CLSA retains buy on Sun Pharma, says valuations are attractive

MUMBAI: CLSA has maintained buy rating on Sun Pharmaceutical Industries with a target price of Rs 560 after the drug maker announced steps to address governance issues.

The company announced steps such as discontinuing the current distribution of products in India through Aditya Medisales, unwinding of loans and advances to third party and appointment of new auditors at subsidiary companies. It also said that no loans or guarantees were provided to Suraksha Realty by Sun Pharma.

"We view the steps taken by Sun Pharma to address governance concerns in a time bound manner as a positive development. We expect Sun to continue to take proactive steps to improve its corporate governance structure," said CLSA.


The foreign brokerage said valuations of Sun Pharma are attractive given improving business fundamentals.

However, the outcome of the whistle-blower complaint to the SEBI will remain an overhang.

"While earnings are likely to improve from hereon, clarity on the whistle-blower investigation and outcome of the DoJ investigation on price increases in the US, a likely CY2019 event in our view, could remain an overhang on Sun shares," said CLSA.