Sun Pharmaceuticals posted poor set of numbers for 1QFY2018. Sales came in at `6,167cr (`6,825cr expected) v/s. `8,007cr in 1QFY2017, a yoy de-growth of 23.0%, mainly driven by the Indian formulation sales dip and US (which was impacted on the back of pricing pressures and base effect). On operating front, the EBITDA margins came in at 17.1% (17.7% expected) v/s. 33.5% in 1QFY2017, mainly on the back of lower than expected sales during the quarter and base effect. Excluding the Modafinil settlement, its adjusted net profit was at `526cr, down 77% over 1QFY2017, with resulting adjusted net profit margin of 8.5%. Net profit for 1QFY2017 last year included the benefit of the 180-day exclusivity for Imatinib which expired in July-2016. We maintain our Buy.

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