Mayuresh Joshi of Angel Broking told CNBC-TV18, "Clearly after the merger one has probably witnessed between Sun Pharma and Ranbaxy the synergies on Sun Pharma’s balance sheets will be compounded over the next couple of years. Having said that statistically the EBITDA margins probably would come down for the consolidated entity at around 31.5 percent but that one again will remain one of the better operating margins within the pharma industry itself. Again with the merger we are looking at Sun Pharma being in the top five generic pharma companies in the world and the combined ANDA populous will be around 600 applications for Sun Pharma in different products in niche categories in different geographies and the asset base itself is very commendable."
"The expected sales which comes in from the US is expected to grow at around 17.5 percent on a compounded basis over the next couple of years. The domestic formulation business will now account for 9.2 percent which will be followed by Abbott India at 6.5 percent. So on the domestic formulation side as well we are expecting a 22-23 percent compounded growth."
"The valuations not too expensive probably at this point of time on an FY17 basis. So our take is probably one should invest in Sun Pharma within the top tier names and it remains one of our preferred picks, but do invest in a staggered manner to avoid the risk of the stock falling down. For the next two to three months invest in a staggered manner in Sun Pharma and 15-20 percent upside is probably what we see in the stock over the next year or year and half," he added.
"In the midcap space our preference still lies with Dishman Pharma. The numbers have not been so encouraging as per our expectations in the quarter gone by but clearly if one looks at the kind of orders that one expects and the kind of orders with the margins expected from Dishman in the coming fiscal the management expectation of 24-25 percent of EBITDA margins probably coming in from FY16 should more or less play out."
"So there will be a significant EBITDA expansion for Dishman Pharma. Though the results should be closely monitored this time around but again a staggered approach into this stock over the next two to three months would be a better way to approach Dishman Pharma. So Sun Pharma within the top names and Dishman within the midcap pharma remain our preferred picks," he said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
