Sun Pharmaceutical Industries is a growth stock to keep your eyes on
05-06-2014 • About Sun Pharmaceutical Industries (
$SUNPHARMA) • By InTwits
Pay attention to Sun Pharmaceutical Industries as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Sun Pharmaceutical Industries showed growth in the last financial year. Sun Pharmaceutical Industries's revenue surged on 42.4% in FY2014. EBITDA also increased considerably: 44.5% for the same period.
In the last 3 years the company showed fast revenue growth of 40.9% from FY2011 to FY2014 annually. EBITDA surged on 54.1% from FY2011 to FY2014 annually.
Sun Pharmaceutical Industries ($SUNPHARMA) financials for the last 5 years
| mln. INR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 469,545 | 57,216 | 80,054 | 112,389 | 160,044 |
|---|
| Revenue growth, % | | -87.8% | 39.9% | 40.4% | 42.4% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 13,633 | 19,631 | 32,676 | 49,749 | 71,906 |
|---|
| EBITDA growth, % | | 44.0% | 66.4% | 52.2% | 44.5% |
|---|
| EBITDA margin, % | 2.90% | 34.3% | 40.8% | 44.3% | 44.9% |
|---|
| Net Income | 13,511 | 18,161 | 26,567 | 29,831 | 31,415 |
|---|
| Net Income margin, % | 2.88% | 31.7% | 33.2% | 26.5% | 19.6% |
|---|
| |
| CAPEX | 2,841 | 4,219 | 7,129 | 8,455 | 9,060 |
|---|
| CAPEX/Revenue, % | 0.605% | 7.37% | 8.91% | 7.52% | 5.66% |
|---|
| Debt | 1,712 | 4,256 | 3,207 | 2,597 | 25,609 |
|---|
| Cash | 5,077 | 8,105 | 17,527 | 20,691 | 43,587 |
|---|
| Net Debt/EBITDA | -0.2x | -0.2x | -0.4x | -0.4x | -0.3x |
|---|
| |
| ROIC, % | 15.6% | 18.9% | 24.8% | 31.1% | 35.0% |
|---|
| ROE, % | 18.2% | 21.0% | 24.5% | 21.9% | 18.7% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. Sun Pharmaceutical Industries's EBITDA margin increased slightly on 0.600 pp from 44.3% to 44.9% in FY2014. In the last 3 years Sun Pharmaceutical Industries's EBITDA margin surged on 10.6 pp from 34.3% in FY2011 to 44.9% in FY2014.
Sun Pharmaceutical Industries shows attractive ROIC at 35.0% for the last 12 months which assumes stable development model. During the last three years it surged - it was 18.9% in FY2011. Average ROIC for the last three years was 30.3%.
Net Income margin dropped on 6.90 pp from 26.5% to 19.6% in FY2014. In the longer period Sun Pharmaceutical Industries's Net Income margin dropped on 12.1 pp from 31.7% in FY2011 to 19.6% in FY2014.
Sun Pharmaceutical Industries operates at ROE of 18.7%. It's average ROE for the last three years was 21.7%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.In FY2014 the company had CAPEX/Revenue of 5.66%. CAPEX/Revenue dropped on 1.71 pp from 7.37% in FY2011 to 5.66% in FY2014. Average CAPEX/Revenue for the last three years was 7.36%.
Leverage (Debt)
Having such a fast growth profile Sun Pharmaceutical Industries keeps negative net debt at -0.3x Net Debt/EBITDA. If we look for the longer period the company's leverage surged on 0.05x from -0.20x in FY2011 to -0.25x in FY2014.
Valuation vs. comparable companies
The market closed today at 17.0x EV/EBITDA for Sun Pharmaceutical Industries which is the same as 17.1x Pharmaceuticals peer group avearge calculated on the basis of 266 companies. The market closed today at 39.4x P/E for Sun Pharmaceutical Industries which is 53.5% higher than 25.7x Pharmaceuticals peer group avearge calculated on the basis of 24 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 19.4x EV/(EBITDA-CAPEX) which is higher vs. -3.4x Pharmaceuticals industry avearge calculated based on 20 companies.
