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Sun Pharma. Ind. Ltd (SPIL) | Q3FY13 First Cut Analysis




IndiaNivesh Securities Pvt Ltd


08 Feb 2013





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Sun Pharmaceutical Industries Limited (SPIL) | Q3FY13 First Cut Analysis Robust performance continues.... Benefiting from three factors a) healthy growth of Taro, which grew 25.4% y-o-y (15.4% q-o-q) to $189 million linked with volume growth & stabilization in higher prices b) Supply of Doxil (anti cancer drug) in US market since Feb 2012 and c) favorable currency movement, Sun Pharma reported another quarter of healthy growth of 33% y-o-y (7.3% q-o-q) to Rs 28.52 billion in Q3FY13, (V/s INSPL est= Rs 26.15 billion). Adjust for change in sales return treatment, domestic formulation business grew 19% y-o- y. Overall US business (including Taro) grew 32% y-o y to $ 276 million & RoW business grew 31% y-o-y to $ 73 million. Company’s API business also reported robust growth of 36% y-o-y (19% q-o-q) to Rs 2.09 billion. Valuations: On the back of price stabilization & volume growth in Taro’s product & supply of Doxil to US market in Sun Pharma reported another quarter of robust growth. Additionally, Sun pharma completed acquisition of DUSA & URL during quarter. Company has received ANDA approval for supplying generic version of Doxil in US, which, in our view, would be key positive for the company. Still Johnson & Johnson has not resumed complete supply of the product & it may take longer period. Another, generic player in the same line looks at least one & half year away. Hence, US business is likely to maintain the overall growth for the company. Domestic revenue grew 19% y-o-y during the quarter, we expect company to maintain the same run rate going forward. At CMP of Rs 750, the stock is trading at PE multiple of 25.3x of FY13E & 21.7x of FY14E earnings estimates. At current price stock’s looks fairly valued. We intend to come out with detailed analysis after attending con call scheduled for today (08th Feb 2013).

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