SUN PHARMA KEEP ACCUMULATING

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SUN PHARMA : CMP : 475 , Price Target 1 : around 640 , Price target 2 :around 740.Possible downside to  a 365 to 400 range however cannot be ruled out.

Sun Pharma  at the current market price (CMP)  of 475 has a cash P/E at 16.37 and P/BV at 3.11 . Looking at the strong downward momentum and ” stay – away ” , “avoidable”  view on the pharma sector , the stock may be hammered down towards 365 to 400 levels , however alternately the valuations are BECOMING attractive and so are the technicals.

FY 17 FY 16 FY 15 FY 14 FY 13
Consolidated Net profit (crs) 6964 4715 4539 3141 2983
BV PER SHARE 152 130.47 123.49 89.44 59.08
Price Low 571 704 570 405 277
Price High 841 1200 1075 651 424
Price low to BV 3.76 5.40 4.62 4.53 4.69
Price High to BV 5.53 9.20 8.71 7.28 7.18
EPS 29.03 19.6 21.92 15.17 14.43
Price Low to EPS 19.67 35.92 26.00 26.70 19.20
Price High to EPS 28.97 61.22 49.04 42.91 29.38

Assuming 50% drop in Consolidated Net Profit 3482 3482 3482
Shares O/s as of March 17 239.93 239.93 239.93
EPS 14.51 14.51 14.51
Assumed Valuation P/E      
15 217.69 217.69 217.69
16 232.20 232.20 232.20
17 246.71 246.71 246.71
18 261.23 261.23 261.23
19 275.74 275.74 275.74
Assuming 40% drop in Consolidated Net Profit 4178.4 4178.4 4178.4
Shares O/s as of March 17 239.93 239.93 239.93
EPS 17.42 17.42 17.42
Assumed Valuation P/E      
15 261.23 261.23 261.23
16 278.64 278.64 278.64
17 296.06 296.06 296.06
18 313.47 313.47 313.47
19 330.89 330.89 330.89
Assuming 30% drop in Consolidated Net Profit 4874.8 4874.8 4874.8
Shares O/s as of March 17 239.93 239.93 239.93
EPS 20.32 20.32 20.32
Assumed Valuation P/E      
15 304.76 304.76 304.76
16 325.08 325.08 325.08
17 345.40 345.40 345.40
18 365.72 365.72 365.72
19 386.03 386.03 386.03

Assuming the profit falls by 30% and a P/E of 18 is applied the price should be around 365 and a P/BV of 2.40 which is a very attractive level. That also assumes that going forward the profits stay flat, assuming the P/E multiple still remains at 18 for a rudimentary valuation.

Below is the monthly chart with key points

Monthly Chart Sun Pharma

 


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