SUNPHARMA - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.8
| Stock Code | SUNPHARMA | Market Cap | 4,42,760 Cr. | Current Price | 1,845 ₹ | High / Low | 1,917 ₹ |
| Stock P/E | 101 | Book Value | 99.2 ₹ | Dividend Yield | 0.87 % | ROCE | 16.8 % |
| ROE | 17.8 % | Face Value | 1.00 ₹ | DMA 50 | 1,786 ₹ | DMA 200 | 1,733 ₹ |
| Chg in FII Hold | -0.18 % | Chg in DII Hold | 0.28 % | PAT Qtr | 872 Cr. | PAT Prev Qtr | 564 Cr. |
| RSI | 54.8 | MACD | 37.6 | Volume | 37,11,975 | Avg Vol 1Wk | 25,45,365 |
| Low price | 1,547 ₹ | High price | 1,917 ₹ | PEG Ratio | 1.39 | Debt to equity | 0.56 |
| 52w Index | 80.6 % | Qtr Profit Var | -24.6 % | EPS | 16.7 ₹ | Industry PE | 30.5 |
📊 Core Financials
- Revenue & Profit: Quarterly PAT ₹872 Cr. vs ₹564 Cr. previous quarter, showing growth but overall profit variation is negative (-24.6%).
- Margins: ROE at 17.8% and ROCE at 16.8% indicate strong efficiency and profitability.
- Debt: Debt-to-equity ratio of 0.56 reflects moderate leverage, manageable for a large pharma company.
- Cash Flow: Stable due to diversified product portfolio, though earnings volatility is evident.
💹 Valuation Indicators
- P/E Ratio: 101 vs Industry PE of 30.5 — significantly higher, suggesting overvaluation.
- P/B Ratio: Price ₹1,845 vs Book Value ₹99.2 → ~18.6x, very expensive relative to assets.
- PEG Ratio: 1.39 indicates moderate overvaluation relative to growth.
- Intrinsic Value: Current price appears stretched compared to fundamentals.
🏭 Business Model & Advantage
Sun Pharma is India’s largest pharmaceutical company with global operations. Its competitive advantage lies in scale, strong R&D, specialty drugs, and global distribution. Diversification across geographies and therapeutic areas provides resilience, though regulatory risks and pricing pressures remain.
📈 Technicals & Entry Zone
- RSI at 54.8 indicates neutral momentum.
- MACD positive (37.6) suggests short-term bullishness.
- Entry Zone: Attractive accumulation only if price corrects to ₹1,650–₹1,720 range.
- Long-term Holding: Suitable for investors seeking exposure to pharma growth, but valuation risks are high.
✅ Positive
- Strong ROE (17.8%) and ROCE (16.8%).
- Global presence with diversified portfolio.
- Moderate debt-to-equity ratio (0.56).
⚠️ Limitation
- Extremely high P/E ratio (101) compared to industry average.
- P/B ratio (18.6x) signals overvaluation.
- Quarterly profit variation negative (-24.6%).
📰 Company Negative News
- Profit variation shows volatility despite revenue growth.
- FII holdings declined (-0.18%).
🌟 Company Positive News
- Quarterly PAT improved sequentially from ₹564 Cr. to ₹872 Cr.
- DII holdings increased (+0.28%).
- Strong global market leadership in specialty pharma.
🏭 Industry
Pharma industry PE at 30.5 reflects moderate valuations. Demand is driven by healthcare expansion, generics, and specialty drugs. Regulatory risks and pricing pressures remain key challenges.
🔎 Conclusion
Sun Pharma demonstrates strong efficiency and global leadership, but current valuations are stretched with high P/E and P/B ratios. Earnings volatility adds risk. Long-term investors may consider accumulating only on corrections to the ₹1,650–₹1,720 range, aligning with industry growth but mindful of valuation risks.
For a broader perspective, you could explore a peer comparison or an industry outlook to complement this analysis.