Sun Pharma: Product pipeline to help maintain tempo

Sun Pharma logged 18% sales growth from the domestic market from where it earns 40% of its total revenues. With a total market share of 4.4%, it ma intains its leadership across six therapeutic categories.

The company's first-quarter performance is not comparable to the year-ago period. The June quarter results include the consolidated financials of Taro, the acquisition of which was completed in September 2010. Besides, the first-quarter financials of last year include sales from the generic Eloxation that is not being sold now.

Though y-o-y comparison in case of its overseas business has been rendered unviable, the company has showed improved performance in this business on a sequential basis.

Sun's export formulation sales have grown 13% sequentially. Taro has posted $112-million sales, logging 14% growth. It registered $36-million net profit , higher than the previous year. Taro's performance under Sun's management is showing signs of improving on a sequential basis.

It now contributes 30% to Sun's total revenues . For the March quarter, Taro had posted $107.7-million sales, up by 21% y-o-y . Its net profit stood at $25.7, four times higher than the previous year. Though the company's operating profit margins suffered y-o-y , they have improved sequentially since past two quarters. The management has guided for $100-million capital expenditure for the fiscal. With around $1-billion cash in books, Sun's management has plans to make relevant acquisitions in the US, Brazil, Russia, China and Mexico.

The company has maintai ned its guidance of 28-30 % revenue growth in FY12. Improving performance of Taro, sustained growth in the domestic business, healthy pipeline of products and pick-up in revenues from overseas markets, outside the US, are the drivers for growth, going ahead. However, the company's valuations se em to be a little stretched. The stock is trading at 29.5 times its past four quarters earnings.