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Sun Pharmaceuticals Industries Ltd Research Report - 10th Jun 2016

Pharmaceutical | Published on Jun 10th 2016

IT

For 4QFY2016, Sun Pharmaceuticals Industries (Sun Pharma) posted results marginally lower than our expectations. Sales for the quarter, at Rs7,414cr (V/s Rs7,700cr estimated) grew 20.7% yoy. On the operating front, the company posted an OPM of 31.0% V/s 14.3% in 4QFY2015 and V/s our expectation of 34.9%. Thus, the net profit came in at Rs1,714cr V/s Rs1,653cr expected and V/s Rs889cr in 4QFY2015, a yoy growth of 92.7%. For FY2017, the company has guided for 8-10% yoy growth, while R&D expenses are expected to be 9% of sales in FY2017. However, we are currently maintaining our buy with target price of Rs944. Results mostly in line with expectations: For 4QFY2016, Sun Pharma posted results marginally lower than our expectations. Sales for the quarter, at Rs7,414cr (V/s Rs7,700cr estimated) grew 20.7% yoy. The Indian formulations market posted a growth of 17% yoy to Rs1807cr. US finished dosage sales at US$580mn were up by 19% yoy. US sales include the benefit of the 180-day exclusivity for Imatinib which commenced from Feb 2016. Emerging Markets sales stood at US$124mn, while Rest of World (RoW) sales came in at US$79mn.On the operating front, the company posted an OPM of 31.0% V/s 14.3% in 4QFY2015 and V/s our expectation of 34.9%. R&D expenditure during the quarter was 9.6% of sales. Thus, the net profit came in at Rs1,714cr V/s Rs1,653cr expected and V/s Rs889cr in 4QFY2015, a yoy growth of 92.7%. Other income during the quarter came in at Rs185cr V/s Rs396cr in 4QFY2015. Outlook and valuation: Sun Pharma is one of the largest and fastest growing Indian pharmaceutical companies. We expect its net sales to post a 12.7% CAGR (including Ranbaxy Laboratories) to Rs35,258cr and EPS to post a 22.0% CAGR to Rs32.8 over FY2016–18E. We recommend a Buy on the stock.

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CMP 739
Target Price 944
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)173,153.91
MCAP NSE (Rs in Cr)173,370.52
P/E (x)23.40
EPS (Rs.)30.74
BV (Rs.)89.83
Div Yield (%)0.14
FV (Rs.)1.00
P/BV (x)4.72
EV/Sales (x)6.02
EV/EBITDA (x)23.67

Shareholding Pattern (%)

Promoter55.0
Foreign23.0
Institution11.0
Public & Others8.0
Corporate3.0
Grand Total100.0

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