Shares of Sun Pharmaceutical Industries have been on a winning spree even though the market sentiment is weak owing to the Russia-Ukraine war, rising crude oil prices and firming inflation.
The stock climbed over a percent to hit its multi-year high of ₹911.50 on BSE in morning trade on March 14. The stock has gained about 7 percent in the calendar year so far against a 5 percent fall in equity benchmark Sensex.
Brokerages are seeing opportunity in the stock even at the current juncture thanks to prescription trends of key drugs of the company in the US market.
"Prescription trends of key drugs of Sun Pharma in the US market indicate sustained quarter-on-quarter (QoQ) growth momentum. There is continued volume growth in key products, including Winlevi, Cequa, Ilumya and Carvedilol ER. These products have seen a jump in prescription volume in Q4FY22. We had seen a build-up in prescription volume from Winlevi in Q3FY22; however, a large part of gains should be seen in Q4FY22," brokerage firm Nirmal Bang pointed out.
"We have not seen any direct volume impact post the launch of the generic version of Restasis on Cequa sales. Sun Pharma was the first generic player to receive USFDA approval for gAmbisome and has received CGT exclusivity. The company is yet to launch the product in the US market," Nirmal Bang said.
The brokerage firm has a 'buy' call on the stock with a target price of ₹1,090 at 25 times March 24 earnings per share (EPS).
Brokerage firm Kotak Securities has an 'add' call on the stock whereas it has raised the stock's target price to ₹1,000 from ₹975.
"Sun Pharma’s specialty business is yet to break even and as revenues scale up further, we expect overall margins to advance," said Kotak Securities.
"Continued execution in specialty provides further re-rerating potential. We factor in the recent acquisition of Alchemee by Taro, which drives a 2-3 percent EPS upgrade over FY2023-24E. Key risks to our positive stance on Sun Pharma include higher-than-expected competitive intensity for Ilumya and continued delay in resolution of Halol OAI," Kotak added.
On the earnings front, the company's consolidated net profit had jumped 11 percent year-on-year to ₹2,059 crore while its revenue from operations rose 12 percent year-on-year to ₹9,863 crore for the December quarter of FY22.
Recently, Sun Pharma’s subsidiary Taro Pharmaceuticals signed a definitive agreement to acquire The Proactiv Company from Galderma for $90 million.
Market sentiment on the stock is ‘neutral’, according to a MintGenie poll and an average of 37 analysts has a ‘strong buy’ call on the stock.
(The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.)
