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JP Morgan:
Target: ₹1,200
CMP: ₹990.70
Sun Pharma is the best placed to transition into a specialty player in the US with large investments already in place. The contribution of the specialty business (13 per cent of FY22 revenues) is expected to increase, driven by the ramp-up in its key products such as Ilumya, Cequa and Winlevi.
See a structural shift in the margin profile of the company with improved quality of earnings (less generics exposure, high specialty contribution).
JP Morgan expects Sun to continue gaining market share in the IPM despite the large base, aided by its strong position in chronic segments and best-in-class field force productivity.
The company’s strong balance sheet also provides flexibility to pursue inorganic growth opportunities which can act as an additional lever for growth. Remain Overweight.
The target price of ₹1,200 is based on SOTP valuation of 25x PER on Mar-25 EPS (ex-gRevlimid) and NPV of ₹ 8 for gRevlimid.
Target multiple is 5 per cent higher than its 5-year historical average given increasing specialty contribution, consistent outperformance in the domestic market, structural improvement in profitability and strong net cash balance sheet.
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