Last Updated : Nov 04, 2020 11:56 AM IST | Source: Moneycontrol.com

What should investors do with Sun Pharma post Q2: buy, sell or hold?

The drug major on November 3 reported a 70.4 percent year-on-year growth in consolidated profit, driven by operating performance and tax credit though forex loss limited growth.

Sun Pharmaceutical Industries share price jumped more than 4 percent in the morning session on November 4, a day after the drug major reported a massive 70.4 percent year-on-year growth in consolidated profit, driven by operating performance and tax credit, though forex loss limited growth.

Consolidated profit increased to Rs 1,813 crore in the quarter compared to Rs 1,064 crore in the same period last year.

Tax gain (exceptional) for the quarter was on account of creation of deferred tax asset amounting to Rs 288.28 crore arising out of subsequent measurement attributable to restructuring of an acquired entity, Sun Pharma told BSE.

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Consolidated revenue from operations grew by 5.3 percent year-on-year to Rs 8,553 crore in September quarter.

Here is what brokerages have to say about the stock:

Morgan Stanley

The brokerage firm has an "overweight" rating with target at Rs 611 per share. It is of the view that positive operating leverage has resumed, which is driving up margin and profit. The company's ramp-up of global specialty business could be a medium-term re-rating catalyst. Earnings growth and re-rating underscore the brokerage's overweight rating, CNBC-TV18 reported.

Nomura

The research firm has a "buy" rating with the target at Rs 623 per share. Sun Pharma's Q2 results were ahead of the firm's estimates. The key positives include ramp-up in sales of key specialty products, the brokerage said, adding near-term mismatch appears unsustainable. It expects scale of specialty sales over the next two years.

Credit Suisse

The research firm has an "underperform" call on the stock with the target at Rs 420 per share. The firm is of the view that bull case hinges on success in key specialty drugs. Ilumya will face high competition from three new drugs next year. It raised FY21/FY2E EPS estimates by 29 percent/4 percent. Key risk to the firm's estimates is a sharp pick-up in volumes of Ilumya or Cequa.

CLSA

CLSA has a "buy" rating with the target at Rs 710 per share. Steady recovery and success in specialty should drive rerating, the research firm said. Sales of Ilymuya, Cequa & Odomzo back at pre-COVID levels. The firm raised its FY21 EPS estimate by 39 percent on back of its big beat in Q2. CLSA remains confident of the ramp-up of the specialty business.

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First Published on Nov 4, 2020 10:04 am
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