Company Overview

Sun Pharmaceutical Industries Limited

Sun Pharmaceutical Industries Limited is an Indian multinational pharmaceutical company

headquartered in Mumbai, Maharashtra that manufactures and sells pharmaceutical formulations
and active pharmaceutical ingredients (APIs) primarily in India and the United States. It posted
net revenue of about Rs. 300914 million in FY and a net profit of Rs.26654 million.
Ratio Analysis:

The profit margin is continuously decreasing for the firm since 2017 but there’s a 10% increase in
sales revenue from 2018 to 2019. ROA has increased by 12.4% in 2019 which shows management is
utilizing their funds well. The decrease in ROE can be well explained by the decreasing profit margin.

2019 2018 2017 2016

(FY 2018- (FY 2017- (FY 2016- (FY 2015-
Overall Performance Analysis 2019) 2018) 2017) 2016)
ROA (EBIT/Total assets) 7.04% 6.25% 13.93% 12.14%
ROE (PAT/OE) 5.66% 7.93% 19.17% 13.62%

Sun Pharma has maintained current and quick ratio above 1 over the 4 years which shows company
is able to get rid of its current liabilities through receivables and cash equivalents which is reflected
in the balance sheet where current liabilities have decreased from 2018 to 2019.

2019 2018 2017 2016

(FY 2018- (FY 2017- (FY 2016- (FY 2015-
Liquidity Ratios 2019) 2018) 2017) 2016)
Current Ratio 1.79 1.59 1.84 2.28
Quick/Acid-Test Ratio 1.34 1.25 1.46 1.79

The asset turnover and equity turnover has seen a decline from 2016 to 2019 but a slight increase
from 2018-19 which shows that Sun Pharma is trying to utilize its assets for revenue generation
which in turn would maintain the worth for the shareholders to hold the equity.

2019 2018 2017

(FY (FY (FY 2016
2018- 2017- 2016- (FY 2015-
Investment Utilization Analysis 2019) 2018) 2017) 2016)
Asset Turnover (Total Revenue/Total Assets) 0.47 0.42 0.52 0.52
Equity Turnover (Total Revenue/Owner's
Equity) 0.73 0.72 0.88 0.88

The operating cycle of the firm is high due the increase in days receivables and days inventory which
shows the capital is being blocked in holding inventories and credits sales are more.

AFN for the company is negative which means the current project investments would help in the
future sales revenue growth of the company and the same is reflected in the forecasting through
percentage of sales method where the profits for future years are increasing. The growth rate is
assumed 3.3 %.