Sun Pharma Q4 profit declines 37%: Should you buy, sell or hold?

SUMMARY

Sun Pharma in March quarter FY20 posted a consolidated profit of Rs 399.8 crore. It registered a decline of 37.1 percent year-on-year due to a one-time loss of Rs 260.6 crore. However, consolidated revenue during the quarter rose 14.3 percent year-on-year to Rs 8,184.9 crore, beating CNBC-TV18 estimate of Rs 8,015.8 crore. The pharmaceutical giant's stock rose over 1 percent after the earnings announcement. So should you buy, sell, or hold the stock post Q4? Here's what brokerages say:

By Pranati Deva May 28, 2020 1:44:07 PM IST (Published)

CLSA: The brokerage has maintained 'buy' call on the stock but cut its target to Rs 560 per share from 590 earlier. Sun Pharma's profits were hindered by lower gross margin, higher depreciation, and forex loss said the brokerage.

Credit Suisse: The brokerage has 'neutral' call on the stock with the target at Rs 400 per share. It said that the firm's Q4 result was weak due to higher costs but the highlight of the fourth quarter was strong Ilumya sales.

Jefferies: The brokerage has maintained 'buy' call on the stock and raised its target to Rs 530 per share from Rs 440 earlier. Jefferies said that Sun Pharma is its preferred large-cap pick over peers like Dr Reddy's.

Morgan Stanley: The brokerage is 'overweight' on the stock with a target of Rs 449 per share. Company's global specialty business is steadily gaining traction and it could be a mid-term re-rating catalyst, Morgan Stanley noted. It added that the forthcoming earnings upcycle & potential re-rating underscore an overweight rating.

Nomura: The brokerage has a 'buy' call on the stock with a target at Rs 525 per share. The Q4 numbers were in-line, while specialty ramp-up and improving traction in Ilumya are the key positives, said the brokerage. The Ilumya scale-up could help negate the impact of higher costs on specialty, it added.