Motilal Oswal is bullish on Sun Pharma has recommended buy rating on the stock with a target price of Rs 650 in its research report dated June 14, 2017.
Motilal Oswal's research report on Sun Pharma
Sun Pharma (SUNP) is trading at 16x FY19E PER, which is 20% and 30% below its 10- and 5-year average valuations, respectively. The stock has corrected more than 50% from its peak of >INR 1,100 (in April 2015). This downward movement can be attributed to the regulatory overhang on Halol, competition in key products, consolidation in the distribution channel, and visibility of limited launches of niche products.
The stock at current valuations does not fully value its rich US pipeline and stable, cash-generating domestic business. Consistent outperformance domestically with market share gains and high profitability reflects management’s execution capability (and product selection skills). We assign a target P/E of 20x to SUNP’s base business EPS for FY19E and arrive at a target price of INR 650, implying 22% upside from current levels.
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