Sun Pharma Surges as Margins Beat Estimates in Q1

Sun Pharma shares gained as much as 5 per cent in an otherwise weak market on Wednesday after the company reported better than estimated earnings for the June quarter.
  The drug major's revenue jumped 3.3 per cent annually to Rs 6,522 crore for the June quarter, while its net profit declined 46 per cent to Rs 479 crore on account of a one-time cost of Rs 685 crore related to the integration of Ranbaxy with itself.
  However, on an adjusted basis its net profit stood at Rs 1,165 crore against Rs 1,442 crore year-on-year, said Angel Broking in a note to its clients.
  Angel Broking said Sun Pharma's revenue of Rs 6,522 crore was better than their expectation of Rs 6,200 crore.
  Sun Pharma's revenue growth was driven by the Indian formulation business, which posted an annual growth of 11 per cent to Rs 1,784 crore and emerging markets business, which grew 10 per cent year-on-year to Rs 845 crore.
  Sun Pharma's EBITDA or operating profit came in at Rs 1,860 crore against Rs 1,938 crore year-on-year, while its operating margin came in at 24.8 per cent against 30.3 per cent in the year ago period.
  Angel Broking said, Sun Pharma's operating margin was down on the back of other expenditures, which increased 18 per cent year-on-year and lower sales. Hence, on a normal basis Sun Pharma's operating margin came in at 30 per cent, which is better than estimate of 25.8 per cent, said the brokerage.
  Sun Pharma has reiterated its FY 2016 guidance of flat to lower sales year-on-year, but it is confident that Ranbaxy's synergy benefits of $300 million will come by FY2018.
  Stock Call: Angel Broking recommends "accumulate" on the stock with a target price of Rs 950 per share, which implies potential upside of 13 per cent from Tuesday's closing price.
  Sun Pharma shares closed 2.9 per cent higher at Rs 866.25 apiece compared to 1.33 per cent fall in the broader Nifty.