Sun Pharma Q3 results preview: Revenue, profit to rise slightly, margins likely to expand

Sun Pharmaceutical Industries Ltd (Sun Pharma) is set to announce its earnings for the quarter ended on December 31, 2023 on Wednesday. Brokerage firms expect Sun Pharma to come out with a healthy set of numbers in Q3FY24, aided by specialty portfolio and domestic brand formulation, which will help offset US generic pressures expected in the current quarter.

Analysts tracking the stock, expect Sun Pharma's revenue around Rs 12,000 crore, rising in single digits on year-on-year (YoY) basis, while flattish-to-marginally lower on a sequential basis (QoQ). Ebitda margins are seen expanding for the quarter, aiding Ebitda by 10 per cent YoY ranging in Rs 3,200-3,300 crore. PAT is largely to be around 2,800 crore, rising in double digits YoY.

They believe that management commentary on new product launches, US generic business growth, revenue mix of US and domestic business and revival of the operating performance will be key things to note.

BNP Paribas expects Sun Pharma to clock a revenue of 12,095 crore in Q3FY24, up 8 per cent YoY but flat QoQ. The pharma major may report an ebitda of 3,302 crore, up 10 per cent YoY and 4 per cent QoQ with a Ebitda margin expanding to 27.3 per cent for the quarter. Net profit is seen at Rs 2,790 crore, jumping 16 per cent YoY but flat marginally down sequentially, it said.

US business revenue should be flat QoQ at $431 million with a gradual uptick in the specialty segment being offset by a decline in the generic segment. Domestic formulation should post revenue growth in low double-digits while EBITDA margin should improve 60 bps YoY, said BNP Paribas.

JM Financial expects both revenue and net profit to rise 10 per cent YOY to Rs 12,420.5 crore and 2,389 crore, respectively. It sees Ebitda at Rs 3,267 crore, rising 9 per cent YoY. "We expect 10 per cent domestic growth and strong specialty sales of $268 million. We raised $20 million from gRevlimid," it added with a buy rating and target price of Rs 1,440 on the stock.

The pharma giant is poised to have a high single-digit revenue growth on a YoY basis, led by low teen growth in the global specialty portfolio and domestic branded formulation business. We believe its US generic business may decline on a QoQ basis, primarily due to supply challenges, said Prathamesh P Masdekar, Research Analyst at StoxBox.

"However, its EBITDA and PAT margins will likely expand on an annual basis, mainly driven by strong branded contributions. Furthermore, we would monitor the management's comments on key focus areas such as US base business, specialty portfolio, and margin trend," he said.

Specialty Portfolio and domestic brand formulation should more than offset US generic pressures, said Systematix Institutional Equities, which expects the high single digit revenue growth on YoY basis led by low teens growth in global specialty portfolio and domestic branded formulation business. "US generic business is expected to decline on a QoQ basis led by supply challenges. Ebitda and Net Earnings should expand 13 per cent and 17 per cent YoY," it said.

Elara Capitals pegs Sun Pharma to report a net profit at 2,231.2 crore, up 3 per cent YoY but down 6 per cent QoQ. It estimates the drugmaker to report a revenue of Rs 12,050.3 crore, up 7 per cent YoY , with an Ebitda of Rs 3,096 crore, up 3 per cent YoY. Both revenue and ebitda may fall on a sequential basis, said the brokerage, keeping the stock in its top picks.

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