The healthcare major’s June quarter earnings beat analyst expectations on all parameters, with profit growing more than 31 percent on growth in India and US businesses.
Shares of Sun Pharma fell over 5 percent intraday on August 14, a day after the company said its June quarter profit increased 31 percent year-on-year to Rs 1,387.5 crore from Rs 1,057.3 crore. Sequentially, profit grew 118 percent in Q1 FY20.
Following the results, the scrip jumped 4 percent on August 13 but failed to hold the gains, falling prey to profit-booking.
Brokerages have mixed views on the stock.
HSBC has a hold recommendation on Sun Pharma, with a target price of Rs 400 per share.
he brokerage highlighted that the Q1 numbers were largely in-line at the operating levels, but cost pressure will continue due to ongoing spend for Ilumya & Cequa. “Execution of speciality launches remain key for sustainable earnings growth.”
CLSA, on the other hand, maintained a buy rating on the stock, raising the target price to Rs 540 from Rs 520.
The foreign brokerage said that the company is gradually getting back on track and the ramp-up of the speciality product portfolio will be a key catalyst for growth.
“Strong execution could drive a re-rating of the stock,” said the brokerage.
Credit Suisse has a neutral call on the stock with a target price of Rs 470, citing Q1 results are in-line with estimates.
As per the global brokerage, the ramp-up of Ilumya will be key for upside which may be slow with strong progress of Skyriz. “US sales will normalise from Q2 and it may take 3-4 quarters before the new disclosure will reveal Ilumya growth.”
At the operating level, Sun Pharma’s earnings before interest, tax, depreciation and amortisation (EBITDA) grew 24.2 percent year-on-year to Rs 1,996 crore and margin expanded 160bps YoY to 23.8 percent in Q1.
Profit was estimated at Rs 1,052.6 crore on the revenue of Rs 8,177.6 crore and EBITDA was expected at Rs 1,743 crore with margin at 21.3 percent for the quarter, according to a poll of analysts conducted by CNBC-TV18.
Sun Pharma reported gains on forex transactions at Rs 67.4 crore for June quarter against a loss of Rs 90 crore in the previous year. Finance cost declined 20.5 percent year-on-year to Rs 104 crore in Q1.
At 1010 hrs, Sun Pharma was quoting Rs 413.85, down Rs 23.70, or 5.42 percent on the BSE
