Sun Pharma – Revival of Pharma Industry?

Sun Pharmaceutical Industries Ltd is the largest pharmaceutical company in India which deals in the in the business of manufacturing, developing, and marketing a wide range of branded and generic formulations and Active Pharma Ingredients (APIs). The company and its subsidiaries have various manufacturing facilities which are present across the world with trading and other incidental and related activities extending to global market.

Sun Pharma which is the biggest drug maker of India has been letting out mediocre growth which is way better compared to its peers. The entire pharmacy sector appears to be weakened post the corona period. Since seasonality and opportunity affects the growth of companies, the pharma sector shows immense weakness in 2022.

Quarterly growth

Sun Pharmaceutical Industries has reported an 8 percent year-on-year (YoY) gain in consolidated net profit to Rs 22560 crore for the quarter ended September 2022. The company has reported a 14 percent growth in consolidated revenue from operations to Rs 10,952 crore for the September quarter.

The company booked losses due to spreads related to foreign exchange of Rs 240 crore which were Rs 76 crore in the same quarter of the last year.

The growth in the topline of the company was led by a strong performance in the US formulations business which grew 14 percent on a year-on-year basis to $412 million.

The Indian formulations business has shown rigid growth of 8.5 percent on-year to Rs 3460 crore.

Apart from the US and India, the new emerging market business has drawn sales of $260 million, which is up by 7 percent from the year-ago quarter.

Sun Pharmaceutical’s consolidated operating profit in the reported quarter has risen by 12 percent to Rs 2957 crore which was 2630 crore in the same quarter of the last year.

Drug approval by USFDA

Sun Pharma has signed a licensing agreement with Sun Pharma Advanced Research Company to commercialize a medication for the treatment of neonatal seizures in the US market. The drug named SEZABY is a benzyl alcohol and propylene glycol-free phenobarbital sodium powder used through injection. The company has received an approval by the US Food and Drug Administration (USFDA) and the drug was granted designation for orphans.

Technical Analysis

Sun Pharma Weekly Candlestick Chart on Sharekhan’s TradeTiger

Sun Pharma stock price is approaching its lifetime high of Rs 1200 which was made back during April 2015. We might soon see a double top chart pattern as the price approaches the distribution zone where the stock faces heavy resistance due to the selling pressure.

The price has overextended above the 200-day exponential moving average which indicates imbalance on the upper side, therefore a correction is due for this stock. MFI is at 80 points which indicates that this stock is highly overbought and expensive.

Considering the growth during the last quarter was mediocre, the chances of a breakout over its lifetime high of Rs 1200 seems highly unlikely in the coming months. We may find good shorting opportunities as the stock makes a double top chart pattern.

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