Buy Sun Pharmaceuticals; target of Rs 1827: KR Choksey

KR Choksey's research report on Sun Pharmaceuticals

Sun Pharma Ltd. has announced that the Australian Therapeutic Goods Administration (TGA) has granted regulatory approval for Winlevi (clascoterone cream 1%). Winlevi is a topical treatment of acne Vulgaris in patients of 12 years of age and older. The approval from Australian health authority enables Sun Pharma to exclusively sell the product in Australia from June 24 (Q1FY25). The company has the rights to sell it in the US and Canada, since FY22. The company has exclusive rights from Cassiopeia SpA to develop and commercialize WINLEVI in the US, Japan, Australia, New Zealand, Brazil, Mexico and Russia. Winlevi is one of the prominent products besides Ilumya (plaque psoriasis), Cequa (dry eye), Levulan (actinic keratoses), Absorica (severe recalcitrant nodular acne), Odomzo (basal cell carcinoma), Bromsite (postoperative inflammation), Xelpros (ophthalmic), Yonsa (prostate cancer), and Sezaby (neonatal seizures) for the company, which drives growth in sales of the global specialty portfolio.

Outlook

The stock is currently trading at 39.8x/32.5x/27.1x of our estimated FY24E/FY25E/FY26E EPS. We assign a P/E multiple of 32.0x (earlier 29.0x) on FY26E EPS of INR 57.1 to arrive at a Target Price (TP) of INR 1,827 (earlier TP INR 1,627) and maintain BUY on it.