Buy Sun Pharma; target of Rs 790: Motilal Oswal

Motilal Oswal is bullish on Sun Pharma has recommended Buy rating on the stock with a target price of Rs 790 in its research report dated September 07, 2018.

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September 18, 2018 / 12:55 IST

26 Aug, 2025 12:21

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Motilal Oswal 's research report on Sun Pharma

US FDA recently conducted an inspection at SUNP's Halol plant from 27-31 August and issued Form-483 with six observations. We believe the observations are resolvable and should not impact existing business and/or new approvals, pertaining to SUNP. We raise EPS estimate by 1%/3% for FY19/FY20 to factor in the favorable currency movement. We expect a premium for SUNP to further expand from 25% to 35%, compared to an industry average of 20x 12M Forward Earnings on the back of increasing share of specialty portfolio. SUNP is the only Indian-listed entity, which is progressing well in the specialty portfolio. We believe, the incremental generics business from new launches should be higher than base business erosion, and sustained outperformance in the domestic formulation business should also support multiple re-rating.

Outlook

Accordingly, we raise our P/E multiple to 27x (from 25x earlier) and revise our price target to INR790 (from INR700 earlier); reiterate a Buy.

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