Sun Pharma gains as foreign brokerage upgrades target price

Sun Pharmaceutical Industries rose 1.21% to Rs 608.55 at 15:23 IST on BSE after a foreign brokerage house reiterated its overweight rating on the stock and raised its target price.

Meanwhile, the BSE Sensex was up 12.84 points, or 0.05%, to 25,593.05

On BSE, so far 1.97 lakh shares were traded in the counter, compared with an average volume of 2.29 lakh shares in the past one quarter.

The stock hit a high of Rs 614.85 and a low of Rs 602.50 so far during the day. The stock hit a 52-week high of Rs 653.10 on 3 March 2014. The stock hit a 52-week low of Rs 458 on 13 June 2013.

The stock had underperformed the market over the past one month till 9 June 2014, falling 3.63% compared with the Sensex's 11.25% rise. The scrip also underperformed the market in past one quarter, falling 1.78% as against Sensex's 16.7% rise.

The large-cap company has an equity capital of Rs 207.12 crore. Face value per share is Re 1.

A foreign brokerage house reiterated its overweight rating on the Sun Pharmaceutical Industries stock and raised its target price to Rs 717 from Rs 646 after analyzing multiple EPS scenarios for year ending 31 March 2015 (FY 2015) and FY 2016, which hinge on Ranbaxy 's FTFs (first-to-file) (Nexium and Diovan). According to the report, launch of these FTFs should boost Ranbaxy's cash balance by $290 million (translating to Rs 7.2 a share). The brokerage house remains confident in Sun Pharmaceutical Industries' current business segments for which it forecasts a 3-year revenue CAGR of 17% despite the high base of FY14.

The brokerage also included Gx Gleevec in its FY16 and FY17 estimates (NPV of Rs 2.40 per share). So far in 2014, Sun has underperformed the BSE Sensex despite its strong Q3 December 2013 and Q4 March 2014 results. This underperformance ignores Sun's strong fundamentals and synergies from the Ranbaxy integration, presenting even better entry point for investors, the brokerage said.

On a consolidated basis, Sun Pharmaceutical Industries' net profit surged 56.9% to Rs 1587.12 crore on 31.6% growth in net sales to Rs 4043.57 crore in Q4 March 2014 over Q4 March 2013.

Sun Pharmaceutical Industries is an international specialty pharmaceutical company with over 72% sales from global markets. It manufactures and markets a large basket of pharmaceutical formulations as branded generics as well as generics in US, India and several other markets across the world.

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