Hold Sun Pharma; target of Rs 915: KRChoksey

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26 Aug, 2025 12:21

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KRChoksey report on Sun Pharmaceutical Industries

"Sun Pharma’s Q2FY15 results were in line with our estimates on account of strong Taro’s performance. Revenues grew by 13% YoY to Rs. 4769 crs. Taro posted sales of USD 251mn marginally higher than our expectation on account of price hikes taken across a range of products. Domestic business showed strong performance in line with our estimates. Ex Taro, US sales were hit by additional competition in Cymbalta, Doxycycline hyclate & lack of Prandin exclusivity during the quarter. EBITDA grew by 18% YoY to Rs. 2180 crs & margins were at 45.7% expanded by 190bps on account of Taro’s strong performance. Taro posted operating margin of around 63.9% of sales. However, base business margins were hurt due to compliance cost related to Halol facility, transaction & integration related cost to Ranbaxy merger. Reported PAT stood at Rs. 1572 crs grew by 15% YoY & EPS for the quarter stood at Rs. 7.6."

"We have incorporated Ranbaxy financials in our FY16 estimates as the merger deal is likely to be closed by FY15 end. We believe synergies from Ranbaxy merger will arise from FY17 onwards. We are positive on the stock on account of strong domestic business & its capability to strengthen Derma franchise. However we believe that the stock is fairly priced at current valuations & therefore we recommend ‘Hold’ rating on the stock with the target Price of Rs 915 at 26xFY16E", says KRChoksey research report.

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