Sun Pharma rallies 5%, hits new 52-week high post Q3 results

Shares of Sun Pharmaceutical Industries hit a 52-week high of Rs 879.85 on rallying 5.5 per cent on the BSE in Tuesday’s intra-day trade after the company reported a good operational performance in December quarter. Earnings before interest tax and depreciation and amortization (EBITDA) margins declined 80 bps year-on-year (YoY) at 26.4 per cent on back of marginal dip in gross margins and higher other expenditure.

The country’s largest pharma player posted an 11 per cent YoY rise in consolidated revenues to Rs 9,814.2 crore in Q3FY22, riding on strong growth in its key markets – India and the US. The net profit grew 11.1 per cent YoY at Rs 2,058.8 crore. The board also declared an interim dividend of Rs 7 per share.

The management said the company achieved a sustained momentum and good growth across businesses; despite rising costs, achieved higher profitability. India business continues to grow faster than market, leading to increase in market share. Global specialty business for the first nine months has already crossed previous full-year revenues.

This metamorphic shift from generics to specialty and strong domestic franchise is likely to change the product mix towards more remunerative businesses by FY22. This would have positive implications for margins also as we expect faster absorption of frontloaded costs on the specialty front, ICICI Securities said in a note.

Motilal Oswal Financial Services remains positive on Sun Pharma on the back of superior execution in its Specialty portfolio, better-than-industry growth in the Branded Generics market of Domestic Formulation (DF) as well as other emerging markets, sustained launch momentum in US Generics, and delayed R&D spend in the Specialty portfolio. The brokerage firm reiterates Buy rating on the stock with target price of Rs 1,000 per share.

At 12:37 pm; Sun Pharma traded at Rs 877, up 5.2 per cent, as compared to 1.3 per cent rise in the S&P BSE Sensex. The stock surpassed its previous high of Rs 871 hit on January 13, 2022.