Sun Pharmaceutical Indestries Limited is one of the top most pharmaceutical company in India headquarted in Mumbai, Maharashtra that produces Pharmaceuticals and genetic drugs. Complementary growth has taken by company with some acquisition and joint ventures in last two dacades. By Owning ₹ 54, 219 crore of total assets Sun Pharma became the largest pharmaceutical company in India, the largest Indian Pharma company in US and the 5th largest generic company over the globe.
Recent issues had given a roller coster ride to Sun Pharma in last few months. Stock has fallen around 40% since October because of of revelation report submitted by whiste blower to market regulator Securities and Exchange Board of India (SEBI). Indian stock market always reacted to rumors and news instantly, resulting such companies to face some falls. SEBI has started invastigating Sun Pharma in their ways.
Following are the considerations before investing in Sun Pharma
Valuation
Despite having such alligations, Sun Pharma still holds the rank amongst the top pharmaceutical companies. Its stock is valued at 3.4 times its consolidated revenues – while its peer Aurobindo Pharma NSE 0.80 % is at 2.6 times, Lupin at 2.5, Cipla NSE -0.03 % at 2.7 and Dr Reddy’s and Cadila Healthcare NSE -0.71 % at 3 times each. It's trading at 35 times its earnings versus the price-to-earnings multiple of 26.7 of ET Pharma Index. So, Sun Pharma is stilla considerable company to invest.
Alligations
Alligations have been taken seriously by Securities and Exchange Board of India (SEBI) because their call details are about to be investigate. Sun Pharma is under the cloud of media after the whistle blower has complained second time in last week. But, still investers haven’t lost their interest in in company and Sun Pharma’s spokesperson said, “We have received two queries from SEBI which the company has responded to. We are not in a position to comment as to whether the queries are related to the whistle blower complaint.” Only if alligations are proved they are about to face some serious damage in the field of management, stakeholders and investments.
Aspects
While the rumors have done their job on the information given by the whistle blowers. Securities and Exchange Board of India (SEBI) is yet to break its silence on this this case. Sun Pharma is seeing a 52-week low and chances are it may still slide a bit. But, Certainty has been shown by investors around the globe proves that trust in the two dacades older compony shoudn’t be held because of such unproved alligations.
Business Fundamentals
Sun Pharma holds the 8.3 per cent share of the ₹ 1,26,000 crore in domestic market. Company holds the track record of meeting investors expectations in around two dacades. Its Sun Pharma Advanced Research Company Ltd. (SPARK) owns the revenue of ₹ 870 million. Sun Pharma has always focused on special drugs and mostly strategic acquisition across the globe. Kejriwal from the Kejriwal Research and Investment Services (KRIS) said “Looking at the company’s performance over the years, there seems to be no concern on its fundamentals for the present. But it also depends on how deep the corporate governance issues are,”
Stakes are High
Sun Pharma holds the place of fourth largest special generic pharma company. It’s globally praised in around 42 countries and all the human living continents. The company’s founder Dilip Shanghvi is the sixth richest Indian on the Bloomberg Billionaire list and is the member on the board of the RBI. In the last month’s call with the investors, the management had indicated its amenability to make changes to better adhere to corporate governance standards.
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