What should investors do with Sun Pharma: buy, sell or hold post Q4?

CLSA has maintained buy rating but cut target to Rs 560 from Rs 590 per share.

May 28, 2020 / 09:48 AM IST
 
 
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Sun Pharmaceutical Industries share price rose over 1 percent in the early trade on May 28 after the company reported its fourth quarter numbers.

The company has reported a consolidated profit of Rs 399.8 crore for the quarter ended March 2020, declining 37.1 percent YoY due to one-time loss of Rs 260.6 crore.

Consolidated revenue during the quarter rose 14.3 percent year-on-year to Rs 8,184.9 crore, which was ahead of the average of estimates of analysts polled by CNBC-TV18 which pegged at Rs 8,015.8 crore.

On the operating front, consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 34 percent to Rs 1,363 crore and margin expanded by 250 bps to 16.7 percent, which also missed analysts expectations.

CLSA | Rating: Buy | Target: Cut to Rs 560 from Rs 590 per share

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The company's profits hindered by lower gross margin, higher depreciation and forex loss and even adjusted for one-offs, the profits were below the estimates, reported CNBC-TV18.

Speciality products continue to gain traction.

CLSA cut FY21-22 EPS estimates by 6 percent on higher depreciation & lower other income, however strong traction in speciality business could drive a PE re-rating.

Credit Suisse | Rating: Neutral | Target: Rs 400 per share

The Q4 was weak due to higher costs, meanwhile, the highlight of the quarter was strong Ilumya sales.

Some recovery has started in the US and India, while patient visits are only 25 percent of pre-COVID-19 in India, reported CNBC-TV18.

Jefferies | Rating: Buy | Target: Raised to Rs 530 from Rs 440 per share

The Q4 results were in-line with expectations. The speciality sales were higher than expected while other businesses were in-line.

Jefferies expects the company to report 20 percent EPS CAGR over FY20-22. The valuations are at 15 percent discount to peers at 23x FY21 PE and company is preferred largecap pick over peers like Dr Reddy’s, reported CNBC-TV18.

Nomura | Rating: Buy | Target: Rs 525 per share

The Q4 numbers were in-line, while speciality ramp-up & improving traction in Ilumya are the key positives. The Ilumya scale-up could help negate the impact of higher costs on speciality, reported CNBC-TV18.

Morgan Stanley | Rating: Overweight | Target: Rs 449 per share

Company's global speciality business is steadily gaining traction and it could be a mid-term re-rating catalyst.

The forthcoming earnings upcycle & potential re-rating underscore overweight rating, reported CNBC-TV18.

At 09:20 hrs, Sun Pharmaceutical Industries was quoting at Rs 450.95, up Rs 0.40, or 0.09 percent on the BSE.
Moneycontrol News
first published: May 28, 2020 09:48 am

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