Hold Sun Pharma; target of Rs 580: Centrum

Centrum's research report on Sun Pharma

We maintain our Hold rating on Sun Pharma (SPIL) with TP of Rs580 (earlier Rs580) based on 26x March’20E EPS of Rs22.4. SPIL has developed a strong pipeline of specialty products for the US. It has received US FDA approval for Xelpros used in the treatment of glaucoma and ocular hypertension. We expect $22mn (Rs1.58bn) revenues from Xelpros in FY20. Key upside risks to our assumption include higher revenues from the US market and key downside risk includes regulatory risks for its manufacturing facilities catering to the global markets. We recommend a switch to Aurobindo or Cipla.

Outlook

We maintain our Hold rating on SPIL and maintain TP to Rs580 based on 26x March’20 EPS of Rs22.4 and downside of 12.8% from the CMP. Key positive risks to our assumptions would be higher growth in the US market and key negative risk would be regulatory risks for its manufacturing facilities. We recommend a switch to Aurobindo or Cipla.