Buy Sun Pharmaceutical Industries; target of Rs 540: ICICI Direct
ICICI Direct is bullish on Sun Pharmaceutical Industries has recommended buy rating on the stock with a target price of Rs 540 in its research report dated May 28, 2020.
May 29, 2020 / 05:48 PM IST
ICICI Direct's research report on Sun Pharmaceutical Industries
Revenues were in line with I-direct estimates but profitability was below I-direct estimates due to lower-than-expected operational performance and a forex loss of Rs 142 crore. Q4FY20 revenues grew 14.3% YoY to Rs 8184.9 crore, mainly due to adjusted 8.2% YoY growth in India formulations to Rs 2364.8 crore (adjusted for one-time distribution change impact of ~Rs 1085 crore in Q4FY19). US business declined by 13.1% YoY to Rs 2712.9 crore due to one-time business opportunity in Q4FY19. EBITDA margins expanded 246 bps YoY to 16.7% due to lower employee and other expenditure. EBITDA grew 34.1% YoY to Rs 1363.0 crore. Adjusted net profit grew 7.3% YoY to Rs 660.5 crore. Delta vis-à-vis EBITDA was due to higher tax rate (14.4% vs -4.1% in Q4FY19) and lower other income.
We upgrade to BUY and arrive at our new TP of Rs 540 based on 22x FY22E EPS of Rs 24.5.
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