What to do with Sun Pharma shares post Q4 results? Here’s everything you need to know

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What to do with Sun Pharma shares post Q4 results? Here’s everything you need to know
Credit: © Reuters.

The shares of India’s largest drug manufacturer fell by 4.8% the day after the company announced robust 32% year-on-year growth in net profit.

At 11:50 a.m., Sun Pharmaceutical Industries Ltd shares were trading at Rs 1,484 per share, down 3.66% on the National Stock Exchange from the previous close price. The company has a market capitalization of Rs 3,56,052 crore.

The company’s consolidated revenue reached Rs 11,982.9 crore, reflecting a 9% increase from Rs 10,930.6 crore the previous year. Net profit rose by 32%, from Rs 2,016 crore to Rs 2,666 crore, driven by a 62% surge in other income, which amounted to Rs 606 crore compared to Rs 373 crore in the same quarter last year.

Sun Pharma’s EBITDA margin stood at 25.3%, surpassing the 24.6% estimate by 70 basis points, though it was 30 basis points lower than last year’s margin.

India formulation sales for the March quarter grew by 10.2% year-over-year to Rs 3,707 crore, representing 31.4% of the company’s total consolidated sales.

Sun Pharma’s global specialty sales were reported at US$ 271 million, marking an 11.1% increase year-over-year. For the full fiscal year 2024, formulation sales in emerging markets totaled US$ 1,041 million, a 5.9% rise from the previous year. In Q4FY24, emerging markets sales were US$ 245 million, up 10.8% year-over-year, accounting for 17.2% of the total consolidated sales for the quarter.

For the full year ended March 31, 2024, revenues rose by 20% to Rs 48,496 crores, compared to Rs 43,885 crores for the year ended March 31, 2023. Profit for the full year increased by 13% to Rs 9,640 crores, up from Rs 8,560 crores in the previous year.

The company’s R&D investments during the quarter were Rs 900 crore, compared to Rs 665 crore in the same quarter the previous year. R&D spending was 7.6% of sales in Q4FY24, with specialty R&D constituting 42% of the total R&D expenditure.

CLSA has an ‘underperform’ rating on Sun Pharmaceutical Industries stock with a target of Rs 1,610, citing near-term margin pressure and moderate guidance for fiscal 2025.

Nuvama has downgraded the stock to ‘hold’ with a target price of Rs 1,620, based on an earnings miss at the operating level. Following the company’s guidance of high single-digit revenue growth and 8–10% R&D spend, the brokerage firm cut its FY25E/26E EPS by 17%/6%.

However,Jefferies and HSBC have maintained a ‘buy’ call on Sun Pharma stock with target prices of Rs 1,785 and Rs 1,670, respectively. Citi has also maintained a ‘buy’ on the stock with a target price of Rs 1,640 per share, seeing an upside of 10% from Thursday’s trading price of Rs 1,491.

Motilal Oswal (NS: MOFS ) retained its ‘buy’ rating on the stock with a target of Rs 1,810, siting that Sun Pharma reported a slight miss at the operational level for Q4FY24 due to lower-than-expected sales in the Rest of the World(ROW) market and higher-than-expected operating expenses for the quarter.

Sun Pharmaceutical Industries Ltd. (NS: SUN ), an international specialty pharmaceutical company, is actively enhancing its specialty pipeline in dermatology, ophthalmology, and onco-dermatology. According to a report by Motilal Oswal, the target action date of July 2024 is a significant near-term milestone for Deuruxolitinib.

Sun Pharma manufactures active pharmaceutical ingredients. Their branded products are commonly prescribed in chronic therapy areas such as cardiology, psychiatry, neurology, gastroenterology, diabetology, and respiratory.

The company also produces treatments for CNS disorders, cardiology, diabetes and metabolic disorders, gastroenterology, ophthalmology, oncology, pain, allergy, asthma, inflammation, and gynecology.

Sun Pharmaceutical shares have risen by 24% in the past six months and 60% in the past 12 months. The latest shareholding pattern reveals that company promoters hold a 54.48% stake, Foreign Institutional Investors hold 17.72%, and Domestic Institutional Investors hold 18.82%.

Written by Omkar Chitnis


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