Accumulate Sun Pharma; target Rs 664: Dolat Capital
Dolat Capital is bullish on Sun Pharmaceutical Industries and has recommended 'Accumulate' rating on the stock with a target price of Rs 664 in its November 14, 2013 research report.
November 18, 2013 / 15:43 IST
Dolat Capital's report on Sun Pharmaceutical Industries
"Sun Pharma (SUNP) revenues grew 57.9 percent YoY to Rs 42.1bn driven by robust growth in US formulations (94.6 percent YoY) and domestic formulations (17.2 percent YoY). US formulations grew by 94.6 percent YoY at Rs 25.9bn (Rs 13.3bn in Q2FY13). Growth was primarily led by gPrandin (180 days exclusivity), Doxycycline, Lipodox and other niche products. Taro registered a growth of 27.5 percent YoY at USD 205.3mn, led by increase in product volumes. SUNP continued to show better than expected sales growth in URL and DUSA. Domestic formulations registered better-than-estimated sales at Rs 9.5bn, up 17.2 percent YoY, despite loss of pioglitazone sales and NLEM policy. The company expects to show better than industry growth in FY14E.""EBITDA margins were flattish at 43.8 percent (44.1 percent in Q2FY13), primarily on account of higher sales from low margin products in the US market. R&D spend for the quarter was at 5.3 percent and is expected to be in the 6-8 percent range on the back of clinical development of complex injectables & focus on niche products. Tax rate stood at 15 percent against 17.3 percent in Q2FY13. Consequently, adjusted PAT grew by 50.8 percent YoY to Rs 13.6bn."Valuation: "We expect SUNP to post revenue CAGR of 22.3 percent and PAT CAGR of 23.8 percent over FY13-15E on the back of: 1) Superior revenue mix; 2) Domestic market growth rate to be higher than the market @ 18 percent; 3) Higher R&D expenditure productivity 4) Competition in Taro products leading to price normalization; 5) Increased visibility in US on account of upsides from URL and DUSA acquisitions. At CMP, the stock trades at 26.8x FY14E & 22.6x FY15E earnings. We maintain 'Accumulate' with a revised target price of Rs 664 (25x FY15E EPS)," says Dolat Capital research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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