I have been following Sun Pharma for the last 5-6 years. More closely in the last year. It is a great company to own. Very conservative management. Also very honest management.

Global companies to compare it to are Mylan, Teva, Actavis(formerly Watson), Perrigo, Sandoz which is the generic division of Novartis.

EV / EBIDTA of the global companies are typically around 10-15. Sun Pharma's EV / EBIDTA is around 15. Acquisations happen in the ev / ebidta of 18 - 20 range.

Sun is better positioned than a lot of the global peers becuase of lower cost structure, exposure to emerging markets, high growth niche markets, etc.

For established innovative drug companies in the US growth is stalling and they and seeing how profitable generics business is(in the US and also the rise of the emerging markets) and most now have a generics division.

Sun has no debt and a ton of cash(6500 crore and rising by 800-1000 crore every quarter) plus around 2000 crore with subsidery - Taro(rising by around 400-500 crore a quarter). Management is very conservative and is looking for acquisations.

In my view pharma sector is the sector to be in over the next 4-5 years. There are multiple trends going for Sun - emerging markets consumption with rising incomes(FMCG like), cost savings because of recession in the developed markets, regulatory mid competition environment, etc.

I expect revenues and ebidta to rise 20-30% annually for the next 4-5 years. Share price growth will be slightly lower because multiples will be compressed as market-cap increases.

All this is based on my pea-siZed brain. Can folks more experienced with stocks comment more on Sun Pharma?

Edited by adad - 14/Mar/2013 at 11:33am

My all time favooo stock ..
Seems no on e is closely tracking this one .

I wanted to re-emphasize multiple factors going for it: Taro price increases from Jan onwards(as per Credit Suisse), Domestic Market returning to normal, URL/DUSA acquisation, any possibly quaterly regular growth, Doxil approval and good rupee/dollar rate.

There is a possible downside that the high profit margin might be difficult to maintain.

Long term growth should be good. The US Patent cliff continues till 2018 albeit at a slower pace, India and Emerging markets are growing at a good pace.

Edited by adad - 19/Mar/2013 at 1:34pm

I don't know much about most pharma stocks but i follow Sun(and Lupin to a lower degree).

One thing to consider is Sun is cash rich compared to companies with debt - around 6500 crores on it's books(plus another 400 million plus on Taro) - EV and EV/EBIDTA might probably be a better comparator.

Sun does have signficantly high profitibility compared to it's competitors. This has always been the case since i have followed it.

Current price seems a bit high. You might want to wait a bit for a correction if initiating a new position.

Edited by adad - 20/Mar/2013 at 11:37am