Buy Sun Pharma, target of 1217: Sharekhan

By SiliconIndia   |   Friday, July 31, 2009   |    1 Comments
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Bangalore: After looking at the company's performance in the first quarter of fiscal 2010, Sharekhan has recommended a buy rating on Sun Pharmaceuticals with a target price of Rs. 1217. According to Sharekhan, the performance of the company was below the expectations. The revenues of Sun Pharma for the quarter declined due to lower sales in the U.S. market. The top line of the quarter declined by 24.4 percent to Rs. 787.6 crore, which was below Sharekhan's expectation of Rs. 984 crore. This drop was due to the sharp decline in the domestic formulation business and export formulation business. However, the active pharmaceutical ingredient (API) business was up 43.2 percent, which was in line with Sharekhan's estimate.The domestic formulation revenues were disappointing as the it declined by 27.2 percent to Rs. 312.9 crore in Q1FY2010 largely due to the re-alignment of distribution arrangements in Q4FY2009. Sun Pharma is an international speciality pharma company, with a presence in 30 markets. The Company also makes active pharmaceutical ingredients. Exports were hurt by erosion in revenue from U.S. sales of two generic drugs and the Food & Drug Administration's (FDA) action against the company's U.S. unit - Caraco Pharmaceutical Laboratories. The FDA last month seized drugs made by Caraco at its facilities in Michigan after it found manufacturing defects.
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