MUMBAI: Shares of Sun Pharmaceuticals Industries Ltd on Wednesday surged as much as 6% after the company reported better-than-expected earnings. The company’s speciality drug sales revived to pre-covid levels.

At 11.37am, the Sun Pharma stock was trading at 515 on BSE, up 6% from its previous close.

The company posted a consolidated net profit of 1,810 crore, up a staggering 71% YoY and ahead of Bloomberg survey of analysts at 1,131 crore. The profit growth was largely due to margin improvement, driven by the specialty products business.

“A superior product mix (including the higher share of specialty products), complemented by cost optimization measures, led to a strong beat on 2QFY21 earnings”, said Motilal Oswal in a note to its investors

Debt reduction of $300 million in the first half of this fiscal led to lower interest outgo and deferred tax aided profitability.

Consolidated sales from operations at 8,459 crores, a growth of 6% over the corresponding period last year, led by increase in revenue from its ‘emerging’ and ‘rest of the world’ markets.

“Our speciality revenues in the US have increased over Q1 and for products like Ilumya, Cequa and Odomzo, sales are at pre-covid levels,” Abhay Gandhi, Sun Pharma’s chief executive officer for North America, said.

Brokerage firm Motilal Oswal said that it increased its earnings estimate by 22%/5% for FY21/FY22E, factoring in increased contribution from the specialty portfolio and lower opex for an extended period on account of Covid.

“We value SUNP at 24x 12M forward earnings to arrive at the target price of 610. We remain positive on SUNP on account of a better outlook for its specialty portfolio, a robust ANDA (abbreviated new drug application) pipeline, and increasing market share in the branded generics segment,” the brokerage firm added.

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