Shares of Sun Pharmaceutical Industries gained as much as 2.5 percent on Monday after foreign brokerage firm Jefferies double upgraded its rating on the company’s stock to ‘buy’ from ‘underperform’ and hiked its target price to Rs 910 from Rs 775.

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At 9:49 am, shares of Sun Pharma were trading 0.9 percent higher at Rs 801 on the BSE. The stock has gained after six days of consecutive losses.

The brokerage firm has also raised its earnings per share estimate for the company by 3 percent for FY23 and by 9 percent on FY24.

Jefferies believes that the company’s growth will be driven by its specialty portfolio and India hereon. The brokerage house believes this target is quite achievable as the firm no longer relies on its generic portfolio which has a higher risk of price erosion.

"The next two years' growth will be driven by Ilumya, Cequa, and Winlevi while the dependence on US generics is amongst the lowest in our coverage," Jefferies said in its report.

Sun Pharma clocked strong growth in speciality segment in FY22 (42 percent) primarily led by Ilumya sales, thereby overcoming Absorica's decline. Other products that supported growth for the company are Cequa, Levulan, and Odomzo. Sun Pharma launched Winlevi in November 2021, and Jefferies expects it should help to offset the Absorica sales loss in FY23.

In March, Nithya Balasubramanian, Director, Sanford Bernstein had said that the Indian market still remains underpenetrated and there are several companies that can grow and expand.

She remained positive on Sun Pharma in the long run. “From one-two years’ perspective, we do see significant operating leverage coming through as their specialty portfolio continues to grow,” she said.

Year-to-date, the pharmaceutical major’s scrip is down over 5 percent as compared with the benchmark Nifty50’s 12 percent fall during the same period.

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First Published:Jun 20, 2022 11:26 AM IST