Sun Pharma shares: Two brokerages retain 'Buy' call with up to 18% potential upside

Two brokerages have reaffirmed their 'Buy' call on Sun Pharmaceutical Industries Ltd after the country's largest drugmaker by revenue reported a 29.60 per cent rise in fourth-quarter (Q4 FY23) profit. The company's consolidated profit before exceptional items and tax rose to Rs 2,411 crore for the quarter that ended March 31. Total revenue from operations climbed 15.70 per cent to Rs 10,931 crore.

The company proposed a final dividend of Rs 4 per share for the year financial year 2023 (FY23), adding to a previously paid interim dividend of Rs 7.50 per share.

Global research and broking firm Jefferies maintained its 'Buy' rating on the stock with a revised target of Rs 1,150 per share from Rs 1,200 earlier. Sun Pharma's shares were last seen trading 1.51 per cent lower on Monday at Rs 955.95 over its previous close of Rs 970.65. Considering Friday's closing price, the brokerage suggested a potential upside of 18.48 per cent on the counter.

The brokerage sees Sun Pharma as the best long-term story in the pharma space.

Another brokerage, Prabhudas Lilladher maintained a 'Buy' rating with a target price of Rs 1,140 (Rs 1,175 earlier) based on 25x FY25E earnings. The counter remains our top pick in large-cap space, it added.

"Sun Pharma Q4 FY23 EBIDTA was 4 per cent above our estimate, aided by gRevlimid and higher specialty sales. Overall specialty sales, GMs continue to remain healthy while other expenses remain elevated on the back of higher SG&A and R&D spends," Prabhudas stated.

"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 that has strong growth visibility. Furthermore, the acquisition of Concert Pharma provides visibility to the company's specialty pipeline beyond FY25," it further mentioned.

The brokerage also said that strong Q4 revenue growth was aided by higher gRevlimid and specialty sales.

Meanwhile, Indian equity benchmarks extended their gains in today's deals amid positive global cues. The domestic indices surged today, led by gains in banks, financial and consumer stocks.

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