Pharma stock to buy now for an upside of more than 25%; Recommended by Macquarie

Synopsis:
The shares of Sun Pharma are in focus after Macquarie has initiated a Buy call on the stock, following its low exposure to the US.

The shares of this leading pharmaceutical company are back in the spotlight after Macquarie sees 28 percent upside. In this article, we will dive deep into the details of the rationale behind this.

Leading brokerage house, Macquarie, has maintained its “Outperform” rating on Sun Pharma and assigned a target price of Rs 2,135 per share, signalling an upside potential of 28 percent from its Tuesday closing price of Rs 1,672.50 per share.

The brokerage mentioned that Sun Pharma has a low US exposure, which is that it accumulates 31 percent of its revenue from the US market, followed by 33 percent from India. This makes it less vulnerable to US tariffs as the majority of Indian pharmaceutical companies depend on US exports, which account for a large chunk of money. 

The company reported over 16,200 crore in revenue from the US in FY25, which grew at a CAGR of 9.06 percent over the past five years. And on a year-on-year basis, it grew by approximately 6 percent.

Trump threatened to increase tariffs on pharma imports by 200 percent. However, he mentioned that before the implementation of these tariffs, companies will be given time to establish their manufacturing site in the US so that they can bypass the tariffs. This is crucial for a business like pharma, in which companies source their revenue internationally. 

Financial Highlights

The company reported a revenue of Rs 52,578 crores in FY25, up by 8.41 percent from its FY24 revenue of Rs 48,497 crores. Additionally, the company reported a net profit increase of 14 percent to Rs 10,965 crore in FY25 from Rs 9,610 crore in FY24.

The stock delivered an ROE and ROCE of 16.86 percent and 20.21 percent respectively, and is currently trading at a P/E of 35.10x as compared to its industry average of 33.45x.

Sun Pharmaceutical is a prominent Indian pharmaceutical company that produces and sells both branded and generic medications in India and around the world.

It offers a broad range of treatments for heart issues, skin conditions, cancer, diabetes, and mental health. The company also manufactures active pharmaceutical ingredients (APIs) and provides products such as tablets, injections, creams, and over-the-counter medicines.

Written by Satyajeet Mukherjee

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