Sun Pharma’s FY15 annual report analysis highlights 71% YoY increase in revenue to Rs 274 billion while EBITDA margins declined to 28.7%, led by Ranbaxy’s merger and Halol issues. Legal and consultancy charges increased to Rs 14.2 billion (21.4% of PBT) v/s Rs 4.8 billion in FY14 while, additional provisioning of Rs 1.0 billion (1.5% of PBT) was recognized toward $ 400m deal.
Unrealised forex gains increased to Rs 7.8b (12% of PBT) v/s Rs 0.1b in FY14. Tax rate remained low at 14.2% on account of (a) SPLL structuring leading to tax savings of R3.2b, (b) recognition of DTA of Rs 7.3b and (c) no taxation in the Dubai entity.
Contingent liabilities for tax disputes increased to Rs 26.7 billion. Goodwill stood at Rs 50 b (20% of net worth); of which, Rs 13.6 billion pertains to acquisition (part of which represents brands /products in pipeline); which in our view should be amortised.
Revenue jumps 71% YoY to Rs 274 billion; EBITDA margins decline 1480bp to 28.7% due to (a) Ranbaxy’s merger related cost and relatively low-margin business and (b) Halol issues.
Operating cash flow increased 34% YoY to R53 billion in FY15. Tax rates remained low at 14.2%; contingent liabilities for tax dispute rise to Rs 26.7 billion v/s R12.1 billion in FY14.