Sun Pharmaceuticals - Payback time for generics - Kotak

Sun Pharma settled the pantoprazole litigation with Pfizer, agreeing to pay US$550 mn in damages. We estimate Sun Pharma's sales of US$500-600 mn from pantoprazole for the at-risk period. The damages payment is 3% of the current market capitalization – in addition, the premium multiple attached to the Sun Pharma stock may be at risk given the low cash balance.

We retain our SELL rating given the price increase-led earnings stream, expectation of a large acquisition to drive growth and expensive valuations. No change to estimates and target price (Rs.825).

Source : Equity Bulls

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