Motilal Oswal's research report on Sun Pharma
SUNP delivered a better than expected 2QFY23 earnings, led by superior execution in the Specialty portfolio, US Generics (excluding Taro), and the Domestic Formulation (DF) segment; benefits from the PLI scheme; and a favorable currency movement. As a percentage of sales, R&D spends remain low at 5.3% v/s the management’s guidance of 6-8% for FY23, further boosting profitability in 2Q. We have raised our FY23/FY24 EPS estimate by 7%/5% to factor in: a) enhanced traction in the Specialty portfolio, b) industry outperformance in Branded Generics of the DF segment and in emerging markets, c) reduced R&D spends, and d) better operating leverage.
Outlook
We continue to value SUNP at 25x 12M forward earnings to arrive at our TP of INR1,240. We remain positive on the stock on the back of an increased prescription base for the Specialty portfolio, robust franchise building in Branded Generics, niche ANDA pipeline awaiting approval, and controlled cost. We reiterate our Buy rating.
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Sun Pharma - 02-11-2022 - moti