1. Sun Pharma on Asia Pacific Best Ideas list

Sun Pharma on Asia Pacific Best Ideas list

Retain ‘overweight’ on Sun Pharmaceuticals with a target price of R995 per share.

By: | Updated: March 28, 2015 1:23 AM

Retain ‘overweight’ on Sun Pharmaceuticals with a target price of R995 per share. The stock is on our Asia Pacific Best Ideas list. We expect Sun to continue to increase its earnings at a high-teens rate through its high-quality base business, focus on customers’ pipeline of complex products, unlock value in Ranbaxy, DUSA and SPARC, and make new acquisitions.

Sun Pharma announced closure of its all-stock merger deal with Ranbaxy at an EV of $4 billion (implying 2.2x EV/Sales). Following the closure, Ranbaxy will be de-listed from the stock exchanges. Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy.

Key priorities include strong business growth, increased R&D productivity and achieving 100% regulatory compliance in manufacturing (ie, operationalising Ranbaxy’s four facilities closed by FDA). Sun targets $250 million in synergy benefits over next three years through cost rationalization and business growth. Ranbaxy outsources high level of manufacturing, which Sun targets to bring in-house.

Sun emphasised that, post merger, it would have the ability to scale up consolidated $250 million in R&D spend to $500 million. This would allow the company to enrich its innovation-based product pipeline. It will look for new M&A opportunities which fulfill its strategic rationale such as greater access and scale in EMs.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top