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Buy Sun Pharma, target of Rs 1295: Sharekhan

Posted on: June 2nd, 2009 and is filed under Brokerage Recommendations.

Sharekhan has recommended a buy rating on Sun Pharma, with price target of Rs 1295, in its report dated June 01, 2009.

“Sun Pharmaceutical Industries (Sun Pharma)’ Q4FY2009 performance was above our expectations. The revenues for the quarter declined by 9.8% to Rs 1,134.4 crore due to lower sales in the US market (as against the high base of the nonrecurring sales of Pantaprazole in Q4FY2008), voluntary product recalls (Digoxin and associated write-offs) initiated by Caraco Pharmaceuticals (Caraco) and currency related losses.”

“With Rs 3,000 crore of cash on books and with the global financial meltdown resulting in more attractive valuations for generic drug companies, Sun Pharma is scouting for other acquisition opportunities (possibly a mid-sized generic company in the USA). At the current market price of Rs 1,219, Sun Pharma is valued at 16x FY2010E fully diluted earnings. We shall review our estimates and follow this with a detailed note soon, Buy, target of Rs 1295,” says Sharekhan’s report.

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