As Sun Pharma shares trade at 52-week high, should you buy post Q2 results?
1 min read . Updated: 02 Nov 2022, 01:18 PM IST
Premium- Prabhudas Lilladher has maintained its ‘Buy’ rating on Sun Pharma shares, raises revised target price
Shares of Sun Pharmaceuticals Ltd surged more than 2% to ₹1,070 apiece on the BSE, trading at 52-week high, in Wednesday's trading session after the company reported net profit at ₹2,262 crore, on higher sales in the domestic market, as compared to ₹2,047 crore year-on-year (YoY).
“Sun Pharma reported robust revenue growth of 14% YoY in Q2 FY23 aided by global ramp-up of specialty products, focus on domestic market and steady growth in ROW market. The company’s significant investments and efforts in specialty business started paying off in upward trajectory with 28% YoY growth in H1FY23," said brokerage and research firm Prabhudas Lilladher while maintaining its ‘Buy’ rating on Sun Pharma shares at revised target price of ₹1,175 ( ₹1,070 earlier).
“Sustained momentum in specialty will help in improving operating leverage and margins too. Domestic formulations (32% of total revenue) continue to outperform IPM. We broadly maintain our estimates. Sun Pharma remains our top pick in large cap space," the note stated.
The pharma company, which is known for its consumer healthcare products such as Revital vitamins and pain relief medicine Volini, witnessed a nearly 14% rise in its total revenue from operations at ₹10,952 crore from ₹9,626 crore in the year ago quarter.
“We raise our revenue estimates by 1-3% to factor-in higher sales in the specialty business; however, lower other income and rising tax rate results in 1-2% cut in EPS over FY23E-FY24E. Current valuation at 28.1x FY24E EPS captures the near-term potential, hence we retain HOLD with a revised target price of ₹1,002 per share (earlier: ₹972/share) based on 26x Sep’24E EPS (roll-forward by 6 months)," said ICICI Securities.
Though, ICICI Securities sees faster-than-expected growth in India and the US as key upside risk, and higher-than-expected pricing pressures in the US and regulatory hurdles, as per key downside risks.
Sun Pharmaceutical Industries Managing Director Dilip Shanghvi said, in the second quarter, the company recorded double-digit topline growth and strong margins driven by market share gain in India, sustained ramp-up of global specialty business and growth in emerging markets.
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