Buy Sun Pharmaceutical Industries: Equity99

Sumit Bilgaiyan Equity99

Sun Pharmaceutical Industries has reported better than expected performance in Q1FY19, led by healthy US sales (ex-Taro), strong growth in domestic business. Its sales and EBITDA grew by 16 percent YoY and 47 percent YoY, respectively, while PAT increased by 87 percent on higher other income, strong operating performance and lower tax rate.

Taro has unperformed in this quarter. It's US sales fell by 4.2 percent YoY, while ex-Taro US sales grew by 17.5 percent YoY to USD 240 million owing to launch of gWelchol AG, Yoansa and sales improvement from Halol unit. This clearly shows that Sun Pharma's dependency on the Taro is reducing.

India grew by 22 percent YoY on lower YoY base, while emerging markets business grew 21 percent YoY.

The stock has given strong technical break out on weekly chart after long consolidation. We are recommending a buy for short to long term.