Sun Pharma plunges 3% on weak Q2 nos; Morgan Stanley underweight with target Rs 448

November 16
03:05 2017
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Share price of Sun Pharmaceutical Industries slipped 3 percent in the early trade on Wednesday on the back of poor Q2 (July-September) numbers.

The company has reported 59 percent decline in net profit to Rs 912.1 crore in the second quarter ended September as the company faces pricing pressure in US generics market.

The company had reported net profit of Rs 2235 crore in the same period of previous year.

Revenues declined 19.5 percent to Rs 6650 crore compared to Rs 8260 crore in the year-ago period. The total expenses rose 6.24 percent to Rs 579 crore.

Check out what brokerages saying about the company:

Morgan Stanley | Rating: Underweight | Target: Raise to Rs 448 from Rs 362

According to the broking firm earnings appear to be bottoming but street is estimating a solid recovery. The firm sees the risk to upcoming specialty launches of Seceira & Tildra.

The quicker US recovery and faster specialty ramp-up are the key upside risks to our rating, it added.

Macquarie | Rating: Underperform | Target: Rs 440

The firm believes re-rating triggers are elusive and it is difficult to ignore medium-term pain. It also believes the impact of pricing erosion on the company has been magnified due to its high base.

The resolution of Halol in second half is a key risk to our underperform recommendation, it added.

Edelweiss | Rating: Buy | Target: Rs 525

According to firm the Q2 results are largely in-line with expectations. It believes Halol resolution and inorganic initiatives at Taro can turn the tide around for company.

CLSA | Rating: Sell | Target: Raise to Rs 390 from Rs 370

The brokerage highlighted that the lack of new launches and continued pricing pressure resulted in a sharp US decline. The firm increases FY18 EPS estimate by 7 percent, but retain FY19-20 target.

The company’s US sales may be nearing the bottom and there is little visibility of revival. However, new approvals are the key, which would also depend on Halol resolution, it added.

Credit Suisse | Rating: Outperform | Target: Rs 595

Credit Suisse said the company’s results during the previous quarter were weak impacted by deferred US sales. The firm expects the margins to improve in the second half and likely to beat margin guidance of 20- 22 percent.

The broking firm has cut earnings per share by 3 percent for the current financial year, driven by weak US sales.

The company does not yet have received Halol inspection dates but expects it to be in the current quarter, it added.

At 09:44 hrs Sun Pharmaceutical Industries was quoting at Rs 514, down Rs 12.15, or 2.31 percent on the BSE.

Posted by Rakesh Patil

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