Sunpharma vs Apollohosp Q4 FY24

Sun Pharma reported Q4 FY24 consolidated revenue of INR 11,813 crore, up 10.1% YoY, driven by strong specialty sales (Ilumya up 21.7% to $580M globally) and India formulation growth of 10.2%. EBITDA margin contracted 30bps to 25.3% due to higher R&D and selling expenses. PAT grew 33.8% to INR 2,655 crore, aided by lower tax. Management guided for high single-digit revenue growth in FY25, with R&D spend rising to 8-10% of sales as the company invests in specialty pipeline (deuruxolitinib launch, phase III for MM2). Key risks include FDA compliance issues at Mohali/Dadra, potential pricing pressure from Stelara biosimilars, and elevated investment costs impacting near-term margins.

Guidance read

High single-digit consolidated revenue growth for FY25: Management expects consolidated top-line growth in high single digits for FY2025, driven by all business segments. R&D spend to be 8-10% of sales in FY25: R&D investments will increase to 8-10% of sales for the next year, primarily for specialty pipeline. Deuruxolitinib launch post-PDUFA date (July 2024): Deuruxolitinib is on track for launch after the July 2024 PDUFA date, with pre-launch costs already being incurred.

Risk read

Key risks include FDA compliance issues at Mohali and Dadra plants — OAI status and 483 observations at Mohali and Dadra facilities could impact US generic launches and revenue.; Elevated R&D and launch costs pressuring margins — Higher R&D spend (8-10% of sales) and deuruxolitinib launch costs may compress EBITDA margins in FY25.; Pricing pressure from Stelara biosimilars — Stelara biosimilar entry next year could impact Ilumya pricing and market share in the US psoriasis market.; Currency depreciation in emerging markets — Nigeria forex loss and broader emerging market currency volatility could impact reported revenue and profitability..

Promise ledger

Of 2 tracked promises, management 0 met, 1 close, 1 missed.

Apollo Hospitals reported a strong Q4 FY24 with consolidated revenue of INR 4,944 crore (up 15% YoY) and EBITDA of INR 641 crore (up 31% YoY). Healthcare services revenue grew 17% YoY, driven by 6.1% IP volume growth and 12% ARPOB increase to INR 59,523. Occupancy stood at 65%, with metro hospitals above 70%. The company added 150 new doctors, which temporarily impacted healthcare services margins (23.1%), but management expects a 150 bps margin expansion in FY25. Apollo 24/7 achieved positive EBITDA of INR 12 crore, with a target to breakeven in 6-8 quarters. Pharmacy distribution growth was impacted by inventory rationalization. Guidance includes 15%+ healthcare services growth, 50% GMV growth for Apollo 24/7, and 500-550 new pharmacy stores. Risk: New hospital ramp-up and doctor hiring may delay margin recovery.

Guidance read

Healthcare services revenue growth >15% in FY25: Driven by volume growth, network expansion, and better asset utilization. Healthcare services EBITDA margin expansion of 150 bps in FY25: Targeting 25% margin by end of FY25 through cost optimization and surgical volume growth. Apollo 24/7 breakeven in 6-8 quarters: Targeting GMV of INR 1,700 crore per quarter and take rate improvement from 4% to 8%. Add 500-550 new pharmacy stores in FY25: Offline pharmacy network expansion to continue at similar pace as FY24.

Risk read

Key risks include New hospital ramp-up may delay margin recovery — Four new hospitals with 1,500 beds to be operationalized by calendar 2025-26; initial costs could pressure margins.; Doctor hiring costs may not yield immediate volume benefits — 150 new doctors hired in FY24; full revenue contribution expected only by Q2 FY25, posing near-term margin risk.; Inventory rationalization impact on pharmacy distribution — Lower inventory buildup reduced pharmacy distribution sales by ~INR 150 crore in Q4; growth recovery depends on store-level execution.; Competitive pressure in Nashik market — Nashik hospital remains a drag on western region occupancy due to multiple competitors and low-paying patient mix..

Promise ledger

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