Brokerages bullish on Sun Pharma, see up to 22% upside

NEW DELHI: Brokerages maintained their bullish call on drugmaker Sun Pharma after it posted in-line profit growth for the September quarter on Thursday.

Global brokerage CLSA is keeping faith in the company’s specialty product portfolio ramp-up. It said the profit growth was in-line with its estimates.

Sun Pharmaceuticals reported a consolidated profit of Rs 1,064.09 crore for the September quarter, which was in line with an ET Now poll projection of Rs 1,074 crore. The drug maker reported a loss of Rs 269.60 crore in the corresponding quarter last year.

CLSA sees drug Ilumya gaining traction in the market. The company has also seen an encouraging start to recent Cequa launch. Thus, it retained the fiscal 2020-22 earnings per share (EPS) estimates and target price at Rs 540. That translates into a potential gain of 22 per cent.

Sun Pharma’s net sales for the quarter rose 16.10 per cent to Rs 7,949.19 crore from Rs 6,846.48 crore in the same quarter last year. Margin for the quarter at 22 per cent was better than ET NOW poll estimate of 20.7 per cent. The company had reported 21 per cent margin in the year-ago quarter.

Domestic broker Reliance Securities also retained its view on the stock. It said at the current market price, stock trades at 22 times fiscal 2020 earnings and 17.7 times fiscal 2021 earnings estimates, which is attractive to take fresh position.

“In light of increasing business visibility in India and other geographies, we maintain our BUY recommendation on the stock with a Target Price of Rs 500, Reliance Securities said. That means a 14 per cent potential upside from the last closing price.

The shares of the company closed 4.23 per cent lower at Rs 421.80 on BSE.