A presence in lifestyle and chronic therapy categories such as diabetes and neuro-psychiatry ensures higher growth and twice the margins for Sun Pharmaceutical vis-à-vis peers.
The company has a consistent growth track record with sales growing annually by 36 per cent over the last four years and net profits by 47 per cent during the same period. While the domestic formulation sector is growing at 11 per cent, Sun Pharma has managed to grow its domestic business by 19 per cent for H1, 2009.
In the international segment, expect the US (40 per cent of sales) business to grow at about 25 per cent for the current fiscal. While the company is awaiting approval on the 96 ANDAs it has filed with the US FDA and plans to file 30 more, FY10 might see a slight correction as generic sales move down due to the recessionary trends in the Top 8 global markets.
While uncertainties on Taro acquisition and FDA queries on its Caraco plant are negatives for the stock, expect these to be resolved in the next one quarter. The comfortable cash position at $500 million (Rs 2,500 crore) ensures that Sun Pharma can tide over the tight liquidity conditions prevailing currently and also look out for acquisitions at attractive valuations. At Rs 1,057, the stock can deliver returns of about 25 per cent over the next one year.
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