Stay invested in Sun Pharma: Mayuresh Joshi

Mayuresh Joshi of Angel Broking told CNBC-TV18, "After the merger with Ranbaxy probably all the synergy’s will perk in favour of Sun Pharma. So to put a few statistic in place clearly in terms of their footprints they will get spread across 65 countries; the kind of the ANDA applications that the entire entity might have is closed to 600 odd applications and clearly it will fall in the top 5 generic firm’s in the world.”

He further added, “The domestic formulations business or domestic business for Sun Pharma will now contribute around 9.5 percent that will become the largest entity operating out of the Indian markets followed only EBIT at around 6.5 percent. All the parameters in terms of the numbers are working in favour of Sun Pharma and even if you look at valuations the EBITDA margins expected from consolidated entities at around 31.3 percent is still much higher than its peer group comparison.”

“Even if I look at their return on equities (ROE’s), the ROEs are expected to decompress on a consolidated basis to around 27.5 percent odd. Even that is better than a lot of the peers within the pharma space in India. So clearly the kind of turnaround that Sun Pharma has already done with a lot of its earlier acquisitions URL and DUSA that will hold it in good stared. Again the kind of niche product launches and the niche product offering that it is got via all its entities even that will probably hold the kind of earnings momentum that one probably expects from Sun Pharma to deliver.”

“The expectations are high but again we remain very optimistic on Sum Pharma. We expect the topline to probably go around 25 percent odd over the next couple of years and the earnings per share (EPS) should show significant amount of traction as well. So hold on to the stock and remain extremely optimistic on the stock target of Rs 1,175 over the next 12months,” he added.