The pharmaceutical sector in India is a cornerstone of the economy, contributing significantly to healthcare both domestically and globally. With an annual growth rate averaging around 8-9%, it generates over USD 20 billion in exports annually, making it a vital player in the global pharmaceutical market.
With a market capitalization of Rs 3.59 lakh crore, the shares of Sun Pharmaceutical Industries Ltd were trading at Rs 1,499.65 apiece, increasing around 0.42 percent as compared to the previous closing price of Rs 1,494.75 per share.
Looking into the company’s financial performance, revenue surged by 10 percent from Rs 10,931 crore in Q4FY23 to Rs 11,983 crore in Q4FY24, during the same period, net profit magnified by 34 percent from Rs 1,983 crore to Rs 2,659 crore.
ShareKhan, one of the well-known brokerages in India, gave a ‘Buy’ call on the Pharma stock with a target price of Rs 1,800 apiece, indicating a potential upside of 20 percent from Tuesday’s price of Rs 1,499.65 per share.
Here is the reason for such a bullish movement of 20%:-
● Sun Pharma’s worldwide specialty sales increased to 18% in FY24 from 16% the previous year, owing to good results by Ilumya, Winlevi, and Cequa. Ilumya alone accounted for 56% of specialty sales, providing an EBITDA margin of 25%. Future growth is expected, fueled by new goods and patent protections.
● Merger Agreement Details: Sun Pharma, as Taro’s controlling shareholder, will acquire all outstanding shares at $43.00 each in cash, a substantial premium over market prices. This strategic move aims to enhance combined global capabilities in the challenging US generic dermatology market.
● Financial Impact and Strategic Intent: Taro’s robust FY24 performance, with sales growing 10% YoY to $629 million and operating profit up 21% YoY to $21.48 million, coupled with $1.4 billion in cash reserves, underscores its readiness for post-merger expansion and reinforces its position in the pharmaceutical sector.
● Market Leadership and Growth Strategy: Sun Pharma maintains its top position in the Indian Pharmaceutical Market (IPM) with an 8.5% market share. Growth matching IPM rates and strategic new product launches, including in-licensed products and in-house manufacturing initiatives, underpin its domestic expansion strategy.
● Revenue Projection and Segment Focus: Brokerage anticipates a 10% compound annual growth rate (CAGR) in domestic sales from FY2024 to FY2026, reaching approximately Rs. 1,81,798 crore. This growth is expected to be driven by volume increases and a strong focus on the Chronic segment within the Indian pharmaceutical market.
Sun Pharmaceutical Industries Limited is an Indian specialist generic pharmaceutical firm. The company manufactures, develops, and markets a variety of branded and generic formulations, as well as active pharmaceutical ingredients (APIs).
Written by:- Abhishek Singh
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