Sun Pharma: Yet another robust quarter for Taro
Key Result Highlights:
- Robust 2QCY2012: Taro’s 2QCY2012 results continued to surprise positively yet again with 42.6% y-o-y top-line growth at $159.2mn (against estimate of $139mn), driven by price increase in select products and low base. Efficient cost control measures led the EBITDA margins to surge to 49.6% (up 400bp q-o-q and 1900bp y-o-y). Falling in-line with the strong operational performance, the Net Profit grew 76.2% y-o-y at $62.9mn.
- Investments start to pep new growth prospects: Taro reported an investment of $68mn in this quarter indicating efforts to pep up the matured portfolio. Taro currently has an ANDA portfolio comprising 15 products and 2 NDAs awaiting approval. Besides, it has also accelerated its R&D spend (up 17% q-o-q) in order to bridge the product portfolio gaps.
- Performance sustenance remains a key growth prospect: Taro has been reporting strong numbers since the past four quarters (largely non-recurring in nature) through price hikes in its select products. Besides, a healthy sequential performance indicates that there is still some steam left in the existing product portfolio. However, the criticality of margin sustenance from the current ANDA pipeline despite pricing pressure would be a key monitorable.
Outlook and Valuation: Taro’s 2QCY2012 results were above expectations, largely driven by value growth (flat in volume growth). Notably, while the price increase contributed the bulk of margin expansion, the base business has also remained stable.
Reliance Securities' remain positive on Sun Pharma, given its steady performance, superior brand franchise in the domestic market, growth prospects in the market and an excellent M&A track record. Sun is currently trading at 27.1x and 22.8x its FY2013E and FY2014E EPS respectively. Maintain Neutral
- Robust 2QCY2012: Taro’s 2QCY2012 results continued to surprise positively yet again with 42.6% y-o-y top-line growth at $159.2mn (against estimate of $139mn), driven by price increase in select products and low base. Efficient cost control measures led the EBITDA margins to surge to 49.6% (up 400bp q-o-q and 1900bp y-o-y). Falling in-line with the strong operational performance, the Net Profit grew 76.2% y-o-y at $62.9mn.
- Investments start to pep new growth prospects: Taro reported an investment of $68mn in this quarter indicating efforts to pep up the matured portfolio. Taro currently has an ANDA portfolio comprising 15 products and 2 NDAs awaiting approval. Besides, it has also accelerated its R&D spend (up 17% q-o-q) in order to bridge the product portfolio gaps.
- Performance sustenance remains a key growth prospect: Taro has been reporting strong numbers since the past four quarters (largely non-recurring in nature) through price hikes in its select products. Besides, a healthy sequential performance indicates that there is still some steam left in the existing product portfolio. However, the criticality of margin sustenance from the current ANDA pipeline despite pricing pressure would be a key monitorable.
Outlook and Valuation: Taro’s 2QCY2012 results were above expectations, largely driven by value growth (flat in volume growth). Notably, while the price increase contributed the bulk of margin expansion, the base business has also remained stable.
Reliance Securities' remain positive on Sun Pharma, given its steady performance, superior brand franchise in the domestic market, growth prospects in the market and an excellent M&A track record. Sun is currently trading at 27.1x and 22.8x its FY2013E and FY2014E EPS respectively. Maintain Neutral
Click here to read the full report
|
BSE
979.50 +18.35 (1.91%) NSE
982.00 +20.75 (2.16%) |
Read More
|
World News
Other Articles
- Sun Pharma Q4FY13: Better than expected results
- Sun Pharma: Net profit jumps to Rs10115.70 mn
- Sun Pharma Q3FY13: Reported 33% sales growth
- Sun Pharma: Stellar performance continues
- Technical Stock Pick: Sun Pharma
Featured Author
 |
Punit Jain |
- Macroeconomic indicators & Stock markets
- Midcap/Smallcap Indices - Time to catch up and stop under performing?
- MF Scheme Analysis: Franklin India Bluechip Fund (G)
- Note on RBI's Monetary Policy Announcement for 2013-14
- South Indian Bank Q3FY13: Results in line with expectations, retain accumulate More
Also On IndiaNotes.Com
Personal Finance
Can I get my EPF related grievances addressed?8 steps to financial planningHow to choose the best Credit CardStock Recommendation
NCC: Net profit jumps to Rs271.83 mn, up 151.90% y-o-yNesco: To keep its growth story, maintain buyAccelya Kale Solutions: Impressive results, accumulateMarket Outlook
Week ahead: Nifty surging higher, the bulls remain in controlDow Theory: A tool for technical analystsEquity markets witnessed a choppy session of trade
Reader's Comments
Discussion
19th Jun 2013 | 07:55 am
Stock Tips : Today Best Free Stock Calls Tips
18th Jun 2013 | 11:00 am
Stock Tips : Evening trading Level || intraday commodity tips