Shares of Sun Pharmaceutical Industries gained 2 percent intraday on February 7 despite the company registering a 26.44 percent year-on-year drop in consolidated profit, impacted higher other expenses and lower forex gain with slow revenue growth.
Bottomline for the quarter stood at Rs 913.52 crore, a decline from Rs 1,241.85 crore in the same period last year.
Revenue from operations grew 5.36 percent YoY to Rs 8,154.85 crore in the December quarter, meeting street estimates.
Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) also fell 14.5 percent YoY to Rs 1,841.4 crore. Margin contracted 520bps to 22.6 percent in Q3 FY20.
The company said board has declared an interim dividend of Rs 3 per share for FY20.
Global research firms Morgan Stanley, CLSA and Jefferies have maintained their buy call on the stock.
According to Jefferies, Sun Pharma's Q3 result were in-line with expectations, with margin 138 bps above their estimates. The brokerage has changed its FY20/21/22 EPS estimate by -4/-7/-1 percent, respectively. It has maintained a buy call with target price at Rs 520 per share.
Morgan Stanley is of the view that the generic business is stabilising, adding that positive operating leverage should help momentum in FY21. The research firm is overweight on the stock with target at Rs 530 per share. Global specialty business should gain commercial traction in coming quarters, it said.
CLSA is of the view that the strong ramp-up could drive a P/E rating for the counter, and has reiterated its buy rating with a target price of Rs 570 per share. The research firm is of the view that strong growth in India and emerging markets should help improve profitability. However, the research firm has cut its FY20-22 EPS by 3-10 percent to factor in a higher tax rate cut.
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