Buy Sun Pharma; target of Rs 1810: Motilal Oswal

Motilal Oswal's research report on Sun Pharma

Sun Pharma (SUNP) reported a slight miss at the operational level for 4QFY24. This was due to lower-than-expected sales in the ROW market and higher-than-expected opex for the quarter. SUNP has surpassed USD1b sales in the global specialty segment in FY24 vs. USD430m in FY20. This was backed by enhanced efforts towards product offerings/marketing activities in the regulated markets. We retain our FY25/FY26 estimates. We value SUNP at 30x 12M forward earnings to arrive at our TP of INR1,810. We expect an 18% earnings CAGR over FY24-26, driven by 12-13% sales CAGR in the Domestic Formulation (DF)/EM/ROW markets, 9% sales CAGR in the US market, and 220bp margin expansion.

Outlook

We retain our FY25/FY26 estimates. We value SUNP at 30x 12M forward earnings to arrive at our TP of INR1,810. We expect an 18% earnings CAGR over FY24-26, driven by 12-13% sales CAGR in the Domestic Formulation (DF)/EM/ROW markets, 9% sales CAGR in the US market, and 220bp margin expansion.