ICICI Direct has given Hold recommendation for Sun Pharmaceutical Industries with a target price of Rs. 700 in its research report issued on May 28, 2021

ICICI Direct’s research report on Sun Pharmaceutical Industries

Q4 revenues grew 4.1% YoY to Rs 8523 crore (I-direct estimate: Rs 8760 crore). Indian formulations grew 12.9% YoY to Rs 2671 crore. US formulations remained subdued at Rs 2695 crore, down 0.7% YoY. Emerging markets business grew 3.5% YoY to Rs 1402 crore. RoW Markets business grew 6.3% YoY to Rs 1191 crore. API segment de-grew 9.9% YoY to Rs 473 crore. EBITDA margins expanded 738 bps YoY to 24.0% (I-direct estimates of 23.0%) mainly due to lower other expenditure and better gross margins. Subsequently, EBITDA grew 50.3% YoY to Rs 2048 crore (I-direct estimate: Rs 2015 crore). Adjusting for exceptional items, PAT more than doubled (~2x) to Rs 1343 crore (I-direct estimate: Rs 1455 crore).

Outlook

We change our stance from BUY to HOLD and arrive at our revised target price of Rs 700 (earlier Rs 675) based on 25x FY23E EPS of Rs 27.9.

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