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Sun Pharmaceuticals Industries Ltd Research Report - 21st Jan 2016

Pharmaceutical | Published on Nov 17th 2015

IT

For 2QFY2016, Sun Pharmaceuticals Industries (Sun Pharma) posted results marginally lower than our expectations. Sales for the quarter, at Rs6,803cr (V/s Rs6,600cr estimated) dipped 15% yoy. On the operating front, the company posted an OPM of 27.9% V/s 38.0% in 2QFY2015 and V/s our expectation of 25.4%. The company had benefitted significantly in 2QFY2015 from the 180- day exclusivity on Valsartan tablets in the US, which resulted in a higher base for the quarter under review. Thus, the net profit came in at Rs1,107cr V/s Rs1,145cr expected and V/s Rs2,051cr in 2QFY2015, a yoy dip of 46.0%. Other income during the quarter came in at Rs225.6cr V/s Rs29.1cr in 2QFY2015. However, we are currently maintaining our target price of Rs950. Results better than expected on the OPM front: For 2QFY2016, Sun Pharma posted results marginally lower than our expectations. Sales for the quarter, at Rs6,803cr (V/s Rs6,600cr estimated) dipped 15% yoy. Sun posted results marginally lower than expected. For 2QFY2016, the company posted sales of Rs6,803cr (V/s Rs6,600cr estimated), a dip of 15% yoy. Amongst the key markets- India (Rs1,819cr) posted a growth of only 1%, US (US$510mn) posted a degrowth of 28% yoy, Emerging markets (US$140mn) were down by 16% yoy and ROW(US$76mn) was down 30% yoy. On the operating front, the company posted an OPM of 27.9% V/s 38.0% in 2QFY2015. This was against our expectations of 25.4%. The company had benefitted significantly in 2QFY2015 from the 180-day exclusivity on Valsartan tablets in the US resulting in a higher base. Thus, the net profit came in at Rs1,107cr V/s Rs1,145cr expected and V/s Rs2,051cr in 2QFY2015, a yoy dip of 46.0%. Other income during the quarter came in at Rs225.6cr V/s Rs29.1cr in 2QFY2015. Outlook and valuation: Sun Pharma is one of the largest and fastest growing Indian pharmaceutical companies. We expect its net sales to post a 9.3% CAGR (including Ranbaxy Laboratories) to Rs32,610cr and EPS to post an 8.4% CAGR to Rs26.9 over FY2015–17E. We recommend a Buy on the stock.

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CMP 742
Target Price 950
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)162,589.36
MCAP NSE (Rs in Cr)162,625.46
P/E (x)21.97
EPS (Rs.)30.74
BV (Rs.)89.82
Div Yield (%)0.15
FV (Rs.)1.00
P/BV (x)4.43
EV/Sales (x)5.64
EV/EBITDA (x)22.18

Shareholding Pattern (%)

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

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