Sun Pharma hits fresh 52-week high; brokerages raise target price

NEW DELHI: Sun Pharmaceutical Industries Ltd surged over 8 per cent in a weak market on Wednesday to hit its fresh 52-week high of Rs 1068.05, after the pharma major reported 23.4 percent rise in quarterly net profit, beating market estimates.

The Mumbai-based company reported a consolidated net profit of Rs 1012 crore for the fourth quarter ended March 31, compared with Rs 820 crore a year earlier.

At 12:30 p.m., Sun Pharma was trading 7.9 per cent higher at Rs 1074.05. The stock rallied over 8 per cent in mid-morning trade to touch its 52-week high of Rs 1079.90 in trade today.

According to analysts, Sun Pharma, which is also the most valuable pharmaceutical company in the country, remains an attractive investment opportunity in the sector. However, it may move sideways atleast for some time till further positive development kicks in.

Reacting to the results, most brokerages maintained their rating on the stock and raised their target prices marginally.

SBICAP Securities downgraded the stock to ‘hold’ from ‘buy’ earlier but has raised its target price to Rs 1042. But it remains optimistic on strengthening US portfolio and improved earnings visibility with high probability of bigger sized US acquisition.

“Owing to recent run up of over 30 per cent in the stock price returns since Feb’13, we believe that the stock is reasonably priced growth expectations from continuing business,” the brokerage firm said in a report.

Sun Pharma is also among the most profitable drug companies in the world. Its stock has gained over 35 per cent so far in the year 2013.

Compared to its peers, Sun Pharma is valued at 36 times its earnings for the past four quarters, compared with 20.8 times for Cipla, 25.7 times for Lupin and 30.8 times for GSK Pharma, ET reported.

According to analysts, highly successful US operations may have peaked. This is reflected in Sun's moderate guidance of 18-20 per cent growth in revenues for the current fiscal.

“The performance of the US business, the most critical part of Sun Pharma's operations, which contributes over half its consolidated revenues, has been boosted by favourable currency movement, supply of generic Lipodox and its latest acquisitions Dusa and URL Pharma,” ET said in a report.

However, a significant portion of the US business is accounted for by Sun's subsidiary Taro, which has started showing signs of peaking.
We have collated views and recommendations from various brokerage firms on Sun Pharma post its Q4 results:

Brokerage	Rating	12-month Target Price
CLSA	BUY	Raise target price to Rs 1220, from Rs 990
UBS	Neutral	Rs 1040
Jefferies	BUY	Raises target price to Rs 1150, from Rs 870
Credit Suisse	Outperform	Raises target prices to Rs 1120, from Rs 900
Morgan Stanley	Overweight	Rs 1159
Barclays	Overweight	Raises target prices to Rs 1014, from Rs 936
HSBC	Overweight	Raises target price to Rs 1163. from Rs 953
SBICAP Securities	Hold	Rs 1042

Source: ET Now