Sun Pharma Q3 Results Review - Inline Operational Performance: Nirmal Bang

Nirmal Bang Report

Sun Pharmaceutical Industries Ltd.'s reported Q3 FY24 revenue and margins largely in line with our estimates, with a beat on profitability due to lower tax outgo.

Revenue grew by ~10% YoY on the back of growth across major geographies and ramp-up in the global specialty portfolio. Ebitda margin increased by 88 basis points YoY to 28.1% as strong gross margin was largely offset by higher operational overheads.

We remain positive about Sun Pharma due to the following catalysts:

1. Ramp-up of branded/specialty business in the U.S. (recently acquired Deuroxolitinib would further strengthen the Specialty pipeline).

2. Continued growth in India business.

3. Potential inorganic opportunity given the strong balance sheet, especially in dermatology, ophthalmology and oncology specialties.

4. Maintenance of healthy Ebitda margin at ~28% despite higher research and development spends.

We maintain 'Buy' with a revised target price of Rs 1,653, valuing it at 28 times Decembers 25E earnings per share of Rs 59.

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