Geojit recommended hold rating on Sun Pharmaceutical Industries with a target price of Rs 597 in its research report dated June 19, 2018.
Geojit's research report on Sun Pharmaceutical Industries
Sun Pharma is India’s top drug maker and world's fifth largest specialty generic pharmaceutical company by revenue with 41 manufacturing facilities spread across 6 continents. Revenue fell 2% YoY in Q4FY18 due to lower US and less than expected India sales. US sales declined 7% YoY mainly on account of sharp fall in Taro sales (down 11%YoY) due to continued pricing pressure in the US and lack of significant approvals. EBITDA margin expanded by 340 bps YoY to 25.1% led by improved gross margin. We expect revenue/Adj.PAT to grow at 14%/42% CAGR over FY18-20E driven by expected pick-up in US sales and key speciality & generic launches.Outlook
Given improved visibility for key drug launches in the US post Halol plantresolution, increased spend on specialty business and expected recovery in India business, we change our rating to ‘HOLD’ from ‘SELL’. Our revised target price stands at Rs597 based on 23x FY20E PE.
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