Sun Pharmaceutical Industries (SPIL) – Positively skewed

Q3FY10 results review - ICICI Securities

SPIL's Q3FY10 consolidated recurring net profit dipped 17% YoY to Rs3.39bn, ahead of our estimates, mainly owing to stronger-than-expected revenues and EBITDA margin. The recent US FDA rejection of Osmotica Pharmaceutical's citizen petition is a huge positive and impels SPIL a step closer to potential approval and launch of generic tablet version of EffexorXR capsule. The product could potentially generate incremental EPS of Rs5-10. Post the consent decree, Caraco has made tangible progress, with submission of additional work plan on January 14, '10, and has recalled some laid-off workforce. We believe Caraco could potentially fully-resolve all US FDA compliance issues in CY10. While recent news on the Taro acquisition front is a positive, favourable verdict from the Israeli Supreme Court could be a clincher. Induction of Kal Sundaram, ex-MD of GSK India, as CEO, to oversee branded dosage-form business (local & international) would strengthen top management. Given these developments, we are positively biased towards the stock and will revisit our rating & earnings estimates post meeting the management.

Source : Equity Bulls

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