Buy Sun Pharma; target of Rs 1033: Achiievers

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26 Aug, 2025 12:21

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Achiievers research report on Sun Pharma“Sun Pharmaceutical Industries Ltd. (Sun Pharma) was established in 1983 with five psychiatry products and a compact manufacturing facility at Vapi, Gujarat. Sun Pharma, a leader in chronic therapies is ranked 2nd and holds 5.4% market share in the Rs770.0 bn Indian pharmaceutical market. Globally, Sun Pharma is currently the fifth largest specialty pharmaceutical company manufacturing and marketing a variety of pharmaceutical formulations as branded generics, as well as generics in the US, India and several other global markets. In India, Sun Pharma is having established brands across niche therapies such as psychiatry, neurology, cardiology, nephrology, gastroenterology, orthopedics and ophthalmology. The company has strong skills in product development, process chemistry, and manufacturing of complex dosage forms."

"Sun Pharma has evolved into an international, integrated, specialty pharmaceutical company with 75% of its revenues from US branded generics market and rest of the world. The company is having strong research teams in generics, finished dosage development, biological support and chemistry with over 900 scientists in four R&D centers. The company has entered into a joint venture with Merck for emerging markets excluding India. With equal representation in the joint venture, the agreement allows each partner to use each other’s infrastructure for development, manufacturing and commercialization. Sun Pharma has led its inorganic growth through various acquisitions and joint ventures all over the world. Its recent acquisition has been URL and DUSA in the US. Sun Pharma has 18 manufacturing sites worldwide. There are 6 manufacturing sites each in India and US and one each in Canada, Brazil, Mexico, Hungary, Israel and Bangladesh.”“The company’s US business grew at a CAGR of 44% during FY09-14 on the back of successful acquisitions such as Caraco and Taro (recently Dusa and URL) and timely product launches. The US product basket remains robust. The company cumulatively filed 490 ANDAs, out of which it received approvals for 350 products. Moreover, the US growth is also being backed by extensive infrastructure- out of the 23 global manufacturing facilities 15 have been approved by the USFDA. The only blot in an otherwise smooth journey is the warning letter to the Gujarat based Karkhadi unit. We expect the US business to see some uptick on a higher base during FY14-16E backed by new launches and base business growth. The lower growth also takes into account possible competition in Lipodox in the US.” “We believe Sun's low-cost advantage, brand recognition in emerging markets, and its capability to manufacture complex products will result in sustainable long-term profitability. The firm has a narrow moat primarily due to its low-cost advantage, which includes low manufacturing and labor costs at its primary manufacturing base in India, as well as a vertically integrated API segment that lowers raw material procurement costs. Moreover, Sun Pharma has been able to build out a strong portfolio of products in the US generic market, including injectable and topical drugs, where fewer participating competitors generally lead to more favorable pricing and profitability. We initiate BUY rating on Sun Pharma. At a current CMP of Rs861, Sun Pharma is currently trading at P/E of 27.7x FY15E and 23.3x FY16E. Considering the company’s strong fundamentals, we recommend ‘BUY’ with a target price of Rs1,033, which implies potential upside of ~20% to the CMP from 1 year perspective,” says Achiievers research report.

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