Oct 16, 2017 03:49 PM IST | Source: Moneycontrol.com

Hold Sun Pharmaceutical Industries; target of Rs 575: Sharekhan

Sharekhan recommended hold rating on Sun Pharmaceutical Industries with a target price of Rs 575 in its research report dated October 12, 2017.

Sharekhan's research report on Sun Pharmaceutical Industries

The Dadra plant of Sun Pharmaceutical Industries (Sun Pharma) has recently received an Establishment Inspection Report (EIR) from the USFDA. Dadra is the second largest facility of the company (contributing ~6-8% to sales) after Halol (contributes ~10% to sales). The plant was inspected in April 2017, and had received a Form 483 with 11 observations (all procedural in nature). An EIR indicates that the plant is now has overcome all regulatory issues. The event thereby clears its way for pending approvals.

Outlook

We maintain our estimates for FY2018E and FY2019E and introduce FY2020E earnings. We upgrade our rating to hold with TP of Rs 575 (valuing the stock at 18x FY2020E earnings vs. 16x FY2019E earnings earlier). At current price of Rs 540, the stock is trading at 21.7x its FY2019E earnings and 16.7x its FY2020E earnings.

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