Hold Sun Pharma; target of Rs 775:Axis Direct

Axis Direct's reserach report on Sun PharmaSun Pharma (SUNP) has received a warning letter for its Halol facility postinspection (483)receivedin Sep’14. Halol contributes high single digit share of Sun’s total revenue and is an important growth driver as it is itsonly site with injectable filings. SUNP believes fasterresolution is possible given regular communication of its remediation with significant investments in automation and training to enhance its Quality Systems along with external consultants in the last 15 months.While we had cut our FY16/17 EPS by 24%/14% in our Q2FY16 note post SUNP’s disclosure of OAI^ status of its Halol facility, uncertain resolution timelines on warning letter is an overhang.Thus, despite long-term positives like strong R&D pipeline and synergy benefits from RBXY, we maintain HOLD with TP of Rs775 (23x FY17 EPS).

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