Accumulate Sun Pharma; target of Rs 703: Dolat Capital

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26 Aug, 2025 12:21

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Dolat Capital's report on Sun Pharmaceutical Industries

"Sun Pharma (SUNP) revenues grew 50.5 percent YoY to Rs 43.1bn driven by robust growth in US formulations (79.2 percent YoY) and domestic formulations (20.1 percent YoY). US formulations grew by 79.2 percent YoY at Rs 26.8bn. Growth was primarily led by gPrandin (180 days exclusivity), Doxycycline, Lipodox and other niche products. Taro registered a growth of 15.0 percent YoY at USD 213mn, 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 20.1 percent YoY, despite loss of pioglitazone sales and NLEM policy. The company expects to show better than industry growth in FY14E. EBITDA margins were up 190 bps at 46.4 percent (44.5 percent in Q3FY13), primarily on account of higher sales from high margin products in the US market. R&D spend for the quarter was at 7.1 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 lower at 12 percent against 18.6 percent in Q3FY13. Consequently, adjusted PAT grew by 73.7 percent YoY to Rs 15.3bn."

Valuation: "We expect SUNP to post revenue CAGR of 27.4 percent and PAT CAGR of 26.5 percent over FY13-16E on the back of: 1) Superior revenue mix; 2) Domestic market growth rate to be higher than the market at 20 percent; 3) Higher R&D expenditure productivity 4) consolidation of Dusa and URL acqusition. At CMP, the stock trades at 20.7x FY15E & 17.5x FY16E earnings. We maintain ‘Accumulate’ with a revised target price of Rs 703 (20x FY16E EPS)," says Dolat Capital research report.

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