Markets

Broker's call: Sun Pharmaceutical Ind (Buy)

| Updated on September 04, 2019 Published on September 05, 2019

Trading Bells

Sun Pharmaceutical Ind (Buy)

CMP: ₹426.4

Target: ₹540

Key takeaways: a) Sun Pharma reported Gross Revenue of ₹29,066 crore during FY19, up 9.7 per cent from ₹26,489 crore during FY18.

b) Profit after-tax rose 27.1 per cent to ₹2,665 crores in FY19 against ₹2,096 crore in FY18.

c) The company’s revenues from the US markets grew 22 per cent to ₹10,671 crore in FY19 driven by an increase in generic sales, incremental contribution from specialty product launches and a favourable foreign exchange rate. This is despite the price erosion witnessed in the US markets, driven by a higher bargaining power of customers and a faster pace of generic approvals from the USFDA.

d) In the Indian market, Sun Pharma continues to be the undisputed industry leader, enjoying 8.2 per cent share of the market. This is despite its revenue from the Indian branded generic business declining by 8.5 per cent to ₹7,348 crore in FY19.

Outlook and valuation: The global phar industry is at crossroads with increasing pressure from the governments and regulators over escalating drug prices. The industry, in general, has bottomed out led by Sun Pharma which is currently trading at levels which are 40 per cent off its 52-week high. The company is focussing on exports and R&D as it has become imperative to innovate in order to survive for the long-term in the pharma business.

Published on September 05, 2019
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