SUN PHARMA 2017-18 Annual Report Analysis

Sat, 31 Mar

SUN PHARMA has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

SUN PHARMA Income Statement Analysis

• Operating income during the year fell 15.1% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 52.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 17.4% in FY18 as against 31.2% in FY17.
• Depreciation charges increased by 18.6% and finance costs increased by 29.5% YoY, respectively.
• Other income declined by 11.5% YoY.
• Net profit for the year declined by 67.2% YoY.
• Net profit margins during the year declined from 25.2% in FY17 to 9.7% in FY18.

SUN PHARMA Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	310,378	263,416	-15.1%
Other income	Rs m	10,302	9,121	-11.5%
Total Revenues	Rs m	320,680	272,537	-15.0%
Gross profit	Rs m	96,822	45,843	-52.7%
Depreciation	Rs m	12,648	14,998	18.6%
Interest	Rs m	3,998	5,176	29.5%
Profit before tax	Rs m	90,479	34,790	-61.5%
Tax	Rs m	12,116	9,110	-24.8%
Profit after tax	Rs m	78,363	25,679	-67.2%
Gross profit margin	%	31.2	17.4
Effective tax rate	%	13.4	26.2
Net profit margin	%	25.2	9.7

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SUN PHARMA Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 199 billion as compared to Rs 179 billion in FY17, thereby witnessing an increase of 11.1%.
• Long-term debt stood at Rs 18 billion as compared to Rs 14 billion during FY17, a growth of 23.4%.
• Current assets fell 4% and stood at Rs 316 billion, while fixed assets rose 17% and stood at Rs 305 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 621 billion as against Rs 589 billion during FY17, thereby witnessing a growth of 5%.

SUN PHARMA Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	366,370	383,141	4.6
Current Liabilities	Rs m	178,870	198,643	11.1
Long-term Debt	Rs m	14,361	17,721	23.4
Total Liabilities	Rs m	589,174	621,090	5.4
Current assets	Rs m	329,537	316,359	-4.0
Fixed Assets	Rs m	259,638	304,731	17.4
Total Assets	Rs m	589,174	621,090	5.4

SUN PHARMA Cash Flow Statement Analysis

• SUN PHARMA's cash flow from operating activities (CFO) during FY18 stood at Rs 39 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -34 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -15 billion, an improvement of 33% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -7 billion from the Rs 6 billion net cash flows seen during FY17.

SUN PHARMA Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	70,822	39,072	-44.8%
Cash Flow from Investing Activities	Rs m	-42,216	-33,708	-
Cash Flow from Financing Activities	Rs m	-22,854	-15,393	-
Net Cash Flow	Rs m	6,107	-7,359	-

Current Valuations for SUN PHARMA

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 10.7, an decline from the EPS of Rs 32.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 495.4, stands at 45.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.1 times, while the price to sales ratio stands at 4.5 times.
• The company's price to cash flow (P/CF) ratio stood at 33.4 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	129.4	109.8
TTM Earnings per share	Rs	32.7	10.7
Diluted earnings per share	Rs	32.7	10.7
Price to Cash Flow	x	18.1	33.4
TTM P/E ratio	x	22.3	45.1
Price / Book Value ratio	x	4.6	3.5
Market Cap	Rs m	1,696,877	1,360,056
Dividends per share (Unadj.)	Rs	3.5	2.0

Ratio Analysis for SUN PHARMA

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.6x during FY18, from 1.8x during FY17. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 7.7x during FY18, from 23.6x during FY17. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company declined and down at 6.7% during FY18, from 21.4% during FY18. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company declined and down at 10.0% during FY18, from 24.8% during FY17. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company declined and down at 5.0% during FY18, from 14.0% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	1.8	1.6
Debtors’ Days	Days	85	108
Interest coverage	x	23.6	7.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	14.0	5.0
Return on equity	%	21.4	6.7
Return on capital employed	%	24.8	10.0

To see how SUN PHARMA has performed over the last 5 years, please visit here.

SUN PHARMA Share Price Performance

Over the last one year, SUN PHARMA share price has moved down from Rs 687.7 to Rs 495.4, registering a loss of Rs 192.3 or around 28.0%.

Meanwhile, the S&P BSE HEALTHCARE Index is trading at Rs 13,157.6 (down 1.1%). Over the last one year it has moved down from 15,312.4 to 13,157.6, a loss of 2,155 points (down 14.1%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

(To know more, check out historical annual results for SUN PHARMA and quarterly results for SUN PHARMA)

Read: Latest Annual Report Analysis of SUN PHARMA