Sun Pharma - Global Specialty Sales To Get A Boost From Addition Of Australian Geography: DRChoksey

DRChoksey Research Report

We expect the Sun Pharmaceutical Industries Ltd.’s global specialty segment sales growth to get a boost from the recent additional marketing approval for Winlevi in Australia.

We therefore increase Sun Pharma’s sales and net income estimates to 10.9% and 16.0% compound annual growth rate, respectively from 10.6% and 15.3% CAGR, respectively. We also increase the valuation multiple by 10% to 32 times on FY26E earnings per share.

The company has been seeing steady growth in revenue and net income over the last few quarters on the back of strong growth witnessed in specialty revenue, which now corresponds to 19.2% of overall sales as of Q3 FY24 versus 16.5% it was in Q3 FY23 and 16.4% it was in Q2 FY24 and market outperforming growth in Indian pharma market.

The stock is currently trading at 39.8 times/32.5 times/27.1 times of our estimated FY24E/FY25E/FY26E EPS.

We assign a price/earning multiple of 32.0 times (earlier 29.0 times) on FY26E EPS of Rs 57.1 to arrive at a target price of Rs 1,827 (earlier target price Rs 1,627) and maintain Buy on it, as the upside potential is 18.2% from its current market price of Rs 1,546.

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