Sun Pharma share tanks 5% post Q4 earnings

Revenue from operations grew 4 per cent to Rs 8,522.98 crore in the March-ended quarter against Rs 8,184.94 crore a year ago

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Share of Sun Pharma fell 5 per cent to hit an intraday low of Rs 666.55 on BSE after the company posted weaker-than-expected earnings for the quarter ended March 2021.

The company reported an over two-fold jump in consolidated net profit to Rs 894.15 crore for the quarter ended March 2021, which was sharply below analysts' estimates of Rs 1,513 crore. Profit in the year-ago period stood at Rs 399.84 crore.

Revenue from operations grew 4 per cent to Rs 8,522.98 crore in the March-ended quarter against Rs Rs 8,184.94 crore a year ago.

The share of Sun Pharma opened 0.16 per cent lower at Rs 698.60 against the previous close of Rs 699.75. The stock has gained 46 per cent in the last 12 months and risen 13 per cent since the beginning of this year.

Sun Pharma's share stands higher than 50 day, 100 day, and 200 day moving averages and lower than 5 day, 10 day, 20 day moving averages. Market cap of the firm fell to Rs 1,60,847.44 crore.

India sales stood at Rs 2,670.9 crore, growth of 12.9 per cent compared to Q4 last year. For FY21, India sales grew 6.5 per cent to Rs 10,343.2 crore over the same period last year.

"Our sales in Emerging Markets were at US$ 192 million for Q4, a growth of 2.8% over Q4 last year. Overall sales in Emerging Markets accounted for about 17% of total consolidated sales for the quarter. For the full year FY21, sales were US$ 780 million, flat over the same period last year," the company said.

"FY21 was a year marked by a highly volatile business environment due to the global Covid-19 pandemic and lockdowns in various countries. Despite these challenges, I

 am happy to see that we have been able to maintain business continuity and record positive overall growth," said Dilip Shanghvi, Managing Director of the company.

"While our India business continues to outperform the average industry growth, our global specialty sales have continued to show an improving trend. Global Ilumya sales for the year have grown by 51% to US$ 143 million," he added.

"We raise our earnings to estimate by 9%/8% for FY22E/FY23E, factoring in heightened demand due to COVID, steady growth in the Chronic segment, and recovery in the Sub-Chronic category in the DF segment, the benefit of an expanded field force in the DF segment and improving traction in the global Specialty portfolio," Motilal Oswal said.

The brokerage house has raised the target price to Rs 830 on a 25x 12M forward earnings basis.

CLSA noted that the key specialty products are gaining ground. Significant operating leverage will accrue over the coming years. Success in specialty products should drive a PE rerating.

It has raised the FY22-23 EPS estimate by 1-3%.