43 per share is poised to deliver a 48% premium to the unaffected price on 25 May 2023. The merger agreement is subject to various closing conditions including shareholder approval," it added.

Formulation sales in emerging markets stood at $252 million in Q3, a 2.3% decline due to adverse currency movements.

The segment accounted for 17% of the total sales of the company. In comparison, rest of the world markets were up 12.9% year-on-year at $214 million, and accounted for 15% of the total sales. Among the largest markets, Brazil and Romania performed well.

“India’s growth has bounced back, with the market growing at 9% y-o-y in Q3 (as per AIOCD), but we expect our coverage companies to grow faster at 10% and can fetch revenue of 206 billion ( 20,600 crore). Price hikes, new launches, and acquisitions are likely to be the main growth drivers. In contrast, volume growth for the industry had bounced back in December 2023," said Abdulkader Puranwala, a research analyst at ICICI Securities Ltd. “Aggregate US sales of our coverage universe may scale up to $2.5 billion, up 12% y-o-y. Lesser price erosion in base business and improved supplies, coupled with a seasonally strong quarter, may drive growth. While the tailwinds in the US may be short-lived, the initial signs of volume revival in the domestic market are encouraging."

HDFC Securities also maintains a buy rating on the company due to structural growth through the Indian market, leading to a steady margin.

The company also disclosed that during the quarter, it earned 466.1 crore from external sales of active pharmaceutical ingredients (API), which was 9.65% lower. The company, though, said that it continues to focus on increasing API supply for captive consumption for key products.

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Naman Suri
Naman is a skilled business journalist who excels in breaking down complex financial details. He specializes in the corporate sector, providing thorough coverage of the pharmaceutical industry, the dynamic field of sports business, and the fascinating area of white-collar crime. Naman has a knack for making sense of numbers and presenting them in an understandable way.
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Published: 31 Jan 2024, 02:38 PM IST
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