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Nirmal Bang Report
Sun Pharmaceutical Industries Ltd. reported Q2 FY24 revenue and margins largely in line with our estimate, with a beat on profitability due to lower tax outgo.
Revenue grew by ~11% YoY on the back of growth across major geographies and ramp-up in the global specialty portfolio. Ebitda margin declined by 92 bps YoY to 26.1% as strong gross margin was largely offset by higher operational overheads.
We remain positive on Sun Pharma due to the following catalysts:
Ramp-up of branded/specialty business in the U.S. (recently acquired Deuroxolitinib would further strengthen the specialty pipeline),
Continued growth in India business,
Potential inorganic opportunity given the strong balance sheet, especially in dermatology, ophthalmology and oncology specialties
Maintenance of healthy Ebitda margin at ~27% despite higher research and development spends.
We maintain 'Buy' with a revised target price of Rs 1,345, valuing it at 28 times September 2025E earning per share of Rs 48.
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