Pharmaceutical major Sun Pharma's healthy Q2 backed by its industry-beating performance in the domestic market and stellar global specialty sales have impressed brokerages across the board, prompting some of them to raise their target prices for the stock. Brokerages like Nuvama Institutional Equities and Citi have raised their price targets for Sun Pharma post its Q2 results.
The drugmaker reported a 5 percent on year jump in its Q2 net profit to Rs 2,375.5 crore while its revenue rose 11.3 percent to Rs 12,192 crore. Not just that, the net profit as well as revenue also topped the Street's estimate of Rs 2,316.7 crore and Rs 12,047.6 crore, respectively.
The growth in earnings was backed by a 19.2 percent spike in global specialty sales along with an around 11 percent rise in India formulation sales. Its worth noting that the drugmaker delivered a healthy set of earnings despite a sequential decline in its US sales.
Meanwhile, the drugmaker is also focused on securing its next leg of growth and hence, has maintained its R&D (Research and Development) guidance of 7-8 percent for FY24. The management also revealed that the dispatches from Mohali have resumed post-implementation of the corrective measures, which should aid growth in US sales going ahead.
Brokerage firm Citi raised its price target for the stock by over 8 percent to Rs 1,380 as it believes a potential recovery in the US generics segment suggests a better margin outlook for the drugmaker. Accordingly, the firm also raised its FY24/25 earnings estimates by 9 percent and 4 percent, respectively.
Nuvama was another brokerage that increased its price target for the stock, albeit marginally, to Rs 1,330 while retaining its 'buy' call on Sun Pharma. "We are more confident on the drugmaker's potential given a steady Q2 even as opex rose sharply and Revlimid (cancer drug) contribution dipped, much-awaited India recovery seems to materialise as it gains share and posts double-digit growth," Nuvama stated in a note.
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"Specialty seems to be progressing well, shall see Winlevi (acne drug) and Sezaby (seizure drug) boost from FY25 and potential approval of deuruxolitinib (to treat alopecia areata) by FY26, Halol products have started to regain share and Mohali shall gradually inch toward normalcy," the brokerage added.
Macquarie also remains positive on Sun Pharma's specialty portfolio as it sees major products including Ilumya, Winlevi, and Cequa witnessing encouraging prescription growth trends. The brokerage retained its 'outperform' call on the stock with a target price of Rs 1,275.
Global brokerage firm Jefferies also sees a ramp-up in Sun Pharma's specialty sales and strong presence in the India/Emerging Markets as key drivers for the drugmaker's core earnings growth. Jefferies has a 'buy' call on Sun Pharma with a target price of Rs 1,310.
Motilal Oswal also remains bullish on Sun Pharma's growth prospects as it retained its 'buy' rating for the stock, assigning it a price target of Rs 1,310. The firm believes Sun Pharma is well-positioned to reinforce its specialty franchise by adding new products, expanding its reach, and superior implementation of its existing products. It continues to outperform both in the branded generics market of India and other emerging markets.
Shares of Sun Pharma also settled 2.5 percent higher on November 1, post the results announcement at Rs 1,116.20 on the NSE. At 09.25 am, shares of the drugmaker were trading marginally higher at Rs 1,118.85 on the NSE.
Also Read | Sun Pharma Q2 results: Net profit up 5% at Rs 2375 crore, beats estimate
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