Sun Pharmaceutical Industries Limited

 

Industry profile.  : Indian Pharmaceutical sector is among fastest growing market and it is third largest market by volume and thirteen by value. It is expected that Indian pharma industry will grow with 15% CAGR in between 2015-20. The Indian pharmaceutical industry is expected to become $55 billion by value till 2020 emerging as sixth largest pharmaceutical market by absolute size. India is largest suppler of generic drug global exports with 20% by volume. 80% of Anti retro-viral drugs used against AIDS all over world are supplied by Indian companies.

India maintain its lead over china in pharmaceutical export with 11.44% year on year growth to $12.91 billion. drug approval to Indian pharma from US FDA is also increase by nearly double but with substantial inspections, which is biggest problem for many Indian companies now.

All due to support from govt of India, the sector is thriving and surviving against global competition. The farmaceutical sector is permitted to receive 100% FDI under automatic rout and so the sector attracts FDI inflows about $ 14.53 billion in between April 2000 and December 2016. many Global companies like Abbott, GSK are investing in India.  UN backed Medicine Patent pool signed six sub license with Aurobindo, Cipla Disano, Emcure, Hetero Labs and Laurus Labs for manufacturing anti AIDS medicine for 112 developing countries.

Company Profile :  Company set up by Dilip Shanghvi in 1983 is multinational company, operating in US and India. The company manufacture and sell formulations and API for Cardiology, Psychiatry, Neurology, Gastroenterology. It also provides APIs such as warfarin, carbamazepine, etodolac, and clorazepate, as well as anticancers, steroids, peptides, sex hormones, and controlled substances. Today it is the largest chronic prescription company in India and a market leader in various products like neurology, cardiology, Ophthalmology. Acquisition of Ranbaxy makes them largest Indian company in US and Largest Pharma company in India and the 5th largest specialty generic company globally. Over 72% of Sun Pharma sales are from markets outside India, primarily in the US. The US is the single largest market, accounting for about 50% turnover; in all, formulations or finished dosage forms, account for 93% of the turnover. Manufacturing is across 26 locations, including plants in the US, Canada, Brazil, Mexico and Israel.

Share holding Pattern  :   The company, is owned by different promoter entities. 25 Promoter entities owned 54.39%. out of which some part is pledged. Mutual funds hold 5.39%. financial institutions hold 4.67%. Foreign Investors owned 21.76%. Remaining is held by public.

Financials and Ratios   :  

 2010-112011-122012-132013-142014-152015-162016-17
Revenue3,302.294,358.842,668.753,006.558,228.778,046.28
Net profit1,383.801,697.49516.55(2,828.52)(1,474.13)(1,073.36)
NPM44.5242.2721.23(99.99)(18.38)(14.09)
EPS13.4016.405.00(13.70)(6)(4.5)
Book Value64.5176.0775.2135.77109.7889.27
Dividend Per Share3.504.2551.531
Dividend Payout26.1925.92100.24(10.98)(48.97)(22.420
ROE20.7121.546.63(38.18)(6.48)(4.99)
ROCE20.2920.926.38(27.91)(5.58)(4.23)
ROA18.1918.585.58(20.44)(3.93)(3.13)
Debt to Equity0.010.010.010.330.240.26
asset turnover40.8543.9726.3020.4421.4122.27

Future prospectus :  The fundamentals are stretched because of acquisition of Ranbaxy. Solvency ratio and as return on equity is in bad condition. It is affecting the stock price. plus recent views from USFDA on Halol plant making it more and more tuf. But there are some sign of revival. the company is making profit on operating level. on cash basis though, it is looking bad and the decision to give profit even when the company is making loss, is not looking good. Cyclically adjusted PE is around 22 as I am writing it, which is good enough if your investment time is long term.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter