Sun Pharma, BPCL, Federal Bank, Macrotech, CDSL, Syrma, Cholamandalam And More Q2 Review: HDFC Securities

HDFC Securities Institutional Equities

Sun Pharma - Steady Q2; specialty business-led growth to continue

Sun Pharmaceutical Industries Ltd.'s Ebitda grew 19% YoY on 9% sales growth (US: +11% QoQ; global specialty: +8% QoQ; India: +11% YoY), higher gross margin (+259 bps) and steady costs (staff/R&D/selling general and administrative increased by +5/1/15% YoY).

The specialty share increased to 18.1% of sales (versus 16.5% in Q2 FY24 and 17.7% in Q1 FY25). Sun Pharma expects its global/US specialty business to continue growing, led by a scale-up in key products (prescription trends were strong).

It expects India to see steady growth. Sun Pharma cut R&D spend guidance to 7-8% in FY25 (~6% of sales in H1; from 8-10% earlier) due to clinical trial delays for a few of its assets in H1; it expects R&D to inch up in H2.

We expect a scale-up in specialty (traction in Ilumya, Winlevi, Cequa, and the potential launch of Deuruxolitinib), steady US generics, and India (new launches, in-licensing) to drive growth and lead to a steady improvement in the margin.

Factoring in Q2, we have tweaked our estimates and rolled forward target price to Rs 2,180, (36 times Q3 FY27E EPS). Buy stays

BPCL - Weak refining environment

We maintain our Reduce rating on Bharat Petroleum Corporation Ltd., with a target price of Rs 280, owing to the risk of-

1. lower auto-fuel marketing margins and

2. moderation in refining margins.

Q2 FY25 Ebitda stood at Rs 45.4 billion (-65% YoY, -20% QoQ) and reported PAT came in at Rs 23.9 billion (-72% YoY, - 21% QoQ), below our estimates due to lower-than-expected refining margins, inventory losses and under-recovery in LPG.

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