Moneycontrol Bureau
Shares of Sun Pharma tanked 10 percent intraday on Monday as its March quarter results missed street expectations. Its fourth quarter consolidated profit shot up 124.63 percent sequentially (down 44 percent year-on-year) to Rs 888 crore. Weak operational performance dented bottomline on year-on-year basis. This was the first quarter when combined earnings was reported (Sun Pharma and Ranbaxy).
Total income declined by 11.1 percent quarter-on-quarter (up 51.7 percent on yearly basis) to Rs 6,157 crore during January-March quarter, the company said in its filing.
However, analysts do not seem to be perturbed. Macquarie has an outperform rating with a target price of Rs 1100 per share. With strong execution, free cash flow and a niche pipeline, Sun Pharma should sustain the upper-end of its historical premium valuation, says the brokerage. Ranbaxy integration provides an additional lever for growth, over the medium-term, it adds.
It expects recovery in growth staring H2FY16 as the impact of remediation measures at Halol recede by Q2FY16, benefits from Ranbaxy integration start trickling in and large Gleevec FTF launch in US (scheduled for Q4 FY16).
Credit Suisse also maintains outperform but slashed FY16 earnings per share (EPS) by 8 percent. "Q415 was a weak quarter both on sales and margins. A large part of the miss was driven by the first quarter of Ranbaxy integration but key surprise was continued supply constraints at Halol plant. Sun did not provide sales growth guidance for FY16 after missing guidance for FY15. In our view, this is likely to be driven by uncertainty at Halol and also the first year of Ranbaxy integration. Halol resolution is the key event for the stock," it says in a report.
At 13:09 hrs Sun Pharmaceutical Industries was at Rs 888.10, down Rs 77.65, or 8.04 percent on the BSE.
Posted by Nasrin Sultana
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