Buy Sun Pharma; target Rs 670: 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 670 in its November 19, 2013 research report.
November 25, 2013 / 13:42 IST
Firstcall Research report on Sun Pharmaceutical Industries
"Sun Pharma, the second largest drug maker in India continued with its wining streak with 58 percent rise in its net sales YOY on consolidated basis. Branded generic sales in India and International formulations both grew by 17 percent at Rs.9490 mn and $79 mn respectively in the second quarter FY14. US finished dosage sales rose in double digits at a whopping 72 percent in Q2 FY14. US finished dosage stood at $ 419 million agianst $ 244 mn same quarter last year. Consolidated Net profit in the current quarter at Rs. 13623 mn is up by 326 percent without adjusting the protinix litigation provision in Q2 FY13 results. Even after factoring in protinix provision amount of Rs. 5835.80 mn, net profit is up by 51 percent in Q2 FY14. Net profit in corresponding quarter of the previous year stood at Rs. 3196.40 mn. EBDITA also rose by 45 percent at Rs. 19479.30 mn against Rs. 13443.70 mn corresponding quarter previous fiscal.""Even with such strong numbers, Sun Pharma's stock price fell by 0.96 percent after announcement of Q2 results mainly due to rise of short term borrowings. As on 31st March 2013, the debt equity ratio was as low as 0.01. Over the last six months, short term borrowings have escalated by almost 31 times. Short term borrowings stood at Rs. 25733.80 mn in the current quarter against Rs. 829.50 mn as on 31st March 2013. Long term borrowings have also increased but at a lower percentage of 13.5 percent. Although, the company stands debt free due to its sufficient cash & cash equivalents, finance costs are expected to rise in the coming quarters. During July- September quarter, Sun Pharma launched generic Prandin in the US Market. The company is the First-to-File Para-IV filer and is entitled to 180 days of marketing exclusivity for the product in US. US FDA has also granted final approval for its ANDA for generic version of Prevacid®, Lansoprazole Delayed-Release Capsules, therapeutic equivalent of Takeda's Prevacid® Delayed-Released Capsules.""The company has filed ANDAs for 10 products during the second quarter. On a cumulative basis, ANDAs for 463 products have been filed with the USFDA as on September 30, 2013. ANDAs for 9 products received approvals in the second quarter, taking the total number of approvals to 333. Sun Pharma's international revenues account for 75 percent of its total revenues and the company spends 6 percent of its total revenues on R&D annually. With the market share of 5.2 percent, Sun pharma has further consolidated its position in export oriented generic Indian pharma market. Slowing domestic economy has low impact on the export oriented Indian Pharma industry and is further facilitated by the depreciating rupee. With revenue guidance of 24 percent for FY14, Sun Pharma is leading the Pharma sector to new highs and thus we recommend ‘BUY' for the scrip with the target price of Rs 670," 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. 
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