Accumulate Sun Pharma, target Rs 873: Prabhudas Lilladher

Prabhudas Lilladher maintains an accumulate rating on Sun Pharma with a 12-month target price of Rs 873.

Sun Pharma's subsidiary Taro Pharma's FY16 Annual Report analysis observations are, a) price rise in products with marginally declining volume b) high asset-turnover ratio c) high chargebacks/rebates/discounts d) higher working capital and d) Lower addition in net operating cash-flow in comparison to increase in sales.

"More than 90% of cash and equivalent in current account has impacted yield as it crashed to 1.5% FY16 from 5.5% in FY16 and FY15 respectively. Taro has 91.4% of cash in current account in FY16," said the note.