Sun Pharma shares reclaim four-digit mark after a long 7-year run

The drugmaker is scheduled to announce its earnings for Q2 FY23 on Tuesday, November 1, 2022, in the second quarter ended September 2022 of the current fiscal year or next week.

Global brokerage BNP Paribas said in an earnings preview note on the Indian pharma industry that it believes Sun Pharma should benefit from operating leverage, with continued scale-up of the specialty business.

“We project our Indian pharma and healthcare coverage universe to report overall c6% yy revenue growth and c11% yy earnings decline in 2QFY23. In the pharma space, we expect revenue growth largely from the domestic formulation Segment-led. In the healthcare space, we expect hospitalization to improve while diagnostics will be impacted by a higher base due to the business related to COVID. Sun Pharma in pharma,” said BNP Paribas.

The brokerage expects Sun Pharma’s US business to grow in low single-digit QoQ, led by the ramp-up of Vinlevy and Pentasa ER. Domestic formulations to grow in high single-digit YoY. In the US, EBITDA margins will remain above 25% with specialty revenues increasing.

“It still remains to be seen whether companies derive any tangible long-term benefits from digital initiatives over the past two years. In our view, amidst the challenges and supply chain disruptions in the US, a sustained home improvement becomes even more important for investors to monitor. Within our pharma coverage, Cipla and Sun Pharma are our top picks,” Kotak Securities said.

According to analysts, in Q2FY23, the pharma sector is expected to benefit from factors such as currency depreciation, fall in raw material prices, lower raw material prices and improvement in shipping prices, likely to improve revenue growth and gross margins.

Drugmaker Sun Pharma reports net profit of 2,061 crore for the quarter ended June 30, 2022 or Q1 while revenue from operations grew by 11% year-on-year (YoY) 10,761.7 crores.