Reduce Sun Pharma, target of Rs 1108: IIFL

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IIFL has maintained its reduce rating on Sun Pharmaceutical Industries with a target price of Rs 1108 in its August 18, 2009.

"Sun Pharma has been in the news of late for a number of reasons, both good and bad. Its FY09 annual report shows that the company has taken concerted steps to contain its spiralling receivables, with the result that they have come down to about 21% of annual revenues in FY09. The company received US FDA approval for Eloxatin (oxaliplatin from Sanofi), only to be suspended soon after on account of continuing patent litigation. Effexor XR, a relatively large opportunity that slipped from Sun's hands almost a year back, seems to be slipping further away as a new regulatory hurdle has come up."

"Domestic business remains strong, with the company maintaining its brand franchise. Non-US international business is also doing well, with the company's increasing focus on such opportunities. US FDA issues remain a key concern and we believe they will keep the company's core business performance muted for the next 4- 5 quarters. The stock remains richly valued and we maintain our 'REDUCE' rating with price target of Rs 1108," says IIFL's research report.

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