Sun Pharma –

Q2 FY 25 results and concall highlights –

Revenues – 13265 cr, up 10.5 pc
EBITDA – 3939 cr, up 24 pc
PAT – 3040 cr, up 28 pc

Cash on books @ aprox 21000 cr at the consolidated level

Region wise sales –

India sales @ 4265 cr, up 11 pc. Continues to be ranked no 1 in the IPM. Launched 14 new products in India in Q2. Company has 28 brands in top 300 brands in India – highest for any company in India. Also, the company is ranked no1 in 13 different therapeutic segments in India

US sales @ 4290 cr, up 20 pc led by strong growth in speciality products. Launched 2 generic products in US in Q2

EM sales @ 2431 cr, up 3.2 pc

RoW sales @ 1650 cr, down 3.5 pc. Price cuts in Japanese mkts contributed to revenue declines in RoW mkts. Expect this pricing pressure to continue in the next 2 qtrs performance as well

API sales @ 534 cr, up 8 pc

R&D investments @ 793 cr ( at 6 pc of sales ). Out of this 38 pc of money was spent towards speciality products. Company’s R&D pipeline includes 7 speciality molecules in various stages of clinical trials. Guiding for R&D spends @ 7-8 pc of sales for full FY 25

Speciality product sales @ 2373 cr, up 19 pc ( these are high margin products with significant entry barriers )

R&D pipeline –

Liqselvi – Approved in US for Alopecia Areata, awaiting launch

Nidlegy – Filed for approval in Europe for treatment of non-malenoma Skin Cancer

Illumya – for Psoriatic Artritis – undergoing phase 3 trials

MM-II – for pain management in Osteroarthritis – coupled phase 3 trials

Fibromum – for soft tissue sarcomas – undergoing phase 3 trials ( recently in-licensed from Philogen – A European Pharma company )

SCD – 044 – for atopic dermatitis – completed phase 2 trials

GL0034 ( Utreglutide ) for obesity – completed phase 1 trials

The launch of Liqselvi is pending because of an ongoing litigation. Once a favourable judgement is out, the company is ready to launch the product ( ie within a few weeks )

Winlevi – is seeing good QoQ growth in prescriptions in US

Seeing very good traction for Illumetri in China in a short span of time post its launch

Company is very excited about their under trial molecule – Utreglutide

Open to use the cash on Books to acquire speciality assets in the Derma and Derma-Onco space. These are the two long term focus areas for the company. Don’t intend to intend other therapeutic areas as of now

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

https://docsend.com/view/evex75mbs2ppp8ym

Excellent article on Swiggy – helpful to understand how it stacks up against Zomato. Interesting times ahead. Disc. no investment in either.

Their work is not niche (Most IT services is commodity anyway). RPA and chat bot that they showed on the call – people have done these things ages ago.

I feel their products are not really products, but solution accelerators. But good to see a company of this size having them and thinking of industry solutions rather than plain staff augmentation.

To one of the questions, CEO said their revenue is not linear with headcount. My view is that the margin expansion is the result of more work from US, rather than a differentiated model.

They are riding on the demand for service opportunities for Microsoft suite implementation. CEO mentioned services/implementation opportunity being 5-7x of license revenue. I worked in a large consulting provider in their Salesforce practice – they used similar number for calculating TAM.

The market for Microsoft suite implementation is huge. Accenture had a dedicated subsidiary for Microsoft implementation called Avanade. If you google you will see that Avanade revenue is $3 Billion +.

The reason I feel All E Tech will grow at reasonable pace till demand for Microsoft suite sustains, is as follows –

1. The clients they target are small and not serviced by biggies.
2. Big dampener for large IT services right now are the GCCs (captives) that clients are setting up in India. The kind of clients that All E Tech would be keen to get the work done by third parties rather than setting up their captives.
3. Since they are 100% Microsoft shop, Microsoft will push some work to them. CEO alluded to this in the call. I am aware this is a practice followed in the industry, based on my experience in Salesforce landscape.

I like that they publish quarterly results (as SME, they don’t need to) and hold con calls. I like the conservative nature of CEO. I also like that their top management has stayed together for nearly 20 years.

Need to closely monitor how they manage employee cost as they grow. After the madness during COVID years, last couple of years have been benign for talent cost escalation. If situation changes, small companies will find it very hard.

In summary, they are riding Microsoft growth and focusing on a segment of clients that are less likely to be served by biggies. We need to watch how they manage growth along with talent cost.

Disc – invested with a small position.

Found this comment in linked from Genesys Promoter.

Hi, @Deven We are glad you found the feature useful.