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Sun Pharmaceuticals Industries
Limited (SUN.BO / SUNP IN)
Spectacular growth so far
■
Emerging market growth is still some way away but track record keeps
us optimistic: Sun has started focusing on Emerging market growth only
now, but with the management’s past record of execution and hiring a new
CEO to lead EM growth strategy, we remain optimistic on its prospects. Sun
has already invested in manufacturing in Mexico and Brazil, and has a
number of filings in South Africa. It sees Russia as a challenging opportunity,
though acknowledges that presence is a must. It is also evaluating Japan.
■
Rapid profit growth: Sun's track record in profit growth has been
unparalleled in its strength and duration. Investors have therefore been
rewarding the company with a high multiple. Sun's Indian product portfolio is
envied by peers, and its grasp of the fast growing and highly profitable CNS
and CVS therapy areas in the Indian market is quite strong. Management
has been very disciplined with investing the large cash surpluses .
■
US pipeline has some good products: With favourable wins in lower
courts for Taxotere and Prandin, US business should generate good cash
flows. However, with a further delay in Caraco recovery announced, base
business is expected to be weak.
■
Taro integration may not be easy: Sun completed the Taro acquisition
after a long battle with the promoters, lasting over three years. While this is
certainly positive, we believe managing Taro will be tough. A hostile
relationship with original promoters will only make integration difficult. Plus, a
significant decline in Taro’s R&D expenditure indicates pipeline may be weak.
■
Medium growth and pipeline already factored in: While Sun’s mediumterm
growth outlook remains robust, we find the stock has already priced
that in. Caraco recovery is also fully priced in and expectations about
recovery are more optimistic than even management guidance, in our view.
Also, while the Taro acquisition has been factored in, we think integration
would be a painful and long process. Pantoprazole litigation penalty is also a
risk, in our view
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Sun Pharmaceuticals Industries
Limited (SUN.BO / SUNP IN)
Spectacular growth so far
■
Emerging market growth is still some way away but track record keeps
us optimistic: Sun has started focusing on Emerging market growth only
now, but with the management’s past record of execution and hiring a new
CEO to lead EM growth strategy, we remain optimistic on its prospects. Sun
has already invested in manufacturing in Mexico and Brazil, and has a
number of filings in South Africa. It sees Russia as a challenging opportunity,
though acknowledges that presence is a must. It is also evaluating Japan.
■
Rapid profit growth: Sun's track record in profit growth has been
unparalleled in its strength and duration. Investors have therefore been
rewarding the company with a high multiple. Sun's Indian product portfolio is
envied by peers, and its grasp of the fast growing and highly profitable CNS
and CVS therapy areas in the Indian market is quite strong. Management
has been very disciplined with investing the large cash surpluses .
■
US pipeline has some good products: With favourable wins in lower
courts for Taxotere and Prandin, US business should generate good cash
flows. However, with a further delay in Caraco recovery announced, base
business is expected to be weak.
■
Taro integration may not be easy: Sun completed the Taro acquisition
after a long battle with the promoters, lasting over three years. While this is
certainly positive, we believe managing Taro will be tough. A hostile
relationship with original promoters will only make integration difficult. Plus, a
significant decline in Taro’s R&D expenditure indicates pipeline may be weak.
■
Medium growth and pipeline already factored in: While Sun’s mediumterm
growth outlook remains robust, we find the stock has already priced
that in. Caraco recovery is also fully priced in and expectations about
recovery are more optimistic than even management guidance, in our view.
Also, while the Taro acquisition has been factored in, we think integration
would be a painful and long process. Pantoprazole litigation penalty is also a
risk, in our view
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