SUNPHARMA - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.9
| Stock Code | SUNPHARMA | Market Cap | 3,86,390 Cr. | Current Price | 1,610 ₹ | High / Low | 1,851 ₹ |
| Stock P/E | 88.6 | Book Value | 99.2 ₹ | Dividend Yield | 0.99 % | ROCE | 16.8 % |
| ROE | 17.8 % | Face Value | 1.00 ₹ | DMA 50 | 1,699 ₹ | DMA 200 | 1,698 ₹ |
| Chg in FII Hold | -0.43 % | Chg in DII Hold | 0.60 % | PAT Qtr | 872 Cr. | PAT Prev Qtr | 564 Cr. |
| RSI | 34.2 | MACD | -39.0 | Volume | 25,08,565 | Avg Vol 1Wk | 38,97,489 |
| Low price | 1,547 ₹ | High price | 1,851 ₹ | PEG Ratio | 1.21 | Debt to equity | 0.56 |
| 52w Index | 20.7 % | Qtr Profit Var | -24.6 % | EPS | 16.7 ₹ | Industry PE | 29.0 |
💰 Financials: Sun Pharma shows solid return metrics with ROE at 17.8% and ROCE at 16.8%, reflecting efficient capital usage. Debt-to-equity ratio of 0.56 is moderate and manageable for a large pharmaceutical company. Quarterly PAT rose to ₹872 Cr. from ₹564 Cr., but year-on-year profit variation (-24.6%) highlights earnings volatility. Cash flows remain strong, supported by a diversified global pharmaceutical portfolio.
📊 Valuation: Current P/E of 88.6 is significantly above the industry average of 29.0, indicating stretched valuation. P/B ratio (~16.2) is very high relative to book value of ₹99.2, suggesting expensive pricing. PEG ratio of 1.21 indicates fair valuation relative to growth, but intrinsic value analysis suggests the stock is trading at a premium. RSI at 34.2 signals oversold territory, offering potential near-term entry opportunities.
🏭 Business Model & Competitive Advantage: Sun Pharma is India’s largest pharmaceutical company with a strong global presence. Its competitive advantage lies in scale, diversified product portfolio across generics and specialty drugs, and robust R&D capabilities. Strategic acquisitions and global distribution networks strengthen its moat, though pricing pressures and regulatory risks remain challenges.
📈 Entry Zone: Considering DMA 50 (₹1,699) and DMA 200 (₹1,698), accumulation is attractive in the ₹1,550–₹1,600 range. Long-term investors can hold for compounding returns, given Sun Pharma’s leadership position and global growth prospects.
Positive
- Strong ROE (17.8%) and ROCE (16.8%) indicate efficient operations.
- Moderate debt-to-equity ratio (0.56) ensures financial stability.
- Global presence and diversified product portfolio reduce risk concentration.
- Robust R&D and specialty drug pipeline support long-term growth.
Limitation
- High P/E (88.6) compared to industry average (29.0).
- P/B ratio (~16.2) suggests expensive valuation.
- Quarterly profit variation (-24.6%) highlights earnings volatility.
- Regulatory risks and pricing pressures in global markets.
Company Negative News
- Decline in FII holdings (-0.43%).
- Year-on-year profit decline raises concerns about margin sustainability.
Company Positive News
- Increase in DII holdings (+0.60%), signaling domestic institutional confidence.
- Quarterly PAT improved sequentially from ₹564 Cr. to ₹872 Cr.
Industry
- Pharma industry P/E at 29.0 indicates Sun Pharma trades at a premium.
- Sector growth driven by generics, specialty drugs, and global healthcare demand.
- Regulatory approvals and R&D innovation remain key drivers.
Conclusion
🔑 Sun Pharma is a fundamentally strong company with global scale, diversified portfolio, and efficient returns. However, stretched valuations and profit volatility limit near-term attractiveness. Entry around ₹1,550–₹1,600 offers a favorable risk-reward balance. Long-term holding is justified for investors seeking exposure to India’s largest pharma company with strong global growth prospects.
Would you like me to extend this into a comparative HTML snapshot against peers like Dr. Reddy’s and Cipla to highlight valuation and efficiency differences?