Large Cap Pharma Stock Shows Significant Growth, Buy, Says Leading Stock-Broking Firm

Prabhudas Lilladher is bullish on Sun Pharmaceuticals, large-cap company stock. The pharma company has a market capitalisation of Rs 2,32,274.17 crore. Recently the company posted Q4FY23 results which showed that it was 4% above the stock-broking firm's estimates. Thus, the firm believes that the stock price can grow up to a target price of Rs 1,140.

Q4FY23 performance
Sun Pharmaceuticals' revenue grew 16% YoY at Rs109.3 billion against the estimate of Rs106.6 billion. This was aided by higher gRevlimid and specialty sales. Even the EBIDTA adj for milestone came in at Rs 28 billion; up 30% YoY; 4% above the brokerage firm's estimate.

Management Outlook
The large-cap pharma company expects to grow in line with or above the IPM market. Its other expenses increased given higher selling and distribution costs on further normalization, higher R&D cost and consolidation of Alchemee business with Taro R&D investments are likely to increase and guided for 7-8% of sales in FY24, as per the research note of Prabhudas Lilladher.

The management indicated that US Generic continues to remain price competitive and does not see any price stabilization. Plus the strong ramp-up in global specialty business driven by Ilumya, Cequa, and Winlevi. Changes in Copay program for Winlevi have aided realization. Expect Rx to pick up from Q2/Q3FY24.

Valuation & Rating
Pabhudas Lilladher is of the view that the overall specialty sales and gross margins will continue to remain healthy while other expenses remain elevated on the back of higher SG&A and R&D spending. Over the last few years, Sun Pharma's dependency on US generics has reduced and the company's growth is more functional on specialty, RoW, and domestic pharma business, which has strong growth visibility.

Furthermore, its acquisition of Concert Pharma provides visibility to the large company's specialty pipeline beyond FY25. "We maintain a 'BUY' rating at a target price of Rs.1140 (Rs1175 earlier) based on 25x FY25E earnings. SUNP remains our top pick in large cap space", the stock-broking firm added.

Dividend Details
The Board of Directors has proposed a final dividend of Rs. 4.00 per share for the year, FY23 in its Meeting held on 26th May 2023. This dividend is in addition to the interim dividend of Rs. 7.5 per share paid in FY23, taking the total dividend for FY23 to Rs. 11.5 per share compared to Rs. 10 per share for FY22. The payment is subject to the approval of shareholders in the ensuing Annual General Meeting of the company.

Scrip Movement
The latest stock price of this large-cap pharma company has fallen marginally by 0.26% to Rs 968.10 per share on an intraday basis. In the last one year, the share price has given a return of 9.01% while over three years, it has provided a return of 110.8%.

Disclaimer
The stock has been picked up from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the author, or the brokerage firm will not be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.