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Buy Sun Pharma; target of Rs 619 KRChoksey

KRChoksey is bullish on Sun Pharma has recommended buy rating on the stock with a target price of Rs 619 in its research report dated August 07, 2020.

August 09, 2020 / 09:02 AM IST
 
 
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KRChoksey's research report on Sun Pharma

Sun Pharma reported Revenue decline of 9.4% YoY (down 7.3% QoQ) to INR 75,853 mn. EBITDA though declined 8.5% YoY to INR 15,051 mn, rose on QoQ basis by 17.2%. EBITDA margin expanded 23 bps YoY to 23.2% in 1QFY21 (from 23.0% in 1QFY20). On the sequential basis, EBITDA expanded by 487 bps. Company reported a net loss of INR 16,556 mn for the quarter primarily due to exceptional items of INR 36,333 mn during the quarter, company reported Adj Net Profit of 11,460 mn with a Net Profit Margin of 15.3% for the quarter. The Board of Directors of the Company at its meeting held on July 31, 2020, approved the Scheme of Amalgamation and Merger between the Company and Sun Pharma Global FZE (wholly owned subsidiary of the Company) which inter-alia, envisages merger of Sun Pharma Global FZE into the Company. The scheme shall be effective post receipt of required approvals and accordingly, the above results do not reflect the impact on account of the scheme.

Outlook

We have revised our FY21/22E EBITDA margin upward with improvement in efficiency and accordingly raise our P/E multiple to 25x (previously 22.5x) on FY22E adjusted EPS of INR 24.8/share (previously INR 24.4/share) to arrive at a revised target price of INR 619/share (earlier TP: INR 550/share) , an upside potential of 16.0%. Accordingly, we reiterate a “BUY” rating on the shares of Sun Pharma.

For all recommendations report, click here

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Broker Research
first published: Aug 9, 2020 09:02 am

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