Pharmaceuticals: Tax woes apart, nothing much for pharma :: Kotak Securities PDF link

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Pharmaceuticals
India
Tax woes apart, nothing much for pharma. While weighted deduction of 200% for
R&D expenditure was extended for another five years, the benefit has been restricted to
in-house R&D and not extended to outsourced R&D. Imposition of tax on partnership
structures will hit SUN and Cadila. We estimate a hit of Rs2.5/share to FY2013E EPS of
Rs28.1 for SUN and Rs3.8/share to FY2013E EPS of Rs40.9 EPS for Cadila. We reduce
our PT to Rs580 (was Rs625) for SUN, maintain ADD and Rs670 (was Rs700) for Cadila,
maintain REDUCE. We advise buying into recent weakness in SUN.