Buy Sun Pharmaceutical Industries: Akash Jain

Akash Jain Ajcon Global

We believe Sun Pharmaceutical Industries is the best play in pharma space and investors can add this stock to their long-term portfolio. The company reported stellar Q1FY19 results and were above our expectations.

At CMP, of Rs 655 stock trades at a P/E of 43x at trailing 12 months which seems expensive in the near term after the recent rally.

However, considering the long term prospects of the company and expected approvals of its products pipeline after the USFDA's clearance of its Halol plant (after nearly 3 years of non-compliance), we believe investors will be rewarded in the longer term.

In addition, we believe improvement in Taro’s US business (declined in Q1FY19) in the coming quarters along with a ramp-up in India and non US markets such Europe (Q1FY19 growth of 22 percent in India coupled with 11 percent growth in ROW driven by key markets including Romania, Eastern Europe, and Asia) will help to sustain margins.