Prabhudas Lilladher's research report on Sun Pharmaceutical Industries
We believe SUNP's US business continues to be biggest hangover on earnings over FY20-22E due to 1) Taro's continued underperformance, 2) lower than expected ramp up in US Specialty 3) regulatory hurdle in Halol and 4) pricing pressure in US derma products. Over several quarters SUNP had been quite optimistic about their specialty products, however it has failed to meet its own expectation. Much hyped Ilumya was able to generate only US$94mn in FY20 even after 18months of its launch. With requirement of further investment for specialty products (R&D and marketing), SUNP earnings are expected to stay muted in US while India formulations could act as a savior to hold earnings.
We increase our earnings estimate by 7% primarily due to growth in domestic market and arrive new TP of Rs467 (earlier Rs 436) based on 21x PE of FY22E, while maintain 'Hold' recommendation.
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