SUN PHARMA
Reco price: Rs 533;
Target price: NA
Sun Pharma is the largest Indian player in the US generic space (after Taro's acquisition), with superior execution and regulatory pipeline of 215 ANDAs filed with USFDA. Over FY11-13, analysts expect 24 per cent profit CAGR on the back of 25 per cent increase in sales, driven by US market (including Taro), Para IV settlements and niche launches in areas like dermatology and strong domestic business growth (18-20 per cent). Thrust on chronic therapy segment (78 per cent of portfolio) and strong franchise with doctors would enable it to outpace industry growth in domestic formulations. Potential synergy benefits from Taro acquisition could lead to margin surprise. High cash surplus ($1 billion) could be utilised for accretive inorganic expansion, mainly in the US market. Expect stock to sustain premium valuations owing to superior management, strong balance sheet and growth profile. Buy.
—Bank of America Merrill Lynch
