Sun Pharmaceuticals Ltd shares rise over 2% 1,070 on the BSE was trading at a 52-week high in Wednesday’s trading session after the company reported net profit. 2,262 crore on more sales in the domestic market than 2,047 crore year-on-year (YoY).
“Sun Pharma posted strong revenue growth of 14% year-on-year in Q2 of FY13, aided by global ramp-up of specialty products, focus on domestic market and steady growth in ROW market. Maintaining its ‘buy’ rating, brokerage and research firm Prabhudas Lilladher said the company’s significant investments and efforts in the specialty business started paying off in an upward trajectory with 28% growth in the first half. Sun Pharma shares at the revised target price of 1,175 ( 1,070 earlier).
“Continued momentum in the specialty will help improve operating profit and margins as well. Domestic formulations (32% of total revenue) are outperforming IPM. We roughly maintain our estimates. Sun Pharma continues to be our top pick in the large cap space,” the note said.
The pharma company, best known for its consumer health products such as Revital Vitamins and pain relief drug Volini, saw its total revenue from operations increase by about 14%. 10,952 crore from 9,626 crore in the year-ago quarter.
“We increase our revenue projections by 1-3% to factor in higher sales in the specialty business; However, lower other income and rising tax rate resulted in reduction in EPS by 1-2% in FY23E-FY24E. Current valuation at 28.1x FY24E EPS reflects near-term potential, hence we maintain hold with revised target price 1,002 per share (earlier: 972/share) is based on 26x Sep’24E EPS (roll-forward up to 6 months),” ICICI Securities said.
However, ICICI Securities sees sharper-than-expected growth in India and the US as major upside risks, and higher-than-expected pricing pressure and regulatory hurdles in the US as major downside risks.
Dilip Shanghvi, Managing Director, Sun Pharmaceutical Industries said, “In the second quarter, the company posted double-digit topline growth and strong margins on account of increasing market share in India, continued ramp-up in the global specialty business and growth in emerging markets.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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