-------- Forwarded Message --------
Subject: Sun Pharma: Ghosts Of Halol Plant/Ranbaxy & USFDA Is Still
There ??
Date: Tue, 10 Nov 2015 08:51:47 +0530
From: Asis Ghosh <asis...@gmail.com>
Reply-To: asis...@gmail.com
The stock is down by nearly 38% from its April'15 peak & may be
bottoming out
*For Sun Pharma, 740-725 might be a good buying zone for 875-935 in the
near term*
Successful Halol Plant compliance resolution and Ranbaxy integration
holds the key---
*CMP: 757*
*
*
*Buy around 740-725; *
*
*
*TGT: 790-835-875-935 (1-3M)*
*
*
*TGT: 975-1075-1135-1200 (12-24M)*
*
*
*TSL< 715*
*Note:* Consecutive closing below 715 zone for any reason, Sun can fall
up to 690-675-650 & 619-600-570 area, where it may be again accumulated
for better investment buying average.
Scrips of both Sun Pharma slumped for the last few days after the
company missed estimates for Q2FY16 and also cut guidance for the rest
of the FY-16. In addition to that, market is also concerned over its
Halol plant compliance issues with USFDA.
Another pharma major DRL got an official warning from USFDA recently and
analysts are concerned over the similar fate for Sun Pharma also. There
are market buzz that Sun has already got an OAI (official action
indicated) and there is higher probability that it will also be issued
with a warning letter from USFDA.
This Halol plant of ex-Ranbaxy has been under USFDA observation for
quite a long time and the company is finding great difficulties for
fresh approvals on product launches from this plant.
Although the management has assured that the company is doing its best
for "original remediation" of the Halol Plant, keeping the USFDA in loop
"at great frequency", the market is concerned about its impact on US
business and profits in FY-16.
But keeping in view the likely benefit of Ranbaxy integration (synergy),
analysts are giving an average TP of around 900 for the Sun Pharma
scrip, significantly down from earlier projections.
Q2FY16 result was also below street estimates, although the company has
already issued "profit warning" in advance.
Q2 consolidated PAT declined by around 46% (YOY) to Rs.1107 cr due to
lower sales growth, cross currency headwinds/volatility and supply
constraints.
Another disappointing fact was that its domestic (India) sales, which
contributes around 26% of its revenue has grown by only 1% in Q2 (YOY).
The company attributed it to inventory control, withdrawal of product
bonus offer (to trade), relatively soft season in the acute segment and
erratic monsoon this year (seasonal ailments).
The US sales, which contributed around 48% of Sun Pharma was also
declined 28% (YOY) due to competitive pricing pressure, supply
constraints at Halol Plant and high base for the last year's same quarter.
Looking ahead, the company is confident about prescription sales growth
in India and resolution of its Halol Plant and fresh product approvals
from USFDA.
There may be pricing pressure on US market due 2016 presidential
election year as its inviting lots of criticism for high prices of
medicines in US from their politicians, but its an industry wide issue.
Looking at the time & price action & the recent correction on the Sun
Pharma scrip, the above sets of bad news may be already discounted by
the market to a great extent.
Technically, 740-725 is a strong support zone for Sun and its need to
sustain over 790 for some meaningful rally up to 875-935 in the near term.
*As par BG metrics & current market parameters:*
(On consolidated TTM & FWD EPS)
Present median valuation of Sun Pharma may be around: 800 (FY:15/TTM)
Projected fair valuations might be around: 855-950-1120 (FY:16-18/FWD)
SCRIP EPS(TTM) BV(Act) P/E(AVG) Low High Median
200-DEMA 10-DEMA
SUNPHARMA 18.14 95.99 40 798.72 781.71 790.22 879.21 842.16
SUNPHARMA 20.85 115.25 40 856.31 838.07 847.19 879.21 842.16
SUNPHARMA 25.75 138.75 40 951.62 931.36 941.49 879.21 842.16
SUNPHARMA 35.95 165.75 40 1124.41 1100.47 1112.44
879.21 842.16
* Analytical Charts:*
<http://4.bp.blogspot.com/-wpsex_Yl-D4/VkFfhKRbCHI/AAAAAAAAE0k/twhNZRxkiM0/s1600/Sun-wk-09-11-2015.png>
<http://4.bp.blogspot.com/-59hCj6MqXiU/VkFfi2dF4rI/AAAAAAAAE0s/03GxXalumow/s1600/Sun-Fibb-09-11-2015.png>
<http://1.bp.blogspot.com/-Ewmyj3NXKvg/VkFfkgfqXzI/AAAAAAAAE00/FJiW25-bvpg/s1600/Sun-WK-MA-09-11-2015.png>
<http://1.bp.blogspot.com/-TfPqREKae0M/VkFfmgLpL0I/AAAAAAAAE08/yscN4aiZT2k/s1600/Sun-Pattern-09-11-2015.png>
<http://4.bp.blogspot.com/-hWDQE7S65Gk/VkFfols5zXI/AAAAAAAAE1E/tZXri6SroT0/s1600/Sun-TL-RSI-09-11-2015.png>
<http://4.bp.blogspot.com/-3qcQ3zUC860/VkFfvK-2mQI/AAAAAAAAE1M/kgcosGaGYw8/s1600/Sun-TL-09-11-2015.png>
--
Thanks & Regards,
Asis Ghosh
(asisghosh.blogspot.com)
NCFM-TA Certified
--
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