Sunpharma vs Apollohosp Q2 FY24

Sun Pharma reported Q2 FY24 consolidated revenue of INR 12,003 crore, up 11% YoY, driven by India formulations (11.1% growth) and global specialty sales (19.3% growth to $240M). EBITDA margin contracted 90bps YoY to 26.1% due to higher R&D and selling expenses. PAT grew 5% YoY to INR 2,376 crore. US sales grew 4.2% to $430M, supported by specialty products Ilumya, Cequa, and Winlevi, but offset by Halol/Mohali plant issues and lower Revlimid contribution. Management highlighted strong prescription trends and market share gains in specialty, but provided no specific FY24 guidance. Risks include Halol remediation timeline uncertainty, Taro's Israel operations exposure, and potential pricing pressure in US generics.

Guidance read

R&D spend guidance maintained: Management expects R&D expenses to remain at similar levels or increase due to clinical trial ramp-up. India business to grow higher than market: Management aims to grow India formulation business faster than the Indian pharmaceutical market on an annualized basis. Tax rate to inch up on annual basis: Tax rate expected to be higher than last year's 8.8% due to profit mix across jurisdictions.

Risk read

Key risks include Halol plant remediation uncertainty — Halol plant remains under FDA scrutiny; no timeline for re-inspection or resolution, impacting US generic supply.; Taro Israel operations exposure — Taro's operations in Israel may be impacted by regional conflict, though management says business continuity is maintained.; US generic pricing pressure — Management sees no significant improvement in generic pricing environment; pricing remains product-specific and competitive..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.

Apollo Hospitals reported a robust Q2 FY24 with consolidated revenue of INR 4,847 crore (+14% YoY) and EBITDA of INR 628 crore (+11% YoY). Healthcare services revenue grew 12% to INR 2,547 crore, driven by 18% growth in insurance revenues (now 43% of IP revenue) and 20% growth in international patients. Occupancy stood at 68%, with ARPOB up 14% to INR 57,379. The pharmacy business grew 21% YoY, and Apollo 24|7 added 2 million new users, targeting operational breakeven by Q4 FY24. Management guided for 200 bps margin expansion in hospitals and 6%+ EBITDA margin for pharmacy. Key risks include delayed ramp-up of new bed additions and competitive intensity in metro markets.

Guidance read

Hospital EBITDA margin expansion of 200 bps: Management expects hospital EBITDA margins to improve by 200 basis points over the next two years, driven by operating leverage and occupancy improvement. Pharmacy omni-channel revenue of INR 10,000 crore and 6%+ EBITDA margin: Pharmacy business is on track to achieve INR 10,000 crore in revenue for FY24 with EBITDA margin of 6% or higher. Apollo 24|7 operational breakeven in Q4 FY24: The digital health platform is expected to achieve operational breakeven by the fourth quarter of FY24. Addition of 2,300 beds over three years at INR 3,400 crore: Apollo plans to add 2,300 beds across eight locations over the next three financial years, with a capital outlay of INR 3,400 crore.

Risk read

Key risks include Delayed monsoon impacted medical admissions in South India — Inpatient volume growth was muted in core southern markets due to a delayed monsoon, reducing seasonal medical admissions.; New hospital ramp-up may pressure near-term margins — Analyst raised concern that new bed additions (Pune, Kolkata, Hyderabad) could drag margins until they reach breakeven in 12-18 months.; Competitive intensity in metro markets — Analyst questioned whether expansion in metros (where supply is strong) is prudent versus non-metros where Apollo has an early-mover advantage..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.