Sun Pharma share price gains 2.41% despite weak Q3 numbers; here's what brokerages say

Shares of Sun Pharmaceutical Industries rose 2.41% in early trade on Friday despite the company reporting weak set of earnings in Q3 of current fiscal.

The firm reported a 26% (YoY) fall in consolidated net profit to Rs 913.52 crore during the quarter ended December 31, 2019 compared with Rs 1,241.85 crore recorded in year-ago period.

Following the earnings announcement, share price of Sun Pharmaceutical hit the intraday high of Rs 441 on Friday, rising 2.47% as against the previous closing price of Rs 430.95.

Volume-wise, 3.26 and 66.62 lakh shares changed hands on BSE and NSE, both above the 5,10, and 30-day average volume. Sun Pharma stock price trades higher than 5, 100 and 200-day moving averages but lower than 20 and 50-day moving averages.

On Thursday, shares of Sun Pharma closed 1.11% higher at Rs 430.95.

Total revenue from operations rose 5.3% (YoY) to Rs 8,154.85 crore in the October-December quarter of current fiscal compared to Rs 7,740.19 crore in the same period last financial year.

While the firm's domestic sales posted 13% growth, the US market remained tough, witnessing a fall of 3% y-o-y, Standard Chartered said in its daily report.

Edelweiss in its Q3 earnings review maintained 'REDUCE' call on the Sun Pharma stock with a target price of Rs 380. The report added near-term challenges in speciality business eclipse medium-term business outlook as the ramp-up has been slower even as competition is intensifying. "While the stock price seems to be ascribing a fair value to domestic and EM businesses, it overestimates the opportunity in the specialty. The street is building in FY19-22E EPS CAGR of 20%, which is at risk in our view" Edelweiss said in its report.

SBI Cap Securities in its result review of Sun Pharmaceuticals said the pharma major has a stable quarter and that the Q3 revenue was in-line while EBITDA and net profit missed the estimates by 5% and 25%, respectively. The report added the speciality revenue of the company at US$118mn grew 30% QoQ, primarily due to a seasonally strong quarter for Levulan, Absorica, and uptick in Ilumya, Odomzo, and Cequa.  "We modestly tweak our FY20 and FY21 estimates and reiterate 'BUY' rating with a target price of Rs 525 for Sun Pharma".

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