Sun Pharma's Q4 pre-tax profit down 17% at Rs 577 cr on multiple one-offs

Consolidated sales came in line with estimates at Rs 8,078 crore, up 15 per cent year-on-year led by India, global specialty and rest of the world businesses
Sun Pharmaceutical Industries reported a 17 per cent year-on-year (YoY) fall in consolidated profit before tax (PBT) to Rs 577 crore for the March quarter.

This was below the consensus estimate of Rs 1,361 crore, caused by multiple one-offs and lower other income. Net profit, too, saw a 37 per cent YoY fall to Rs 399.8 crore, against estimates of Rs 950-1,000 crore.

The one-offs pertained to an anti-trust litigation, a central excise refund, and a settlement reached by its US subsidiary Dusa Pharmaceuticals.

It made a provision of Rs 124 crore for the settlement of an anti-trust litigation over sleep disorder drug Modafinil. It also charged Rs 104 crore to the profit and loss account for a case related to the central excise refund. Finally, Rs 156 crore was provided for a case related to sales, marketing, and promotion of two Dusa Pharma products Levulan and Blu-u.

In addition, Rs 260.64 crore was reported under exceptional items, and the rest in other expenses. Other income also saw a 64 per cent YoY fall to Rs 102.2 crore. Adjusted for the exceptional item, net profit came in at Rs 660 crore, also below estimates. The lower profit came despite a weak base, as the company had taken a Rs 1,085-crore provision in Q4, related to a change in distribution for its India business.

Consolidated sales were in line with estimates at Rs 8,078 crore — up 15 per cent YoY led by the domestic business, global specialty, and rest-of-the-world business. The India business reported sales of Rs 2,365 crore — up 8 per cent YoY adjusted for the distribution charge. Stocking by consumers and the launch of new products helped record growth in its India business.

Revenues in the US market came in at $375 million, down 15 per cent, though the year-ago period had a high base due to one-time contribution of specialty products. Analysts at Nomura say sales at US subsidiary Taro bounced back sequentially after recording an 8-year low performance in Q3.

Dilip Shanghvi, MD of Sun Pharma, said: “We have done well and started gaining market share in India. Our global specialty business has also gained reasonable traction, with Ilumya recording approximately $94 million in sales globally in the first full year of commercialisation.”

The results came after market hours, but the stock had shed 2 per cent. With pharma stocks in demand, it has gained 39 per cent since the start of the lockdown — broadly in line with gains for peer index BSE Healthcare.

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