Sun Pharmaceutical Industries Ltd. share price target

Remain bullish on the stock and maintain BUY rating with the target price of Rs 670 (25x FY20E EPS). Sun Pharma (SUNP) posted good numbers in 1QFY19. Revenue grew ~16%YoY to Rs 72.2bn, and the EBITDA margin expanded 460bps to 22.2%, ~100bps above our estimates. EBITDA at Rs 16.1bn and PAT at Rs 9.8bn were up 46.6% and 86.9% YoY respectively. Despite challenges in the US generics space and decline in the Taro business, SUNP managed 12% growth in revenues in the US market. Additionally, good performance in India which showed growth of 22% coupled with 11% growth in ROW driven by key markets including Romania, Eastern Europe, and Asia led to positive results for the quarter.

ICICI Securities Ltd | Retail Equity Research Revenues grew 16.4% YoY to | 7224.2 crore (I-direct estimate: | 7131.4 crore) mainly due to 22% growth in India formulation to | 2152 crore (I-direct estimate: | 2130.5 crore) led by lower base of GST impact in Q1FY18. US sales grew 12.3% YoY to | 2542.2 crore (I-direct estimate: | 2543 crore). Taro's sales remained flat at | 1034.4 crore (I-direct estimate: | 1208.7 crore) EBITDA margins improved 459 bps to 22.2% (I-direct estimate of...

Strong Traction in US Business to Continue; Upgrade to BUY Despite Taro's underperformance, Sun Pharmaceutical Industries (SUNP) has reported betterthan-expected performance in 1QFY19, led by healthy US sales (ex-Taro), strong growth in domestic business and lower YoY base. Its sales and EBITDA grew by 16% YoY and 47% YoY, respectively, while PAT surged by 87% on higher other income, strong operating performance and lower tax rate. Despite 215bps YoY contraction in gross margin to 70.8% due to change in product-mix and Taro's higher raw material cost, EBITDA margin expanded by 459bps YoY to 22.2% owing to lower other expenses and R&D; spend. Taro's US sales fell by 4.2% YoY, while ex-Taro US sales grew by 17.5% YoY to US$240mn owing to launch of gWelchol AG, Yoansa and...

Recovery in the Horizon: Net Revenues for the quarter increased by 16.3% YoY to Rs 72.2 bn, above ourexpectation of Rs 66.4 bn.

Sun Pharma: Dual play on US Recovery & growth in IPM, Resolution of Halol plant a key trigger; Godrej Consumer Products: Diverse Portfolio, focused on innovation, Dual play on Domestic and Emerging Markets

SUN pharma is largest pharma company in India, 30% of Company's sales comes from India, 70% business comes from Export. In India, company is ranked No.1, as per IMS rales ranking.

We expect revenue/Adj.PAT to grow at 14%/42% CAGR over FY18-20E driven by expected pick-up in US sales and key speciality & generic launches. Given improved visibility for key drug launches in the US post Halol plant resolution, increased spend on specialty business and expected recovery in India business, we change our rating to HOLD' from SELL'. Our revised target price stands at Rs597 based on 23x FY20E PE. Weak US and subdued India sales drags revenue Sun Pharma reported 2% YoY decline in net revenue in Q4FY18 due to weak US sales which declined by...

We believe FY19 may see a gradual comeback for large cap pharma companies, driven by (1) Actual and likely regulatory resolutions, (2) Moderating price erosion and (3) Several product launches across generic and specialty categories in 2HFY19. We believe earnings have bottomed out, while the base is favourable. Upgrade Sun Pharma to BUY. Beleaguered by regulatory clampdowns, channel consolidation in the US and increased competition, earnings of US-focused Indian pharma companies dropped 30% over FY18. Despite the all-too-visible business challenges, they persisted with higher R&D; activity (related to complex generics and specialty business), which aggravated the pain. As a result, the NIFTY Pharma index has corrected ~30% over three years (after 30% CAGR over FY11-15).

6 March 2018 The Halol facility received 23 483 observations post US FDA inspection in September 2014. Later, in December 2015, US FDA had issued a warning letter for the facility. In November/December 2016, US FDA re- inspected the facility and issued nine 483 observations and maintained OAI status. In February 2018, US FDA re-inspected the facility, and this time, issued three 483 observations, with no data integrity issue and no repeat observation, following which it received VAI status today (Link). SUNPs US business has been under pressure since the warning letter, as it has not received any product approval from this facility in three and a half years. The facility contributes 8-10% of US sales for SUNP, currently down from >15% at the time of warning letter. Resolution of the Halol issue is critical for the company, as it would provide visibility on key approvals including Xelpros, Elepsia, Vagifem, etc.

EBITDA at Rs. 1,417 crores, resulting EBITDA margin of 21.1%. Other operating income for the quarter at Rs. 266 crores which includes US$ 20 million of milestone payment from Almirall S.A (Spain) as part of the licensing agreement for the...