Sun Pharma has once again surpassed expectations, delivering a strong 57 per cent growth in earnings in the March quarter over the corresponding quarter a year ago.

A robust 22 per cent growth in the US (in dollar terms) aided by price increases in select products, and a weak rupee helped Sun improve its operating margin by over three percentage points to 44.4 per cent during the March quarter. The strong 21 per cent growth in the home market further boosted the operating performance.

Product pipeline

Sun’s strong pipeline of 134 products, which are currently pending approval in the US, should help the company sustain healthy growth over the subsequent quarters. In addition to the base business, its acquisitions - Taro Pharma, URL Pharma and DUSA also aided revenue growth.

In the home market, Sun’s strength in therapies such as neurology, cardiology and diabetology enabled the company to sustain growth ahead of the industry and competition.

The revenue impact due to warning letter for its Kharkadi plant (which manufactures active pharma ingredients) is expected to be miniscule.

Revenue growth

Despite a high growth base in 2013-14, the company management expects to grow revenues by 13-15 per cent in 2014-15. It has planned capex of Rs 900 crore this fiscal and targets to file 25 products in the US. Consolidation of Ranbaxy expected to be completed by the end of 2014, may provide a big upside to Sun’s base guidance.