Sun Pharmaceutical Industries’ share price fell 3.5 per cent intraday on Monday, despite a 43 per cent on-year growth in consolidated net profit at Rs 2,061 crore in FY23. The company reported a profit of Rs 1,444 crore in the corresponding quarter of previous year. The stock has risen 18.7 per cent in one year, and 8.3 per cent so far this year. The stock price has added 11 per cent in the last one month. At least three research and brokerage firms have recommended to buy the stock, and see up to 20 per cent upside potential. The Mumbai-based company had posted a net profit of Rs 1,444 crore in April-June period of 2021-22. Total revenue from operations rose to Rs 10,762 crore in the period under review from Rs 9,719 crore earlier, Sun Pharmaceutical Industries said in a regulatory filing.
JM Financial Services
BUY | Target price: Rs 1,130 | Upside: 20%
Analysts say that Sun Pharmaceutical beats street expectations as support from domestic or specialty segments improve earnings trajectory making earnings upgrade imminent. “We maintain BUY, our top pick, at 25x 1Y forward earnings to derive a Jun’23 price target of Rs 1,130 apiece. It also added that the US and EM businesses continued momentum despite a high Covid base. Domestic business grew 2 per cent on-year led by healthy growth in Top 16-25 brands.
Motilal Oswal Financial Services
BUY | Target price: 1,100 | Upside: 17%
Analysts have raised their FY23/FY24 EPS estimate by 6%/4%, factoring in steady industry outperformance in the Branded Generics segment and lower R&D spends. “We continue to value Sun Pharma at 25x 12M forward earnings to arrive at our TP of Rs 1,100. We remain positive on Sun Pharma on the back of sustained scale-up in the Specialty portfolio, robust franchise building in the Branded Generics portfolio, and healthy ANDA pipeline awaiting approval,” it said. Specialty sales grew on-year, despite a seasonal impact on Levulan sales.
BUY | Target price: Rs 1,050 | Upside: 11.2%
Alka Katiyar, Research analyst, Pharma & Healthcare at Centrum Broking, said that the US market has been steady and improving its base riding on specialty business with new addition of Winlevi along with prescription increases to support the base further. “We anticipate the specialty basket focus strategy to start paying better dividends from FY23E, which would add significant delta to earnings going ahead as most of the costs are already in the base,” Katiyar added. She valued Sun Pharma at 24x on FY24E EPS to arrive at a target price of Rs 1,050. At CMP of Rs 943, the stock trades at 26.7x FY23E EPS of Rs 35.3 and 22.2x FY24E EPS of Rs 42.6.
Emkay Global Financial Services
Hold | Target price: Rs 745 | Upside: 3.7%
Analysts at Emkay Global Financial Services maintained a hold rating on the stock as it believes the current valuations (27x 1-year fwd P/E vs. 10-year avg. of 25x) limit upside potential. “We revise our TP to Rs 745 from Rs 730 due to a modest increase in earnings estimates. We raise our FY22/23/24 estimates by 7%/2%/1% to reflect the Q1 beat,” they added. India revenue growth of 39% yoy was driven by good growth across acute, chronic and sub-chronic segments, and 8-10% contribution from Covid-related products.
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