Prabhudas Lilladher's research report on Sun Pharmaceutical Industries
We increase our earnings estimate by 23%/17%9% for FY21/22/23E on back new approvals post Halol resolution, increased revenue contribution from domestic formulation with growth returning to normalize level of 10-12% led by field force expansion, debt reduction and stable growth in ROW markets. SUNP 2QFY21 earnings were higher than our estimates due to growth in export formulation along with tax credit of Rs2,882mn. We believe part of its growth could be sustainable once lockdown restriction eases in coming months. We don’t see Halol regulatory issue getting escalated as only one of the observation were serious in nature and expect resolution in 1HFY22E once travel restrictions eases. With key injectables filed from Halol, new approvals would start coming in and this would be a key growth driver while Taro and specialty products contribution to growth to remain lower.
Outlook
We roll over valuation to FY23E (earlier FY22E) which leads to new TP of Rs597 (Rs476) based on 21x(PE) of FY23E EPS of 28. We upgrade our rating to ‘BUY’ (earlier Reduce).
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