Sun Pharma extends rally, surges 7% in two days; now trades at 5-month high

Sun Pharma could see structural growth and be relatively insulated from the adverse price erosion scenario in the US, according to analysts.

Shares of Sun Pharmaceutical Industries hit a five-month high at Rs 954.25, as the stock gained 4 per cent on the BSE in Thursday’s intra-day trade. In the past two days, the stock of the country’s largest drug maker has rallied 7 per cent after the company said the acquisition of Uractiv portfolio from Fiterman Pharma in Romania closed on September 27, 2022.

Currently, Sun Pharma is trading at its highest level since April 29, 2022. It quoted close to its 52-week high level of Rs 966.90 touched on April 24. The stock has relatively outperformed most pharma stocks and market. In the past three months, it surged 13 per cent, as compared to 7 per cent rise in the S&P BSE Sensex. While, in past one year, the stock soared 17 per cent, as against 4 per cent decline in the benchmark index.

The global pharmaceutical market is estimated to reach about $1.8 trillion by 2026, growing at a compounded rate of approximately 3-6 per cent. The main growth drivers will be increased pharmaceutical spending in the pharmerging markets and the consistent launch of high-end specialty innovative products in developed markets, Israel Makov, Chairman of Sun Pharma said in 30th Annual General Body meeting of the company.

The Indian pharmaceutical market size is estimated to reach about $ 37-41 billion by 2026 recording 8-11 per cent compounded growth. Demographics and lifestyle changes, rising per capita income, growing incidence of chronic ailments, increasing access to modern medicines and improving health insurance coverage will be the key drivers of this growth, said Israel Makov.

Sun Pharma in its FY22 annual report said, all its businesses are positioned for growth, and the company expect high-single-digit to low-double-digit consolidated topline growth for FY23.

“High chronic contribution in its domestic portfolio should aid Sun Pharma to outpace IPM growth rate. It is the only Indian pharma company with a large commercialised specialty portfolio in the US, which could add Rs 5-7 per share in EPS over the next 2 years. Sun Pharma could see structural growth and be relatively insulated from the adverse price erosion scenario in the US. BUY with a target price of Rs 1,034, based on 25x FY24E EPS,” the brokerage firm Systematix Shares and Stocks (India) said in pharma sector update.