Sun Pharmaceuticals Industries Ltd (Sun Pharma) is one of the leading International Pharma Industries in India. It was incorporated in the year 1982 by Dilip S.Shanghvi. The company has begun its business by manufacturing only 5 psychiatry medicines. It focused on the manufacturing products used for cardiology to begin with. Then it gradually added new lines and today it manufactures a wide range of drugs of medical specialties, treatments and disorders. It also produces Active Pharmaceutical Ingredients (API), which used in the manufacturing of Drugs. Currently it is a leading producer of drugs in the areas Cardiology, Psychiatry, Gastroenterology, Neurology, Diabetology, and Orthopedics. Sun pharma manufactures these drugs and markets it through a number of subsidiaries like, Synergy, TDPL, Symbiosis, and Solares etc.

The company is having a well established R&D center at Vadhodra (Sun Pharmaceutical Advanced Research Center SPARC) with cutting edge technologies. The company in 1997 opened another R&D center for developing Dosage forms and documentation for the U.S and European generic drugs market. At present 70% of its revenues are from India. The company made its maiden entry into the U.S market with the acquisition of controlling stake in the Carco Pharmaceutical Laboratories. With this acquisition it has now added many approvals from United States Food and Drug Administration (USFDA) for marketing many Generic drugs in the U.S market. In order to leverage the Insulin production and to expand its global presence the company acquired MJ pharma of Europe. As on date company owns fifteen manufacturing units spread across three continents. It is now in talks with Taro pharmaceuticals an Israel based Pharma Company to explore a merger. Taro Pharmaceuticals is a major producer of Dermatological drugs with manufacturing and marketing rights at Israel and Canada.

FINANCIALS

The company announced financial results for the quarter ended March 31, 2008 recently. The net profit surged by 59% on YoY basis but dipped by 28% when compared to last quarter. The net profit for the quarter ended March 31, 2008 was at Rs.2478.9 Million against Rs.1556 Million in the same period last year. The total sales of the company moved to Rs.5972.2 Million from Rs.1675.3 Million posted in the quarter ended March, 31 2007.

There has been steady all round improvement in its performance during FY 07-08. Margins have improved and earnings have gone up by more than 50%. Wealth accumulation has been on the rise.

A comparison of the company’s performance with its market peers is tabulated below.

The company is in third position behind its market rivals Dr. Reddys labs and Cipla. High raw material costs, soaring inflation numbers are the major concerns for the growth of the company. The Indian pharmaceutical industry is estimated to grow triple and touch $20 billion by 2015. Large number of drug patents is available for development and exploitation through generic drug formulation in ensuing 5-8 years. This will help the company to strengthen its business in the U.S market. As the company is leveraging its exports and extending its geographical area it is expected to deliver good results in the upcoming years.

STOCK OUTLOOK

Sun pharma is now trading in the region of Rs. 1300-1400. The above chart shows clearly that the stock is in an accumulation/ distribution phase. The immediate support level for this stock is at Rs.1280 and resistance level at Rs. 1450. If the Taro pharma acquisition deal is over it will boost the performance of the company in the market. So near term investors can accumulate this scrip to their portfolio with a stop at Rs.1280.