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Sun Pharma share price gains 52% from March lows; time to buy, sell or hold the stock?

Sun Pharma share price gained up to 1.56% to Rs 481 against previous close of Rs 473.60 on BSE. The pharma stock has gained after 2 days of consecutive fall

twitter-logoBusinessToday.In | June 12, 2020 | Updated 15:26 IST
Sun Pharma share price gains 52% from March lows; time to buy, sell or hold the stock?
Sun Pharma share trades higher than 20 day, 50 day, 100 day and 200 day moving averages but lower than 5 day moving averages.

Sun Pharma share price was among the top Sensex gainers in a falling market today even as the Indian firm was dragged to court in US. At least five Indian generic drug firms are among 26 generic drugs makers that are facing a fresh lawsuit in the US on complaints of manipulation and artificial inflation of generic medicine prices. The four other firms that have been dragged to court are Aurobindo Pharma, Glenmark, Lupin, and Wockhardt.

Sun Pharma share price gained up to 1.56% to Rs 481 against previous close of Rs 473.60 on BSE. The pharma stock has gained after 2 days of consecutive fall. However, the stock opened 3.51% lower at Rs 457 on BSE.

The large cap stock trades higher than 20 day, 50 day, 100 day and 200 day moving averages but lower than 5 day moving averages. The pharma stock has gained 52.79% from its 52-week low hit on March 23, 2020.  

The BSE healthcare sector too has gained 5,080 points or 46.15% from 11,007 points level on March 23 to 16,092 today. After the firm was dragged to US court, Credit Suisse gave a neutral rating on the stock.  The brokerage has given a target price of Rs 400 for the pharma share.

"Price fixing litigation expands in US with fresh lawsuit, focuses on topical dermatology drugs, where Taro is one of the key players Lupin, Aurobindo Pharma, Sun Pharma and others are defendants," the brokerage said.

However, after Q4 earnings, Centrum Broking gave a buy call with a target price of Rs 620 after the firm announced its Q4 earnings.

Indian pharma companies Aurobindo, Glenmark, Lupin, Sun, Wockhardt dragged to court in US

"We anticipate the speciality basket focus strategy to start paying dividends from FY21E onwards which would add significant delta to earnings going ahead. We remain optimistic on the name and maintain buy rating on the stock. We have slightly moved our earnings FY21E/FY22E, -4% and /2%, respectively. With the target price of Rs 620 and maintain recommendation at Buy on the stock. At CMP of  Rs 450, Sun Pharma trades at 20 times FY21E EPS of Rs 23.6 and 16.4x FY22E EPS of Rs 27.5, " the brokerage said.

On May 27, the firm reported a 37% fall in Q4 net profit at Rs 399 crore against Rs 635 crore in corresponding period of previous fiscal. Total income gained 14% to Rs 8,184 crore in Q4 compared to Rs 7,164 crore in a year-ago period. Sun Pharma's EBIDTA gained 34% yearly to 1,363 crore in Q4FY20 compared with Rs 1,017 crore during Q4 of FY19.

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By Aseem Thapliyal

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