Peers in Pharmaceuticals
Below we provide Sun Pharmaceutical Industries benchmarking against other companies in Pharmaceuticals industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Granules India ($GRANULES) | | -68.4% | 37.6% | 16.9% | 43.4% |
| Marksans Pharma ($MARKSANS) | | -66.6% | 16.7% | 23.3% | 43.3% |
| Torrent Pharmaceuticals ($TORNTPHARM) | | -63.5% | 22.7% | 17.7% | 32.2% |
| Abbott India ($ABBOTINDIA) | | -46.4% | 8.2% | 8.7% | 27.3% |
| Alembic Pharmaceuticals ($APLLTD) | | -52.0% | 22.0% | 3.7% | 22.6% |
| |
|---|
| Median (29 companies) | | -47.7% | 14.0% | 16.3% | 12.6% |
|---|
| Sun Pharmaceutical Industries ($SUNPHARMA) | | -87.8% | 39.9% | 40.4% | 42.4% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 51.7% | | | 52.1% | 57.4% |
| Omega Laboratories ($OMEGALAB) | | | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (2 companies) | 55.5% | | 46.9% | 26.1% | 28.7% |
|---|
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Divi'S Laboratories ($DIVISLAB) | 11.2% | 38.1% | 37.2% | 38.2% | 40.2% |
| Dr.Reddy'S Laboratories ($DRREDDY) | 3.0% | 21.7% | 25.8% | 22.9% | 25.1% |
| Natco Pharma ($NATCOPHARM) | 10.2% | 21.3% | 21.5% | 23.2% | 24.9% |
| Ipca Laboratories ($IPCALAB) | 8.8% | 20.0% | 22.3% | 22.6% | 24.8% |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 11.1% | 22.6% | 20.8% | 22.8% | 24.0% |
| |
|---|
| Median (28 companies) | 7.2% | 16.9% | 13.5% | 13.5% | 15.6% |
|---|
| Sun Pharmaceutical Industries ($SUNPHARMA) | 2.9% | 34.3% | 40.8% | 44.3% | 44.9% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Granules India ($GRANULES) | 0.9% | 5.3% | 8.8% | 15.2% | 24.3% |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 16.3% | 24.3% | 8.4% | 10.9% | 21.6% |
| Natco Pharma ($NATCOPHARM) | 3.9% | 20.0% | 24.4% | 16.3% | 14.4% |
| Ipca Laboratories ($IPCALAB) | 3.5% | 10.3% | 11.2% | 8.3% | 11.6% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 2.6% | 12.5% | 6.6% | 9.6% | 9.9% |
| |
|---|
| Median (23 companies) | 3.0% | 6.8% | 6.6% | 6.5% | 5.8% |
|---|
| Sun Pharmaceutical Industries ($SUNPHARMA) | 0.6% | 7.4% | 8.9% | 7.5% | 5.7% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | | | 27.5% | 29.1% | 41.5% |
| Marksans Pharma ($MARKSANS) | 1.5% | -25.8% | -142.4% | 34.9% | 33.8% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 26.5% | 22.3% | 26.4% | 30.5% | 33.2% |
| Divi'S Laboratories ($DIVISLAB) | 24.9% | 25.6% | 30.6% | 30.4% | 32.3% |
| Abbott India ($ABBOTINDIA) | 33.5% | 36.0% | 29.6% | 26.9% | 30.5% |
| |
|---|
| Median (43 companies) | 14.8% | 14.6% | 12.3% | 15.4% | 15.7% |
|---|
| Sun Pharmaceutical Industries ($SUNPHARMA) | 15.6% | 18.9% | 24.8% | 31.1% | 35.0% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Ind-Swift Laboratories ($INDSWFTLAB) | 3.9x | 4.6x | 5.5x | 16.1x | 19.5x |
| Jubilant Life Sciences Limited ($JUBILANT) | 4.0x | 5.3x | 4.0x | 3.5x | 3.5x |
| Kopran ($KOPRAN) | 6.6x | 6.0x | 4.5x | 3.0x | 3.0x |
| Granules India ($GRANULES) | 2.3x | 2.0x | 2.2x | 2.4x | 2.7x |
| Neuland Laboratories ($NEULANDLAB) | 7.9x | 4.9x | 4.2x | 3.5x | 2.6x |
| |
|---|
| Median (38 companies) | 1.6x | 1.5x | 1.4x | 1.2x | 0.5x |
|---|
| Sun Pharmaceutical Industries ($SUNPHARMA) | -0.2x | -0.2x | -0.4x | -0.4x | -0.3x |
