Buy Sun Pharma; target Rs 535: Firstcall Research
Brokerage house Firstcall Research is bullish on Sun Pharmaceutical Industries and has recommended buy rating on the stock with a target price of Rs 535 in its August 24, 2013 research report.
August 27, 2013 / 16:26 IST
Firstcall's research report on Sun Pharmaceutical Industries
"Sun Pharmaceutical Industries' stock price jumped by 7 percent after announcement of Q1 FY14 results. With patent settlement already factored in, the Indian markets gave a big thumps up to the company. Even with the consolidated net loss of Rs. 12760 mn, the company enjoys the largest market capitalization in the Indian pharma industry. The net sales of the company zoomed to 31 percent in Q1 FY14 over the corresponding quarter in the previous year. The Indian branded generics market and US formulation grew by 44 percent and 28 percent respectively in the current quarter over the same quarter in the previous year. The growth of sales for the rest of the world excluding ex- Taro sales was 19 percent. With these growth rates, Sun Pharma has consolidated its premier position in the pharmaceutical industry. Sun Pharma has to pay USD 550 mn for the litigation settlement with Wyeth, a division of Pfizer. The company had already made a provision of Rs. 5840 mn in Q2 FY13 and has made a provision of Rs. 25170 mn in Q1 FY14. The litigation provision made in the current quarter is a one time settlement and will have no impact on the coming quarters, but the cash pile of the company will be reduced for future acquisitions. In spite of aggressive inorganic growth the debt equity ratio of the company is very low at 0.1.""Sun Pharma focuses on four main segments, domestic branded prescription drugs, export of branded drugs, US generics and bulk drugs. The company spends more than 6 percent of its revenues annually on R&D which has started reaping profits as 20-25 products are developed every year which are filed in US and other international markets. In addition to all of this, 70 percent of the revenues accrue from outside India which has become a boon with the depreciating rupee. In the present scenario with the US and the European markets picking up, and guidance of 18- 20 percent of sales growth given by the company for the year 2014, Sun Pharma sets itself apart from the rest of the industry and thus we recommend 'BUY' for the scrip with a target price of Rs 535," says Firstcall 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. 
Read More
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
