Q2FY20 result highlights
Impact on financials: Reduce FY20/21 earnings by 8%/5%
Valuations & view
Sharp qoq drop in Sun’s Q2 US sales has been a disappointment and is reflective of challenges in growing its US generic business. While generics still accounts for major share of revenues, Sun’s specialty business along with domestic formulations will increasingly be the prime driver of company’s future growth trajectory. With launch of Illumya and Cequa, Sun’s global specialty strategy has taken significant strides forward. While there are multiple challenges in making this transition, it is a strategic imperative for larger Indian players to go down this path. Sun is potentially best placed amongst large domestic peers to make this transition. While Sun’s medium term growth story is interesting, at current levels, we see limited upsides given the volatility in its base business along with the significant growth uncertainties inherent in any early stage speciality business. Maintain Neutral with TP of Rs474 (21x FY21E EPS). Pick-up in Ilumya / Cequa remains key near term monitorable.
Sun Pharmaceutical and its subsidiaries are principally engaged in developing, manufacturing and marketing generic pharmaceutical products and bulk drugs. Co.'s products are mainly for the following therapy areas: psychiatrists, neurologists, gastroenterologists, diabetologists, chest physicians, consultant physicians, orthopedics, oncologists, gynecologists, ophthalmologists and cardiologists. Generic names of three principal products of Co. is Pentoxifyline, Pentoparzole Sodium, and Metformin Hydrochloride. Co.'s business can be divided into four segments: Indian branded generics, U.S. generics, international branded generics (ROW) and Active Pharmaceutical Ingredients (API).
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.