Hold Sun Pharmaceutical Industries; target of Rs 436: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Sun Pharmaceutical Industries

Taro Pharma's sales was US$180m in Q4FY20 v/s US$148m in Q3FY20. Gross margin however declined to 58% v/s 64% QoQ reflecting an ongoing price erosion in US derma segment. The decline attributed to an unfavorable product mix, mainly contributed by derma products. The company has huge stock of medicines to avoid any shortage post COVID. While US generic price stabilized at 5-7%, Taro continued to face challenges through large revenue exposure (55-60%) and EBITDA contributions (70-75%) from derma products in US portfolio.

Outlook

Taro Q1FY21E sales are likely to be in the range of US$135-145m with gross margin of 55-60%. Taro's disappointment in the US market would continue be a biggest overhang in SUNP earnings which contribute 40-45% to the overall US revenues. We maintain 'Hold' on SUNP and retain TP of Rs436.

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