Sun Pharma Q1 is likely to be muted due to high base effect and weak domestic business

Sun Pharma Q1 is likely to be muted due to high base effect and weak domestic business

Indian pharma major Sun Pharma’s June quarter numbers are expected to decline due to weak domestic business due to high base effect and COVID-19.

Sun Pharma will release its June quarter scorecard on July 31.

Global brokerage firm Philip Capital expects Sun Pharma to be muted due to higher sales last year and lower performance in the domestic business due to COVID.

“Led by a high base of last year in the US, margins may contract by 120 bp, resulting in flat EBITDA. PAT may see a 10 percent decline mainly due to base effect,” Phillip Capital said.

Philip Capital expects Sun Pharma’s revenue to decline by 1 percent (YOY) per year and YOY to decline by 4.4 percent in EBITDA.

In addition to numbers, brokerages believe that the outlook on global specialty business and prescription trends in the specialty portfolio will be in the focus of investors.

Motilal Oswal Financial Services, a brokerage firm, expects Sun Pharma’s US sales to fall 9 percent to $ 386 million. Due to the one-time opportunity in Q1FY20.

Motilal Oswal believes that the impact of COVID-19 on a high base and branded generics in the US last year could keep Sun Pharma sales flat on a YOY basis.

According to Motilal Oswal estimates, Q1 results could be smooth.

Motilal Oswal expects Q1 adjusted net profit to fall 29.7 percent, while net income will fall 0.6 percent. EBITDA is likely to see a 14.9 percent YOY decline.

On the other hand, Kotak Institutional Equities Sun Pharma expects EBITDA margins at 18.4 percent (flat QQ). While consolidated earnings are down nearly 3 percent due to negative operating leverage.

Kotak expects a 3.2 percent YOY decline in net sales, a 25.1 percent YOY fall in EBITDA. And a 540 bps YOY ​​fall in EBITDA margin. The adjusted PAT, according to Kotak, will reduce the YOY by 49.1 percent. Emkay Global Q1 saw a 7 percent YOY fall in net sales and a 60 percent YOY fall in PAT. According to EBITDA, MK, the YOY may fall 34 percent, leading to a 690 bps YOY ​​fall in EBITDA margin.

“US should decline led by a hit on the specialty portfolio and Taro sales (derma concentration). India sales should be relatively better than peers and decline only marginally due to a higher Chronic portfolio. Margins should be flat QoQ as Q4 base had employee provision in a subsidiary and Rs 140 crore forex loss. ” said Emkay Global.

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