Buy Sun Pharma; target of Rs 1015: Angel Broking

Angel Broking's report on Sun Pharmaceutical Industries

"For 4QFY2015, Sun Pharmaceuticals Industries (Sun Pharma) posted numbers lower than expected. The company posted sales of Rs 6,145cr (V/s Rs 7,000cr expected and V/s Rs 4,044cr in 4QFY2014), a yoy growth of 52.0%, driven by Ranbaxy Labs’ merger. The Indian, US, Emerging, and ROW markets posted a yoy growth of 65.8%, 22.6%, 264.9% and 124.6%, respectively. On the operating front, the EBITDA margin came in at 14.3% V/s 35.1% expected and V/s 44.2% in 4QFY2014. The PAT came in at Rs 888cr V/s Rs 1,751cr expected and V/s Rs 1,587cr in 4QFY2014, a yoy de-growth of 44.0%. This was aided by the other income of Rs 395.8cr for the quarter V/s Rs 193.8cr in 4QFY2014. Also, during the period, there was a tax credit of ~Rs 600cr. Thus, adjusted for merger related expenses, the Adj. PAT came in at Rs 1,622cr, posting a yoy growth of 2.2%. On back of the dip in the stock price in the past few sessions, the stock has become attractive; hence, we recommend a Buy on the stock with a target price of Rs 1015."

"Sun Pharma is one of the largest and fastest growing Indian pharmaceutical companies. We expect its net sales to post a 34.4% CAGR (including Ranbaxy Laboratories) to Rs 49,294cr and EPS to post an 25.8% CAGR to Rs 36.2 over FY2015–17E. We recommend a buy on the stock, given the valuations", says Angel Broking research report.

For all recommendations, click here

Read More