Sun Pharma dips 8% on Taro's weak Q4 results

The stock dipped 8% to Rs 589, its lowest level since November 2016 on BSE.

Sun Pharmaceutical Industries  dipped 8% to Rs 589, its lowest level since November 2016 on BSE, after the company’s US subsidiary, Taro reported a weak set of numbers for the quarter ended March 2017 (Q4FY17).

Taro Pharmaceutical Industries reported 25.9% year on year (YoY) fall in net sales for Q4FY17 to $196.4 million, due to continuing increased competition and the challenging pricing environment, the company said in a news release.

Net Income attributable to Taro was $ 83 million compared to $ 115 million, resulting in diluted earnings per share of $2.05 compared to $2.68 for the same period last year, it added.

Mr. Abhay Gandhi, Taro’s Interim CEO said, “As is commonly known, and as we have stated for quite some time, the entire generic sector, including Taro, is facing a challenging period. We continue to see a difficult generic pricing environment, particularly in the U.S., driven by intensified competition among manufacturers, new entrants to the market, buying consortium pressures, and higher ANDA approval rate from the FDA.”

Mr. Gandhi continued, “Based on our well-balanced portfolio, the continuing focus on R&D investment, our healthy pipeline, and the Company’s strong balance sheet, we believe we are well positioned in our target markets.” CLICK HERE TO READ FULL NEWS RELEASE.

Meanwhile, Sun Pharma is schedule to announce its fourth quarter & full year ending March 31, 2017 results on Friday, May 26, 2017.

Edelweiss Securities in Q4 results preview said it expect US revenue (USD 484 million) to decline 17% YoY in CC owing to gGleevec in the Q4FY16 base and around 10% sequential decline in Taro. Rest of the World sales will benefit from additional sales in Japan. India is expected to post steady growth (10%).

“Revenues are likely to grow just 6% YoY as 10% growth in domestic formulations and acquisition in Japan is likely to get offset by around 6% YoY decline in the US. Taro's sales are expected to decline around 24% YoY. EBITDA margins are expected to decline 349 bps YoY to around 30%. Net profit is expected to decline 11% due to lower operational performance and higher taxation,” ICICI Securities said result preview.

At 11:19 am; Sun Pharma was trading 7% lower at Rs 595 on BSE as compared to 0.51% decline in the S&P BSE Sensex. The trading volumes on the counter nearly tripled with a combined 6.88 million shares changed hands on the BSE and NSE so far.