In-line 3Q; IndiaUS-Outperformers for the quarter

Company
11 Mar 2024
5 Min read 
  • Sun Pharma reported in-line earnings for 3QFY24, with robust performance in domestic formulation, specialty portfolio, and US generics.
  •  The company's R&D expenditure remained lower than expected, leading to better profitability for the quarter.
  •  Earnings estimates for FY25/FY26 have been raised, factoring in superior execution in global specialty sales and industry-beating growth in the branded generics market.
  •  The PE multiple has been raised to 28x, and a price target of INR1,635 has been set.
  •  Sun Pharma is expected to deliver a 19% earnings CAGR over FY24-26, driven by growth in the domestic formulation, global specialty sales, and margin expansion.
  •  The company's sales grew 11% YoY in 3QFY24, with strong performance in the US market and domestic formulation segment.
  •  The specialty segment saw a 33% YoY growth in sales, driven by traction in key products.
  •  Sun Pharma's DF sales are expected to grow at a CAGR of 12% over FY24-26, while US sales are expected to grow at a CAGR of 10%.
  •  The company's EBITDA margin is expected to improve to around 27.8% by FY26E.
  •  The adjusted EPS is expected to grow at a CAGR of 19% over FY24-26.
  •  Sun Pharma's return ratios, such as RoE and RoCE, are expected to remain strong.
  •  The company's cash flow from operations and free cash flow are expected to improve over the forecast period.
  •  The closing cash balance is expected to increase from INR72.8 billion in FY23 to INR136.1 billion in FY26E.
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