Sun Pharma - Worth a Buy For 3-5 Year Investment Perspective
In India, Sun Pharma currently has a 3.3 per cent share in a highly fragmented market and enjoys a position of strength in brands catering to therapy areas of psychiatry (Repace), neurology (Oxetol), cardiology (Aztor) and gastroenterology (Pantocid) amongst others.
As it continues to build on marketing initiatives to strengthen customer relationships, Sun’s domestic formulation business will continue to grow faster than the industry growth of 13 per cent.
Sun Pharma’s consolidated net revenues increased by 58 per cent and net profit zoomed by 225 per cent, on the back of significant non-recurring income booked in the fourth quarter due to exclusive product launches in the US.
After adjusting for one-off gains, core sales are likely to have grown by more than 20 per cent on a year-on-year basis, according to our estimates.
Investors with a 3-5 year perspective can buy the stock of Sun Pharmaceutical Industries (Sun). It is an integrated speciality pharmaceutical company that manufactures and markets generic medicines in India, US and several other markets.
Though competition and pricing remain concerns for generic companies with a US exposure, Sun Pharma’s strength lies in its product basket and superior cost management in testing times. That explains Sun’s better profitability as well as performance against competitors.
At the current price of Rs 1,403, the stock trades at a valuation of 20 times its estimated 2008-09 earnings per share. The valuation is justified, given its superior fundamentals and growth prospects.
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