Stock Market Flash on Sun Pharma for 4QFY2011

4QFY2011 Financials Snapshot:   

                                                                   

(`cr)	4QFY2011	3QFY2011	% chg qoq	4QFY2010	% chg yoy
Net sales	1,463	1,601	(8.6)	1,080	35.5
Other income	111	58	90.9	14	707.4
Gross profit	1,150	1,169	(1.6)	814	41.3
Operating profit	444	441	0.7	419	6.0
Net profit	443	350	26.4	394	12.2

4QFY2011 Financials Actual V/s Estimates :

`cr	Actual	Estimates	Var(%)
Net sales	1,463	1,412	3.6
Other income	111	71	55.5
Operating profit	444	400	10.8
Tax	2	51	(95.6)
Adj net profit	443	331	33.9

4QFY2011 Consolidated Financial Result Highlights-  

·         The Net Sales for the quarter under review for the company stood at `1,463cr (`1,081cr) an increase of 35.5% yoy, higher than our estimates of `1412cr majorly led by the higher than expected exports at `869cr (`494cr), increase of 75.7% during the quarter. The formulation segment on the export front clocked a robust growth of 98.5% yoy at `776cr (`391cr).

·         The Net sales for Taro for Jan-Mar 2011 is at US$107.7 million, a growth of 21% yoy. The net profit for the quarter is at US$ 25.7 million, higher by 199% when compared to the same quarter last year.

·         The domestic formulations sales came in at `588.7cr (`489.8cr) increase of 20.2% yoy.

·         The company reported gross margins higher than our estimates at 78.6% (76%) for the quarter. However, the employee and other expenses grew by 119% yoy to `254cr (`116cr) and 61.9% yoy to `453cr (`279.5cr) respectively. As a result the OPM contracted to 30.3% (38.7%).

·         The Net profit came in at `504cr (`392cr), growth of 28.7% yoy. The adjusted net profit grew by 12.2% yoy at `443cr (`394cr), higher than our estimate of `331cr.

·         For the full year, the net sales increased by 42.8% yoy to `5,72cr (`4,007cr). The adjusted net profit grew by 34.4% yoy to `1,816cr (`1,351cr).
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4QFY2011 Consolidated Financial Performance:

Y/E March (`cr)	4QFY2011	3QFY2011	% chg qoq	4QFY2010	% chg yoy	FY2011	FY2010	% chg yoy
Net sales	1,463	1,601	(8.6)	1,080	35.5	5,721	4,007	42.8
Other income	110.8	58.0	90.9	13.7	707.4	272.7	205.3	32.8
Total income	1,574	1,659		1,094	43.9	5,994	4,213	42.3
Gross profit	1,150	1,169	(1.6)	814	41.3	4,261	2,910	46.44
Gross margin (%)	78.6	73.0		75.4		74.5	72.6
Operating profit	444	441	0.7	419	6.0	1,967	1,363	44.3
Operating margin (%)	30.3	27.5		38.7		34.4	34.0
Interest	0	0	-	0		0	0	-
Depreciation	48	80	(40.1)	42	14.9	204	153	33.1
PBT	506	418	21.1	390	29.7	2,036	1,415	43.9
Provision for taxation	2	54	(95.9)	(1)	(277.8)	128	68	89.3
PAT before extra-ordinary item	504	364	38.6	392	28.7	1,907	1,347	41.6
Minority interest(MI)	(61)	(13)	-	3	-	(91)	4
Extraordinary item	0	0		0		0	0
PAT after extra-ordinary item & MI	443	350	26.4	394	12.2	1,816	1,351	34.4
EPS (`)	4.3	3.4		3.8		17.5	13.0

 

At CMP, the stock is currently trading at 22.7x FY2012E and 18.5x FY2013E earnings. We would revise our estimates post the interaction with the management.

Key financials:

Valuation Summary
Y/E March (`cr)	FY2009	FY2010	FY2011E	FY2012E	FY2013E
Net sales	4,273	4,103	5,721	7,627	9,550
% chg	27.3	(4.0)	39.4	33.3	25.2
Net profit	1,818	1,351	1,816	2,030	2,492
% chg	20.7	(25.7)	34.4	11.8	22.7
EPS (`)	17.6	13.0	17.5	19.6	24.1
EBITDA Margin (%)	43.6	33.2	34.4	29.1	29.8
P/E (x)	25.4	34.1	25.4	22.7	18.5
RoE (%)	30.2	17.8	19.3	19.9	20.8
RoCE (%)	27.4	15.3	18.3	19.0	21.1
P/BV (x)	6.5	5.7	4.9	4.2	3.6
EV/Sales (x)	10.4	10.7	7.7	5.8	4.5
EV/EBITDA (x)	23.9	32.3	23.9	19.8	15.2