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Concall Update | Sun Pharmaceuticals Ltd.




IndiaNivesh Securities Pvt Ltd


10 Feb 2013





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 Concall Update Sun Pharmaceuticals Ltd. | Company has reported robust revenue growth & sequential improvement in operating margins in the last 4-5 quarters on the back of better realization of certain derma products by Taro, favorable currency movement & supply of Doxil to US market. During the quarter, once again Taro reported healthy revenue growth with stable Gross margins & improvement in EBITDA margins, which indicates sustainability in increased price of Taro’s certain products. ANDA approval for Doxil has cleared uncertainties for supply of the product in US market. Current acquisition of DUSA Pharma, in our view, may take longer period to generate accretive results for the company, however we believe that URL acquisition would provide impetus to SUN’s revenue. Further, company is likely to launch generic version of Prandin (Anti-diabetic drug from Novo Nordisk, market Size ~$200 mn) in June 2013, with 180 days exclusivity, where company has received favorable verdict from court. Further, Management’s strong execution capabilities, strong balance sheet & continuous free cash flow generation ability of the company justify its premium valuations. We maintain HOLD rating on the stock & revise target price upward to Rs 796 (Valuing at 23x of FY14E). At CMP of Rs 750, the stock is trading at P/E multiple of 25.3x of FY13E & 21.7x of FY14E earnings estimates.

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