Accumulate Sun Pharma; target Rs 586: Emkay

“Sun Pharmaceutical Industries’ Q3FY12 results - Revenues at Rs21bn (up 34% YoY), EBITDA at Rs9.6bn (up 119% YoY) and RPAT at Rs6.6bn (up 91% YoY). Strong performance was led by 63% growth in US which was driven by ramp-up in market share of recently launched products, increase in selling prices of select products in Taro and INR dep. Domestic biz grew 17%. Going forward in FY13E, growth will be driven by Para-IV launch of Lexapro, Plavix, Eloxatin and Stalevo in US and continued momentum in domestic biz.”

“Going forward in FY13E, there will be volume led growth in US market driven by Para-IV launch of Lexapro, Plavix, Eloxatin and Stalevo where the company has already settled with innovator. Domestic formulation is expected to grow at 17% on back of ~30 product launches in FY12. Sun has already launched 23 new products till date in the domestic market. We expect Sun Pharma to report 32% growth in revenues in FY12E and 20% growth in FY13E. EBIDTA margins are expected to improve from 34.8% in FY11 to 34.9% in FY12E and 36.4% in FY13E. Earnings will grow by 25% CAGR over FY11-13E. We revise our target price to Rs 586 (21x FY13E earnings of Rs28). At CMP, the stock trades at 24x FY12E and 20x FY13E EPS. Maintain Accumulate,” says Emkay Global Financial Services research report.

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