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Reliance Securities
Sun Pharmaceutical Ind (Buy)
CMP: ₹430.4
Target: ₹535
Sun Pharmaceutical Industries has been investing significantly for building US specialty franchise. Further, on the back of successful US FDA clearance for Halol facility, strong track record of transforming the acquired assets, we see multiple growth drivers for the company.
We are expecting strong traction in the US business to continue led by new launches and ramp-up in recently launched specialty products along with healthy recovery India business from FY20E onwards. In specialty segment, Sun Pharma has already launched key products such as Ilumya, Yonsa and Xelpros in the US and expected to launch Cequa in 1QFY20E.
We see specialty business is the key growth driver for Sun Pharma, going ahead.
The pharma giant has reported good performance in 3QFY19 led by healthy growth in the US business. We expect Sun Pharma’s overall sales/ earnings to clock 13 per cent/37 per cent CAGR over FY18-20E, while EBITDA margin is expected to expand by 360bps to 24.8 per cent.
We have a fundamental ‘buy’ recommendation on the stock with a target price of ₹535.
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