SUNPHARMA - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.4

💊 Fundamental Analysis: Sun Pharmaceutical Industries Ltd (SUNPHARMA)

Strengths

ROCE (20.2%) & ROE (16.9%): Strong profitability and capital efficiency.

Debt-to-Equity (0.03): Virtually debt-free, ideal for long-term resilience.

EPS (₹45.6): Robust earnings per share.

Global Leadership: Largest pharma company in India and 5th globally in specialty generics

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Specialty Focus: High-margin branded portfolio in dermatology, oncology, and ophthalmology

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R&D Investment: 6.7% of revenue, supporting innovation and pipeline growth

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Concerns

High P/E (35.8) vs Industry P/E (34.0): Slightly premium valuation.

PEG Ratio (1.78): Fair, but not cheap.

Dividend Yield (0.94%): Moderate, not a major income source.

Quarterly PAT Decline (-13.1%): Reflects margin pressure and higher costs

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FII Holding Decline (-0.70%): Mild institutional outflow.

📉 Technical & Trend Analysis

RSI (58.6): Neutral to slightly overbought.

MACD (5.11): Bullish momentum.

Price near 50 DMA (₹1,692) and 200 DMA (₹1,702): Consolidation zone.

Volume: Stable, indicating steady interest.

💰 Ideal Entry Price Zone

Accumulation Zone: ₹1,620–₹1,675

This range aligns with technical support and offers a better margin of safety.

Below ₹1,620, consider aggressive accumulation if fundamentals remain intact.

🧭 Exit Strategy / Holding Period

If you already hold SUNPHARMA

Hold for 5–10 years for long-term compounding, supported by strong ROE, global expansion, and innovation pipeline.

Exit partially if price crosses ₹1,950–₹2,000 and valuation becomes stretched.

Reassess if ROE drops below 14% or regulatory issues (e.g., Halol plant scrutiny) persist

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📈 Long-Term Outlook

Year Target Price Range (₹)

2026 1,975–2,122

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2027 2,175–2,900

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2030 2,530–4,156

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Growth Drivers: Specialty launches (e.g., Leqselvi), ROW expansion, biosimilars, and strategic acquisitions

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Risks: Regulatory scrutiny, pricing pressure in generics, and rising R&D costs.

Would you like a dividend reinvestment strategy or a comparison with peers like Dr. Reddy’s and Cipla to assess portfolio balance?

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economictimes.indiatimes.com

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